V I E T N A M  U P D A T E


 June 24, 2002                                                       Vol. 2:2002



News Briefs:


Labor unrest linked to ineffective unions


The Vietnam General Confederation of Labor (VGCL) reports that workers initiated 459 strikes from 1995 through the end of March this year.  Ho Chi Minh City, the country’s industrial center, recorded 251 strikes during the period, while neighboring Binh Duong ranked second with 98 stoppages. Some 21 strikes were recorded during the first quarter of 2002 alone.


"So far all these strikes have been illegal in terms of how they were organised, but most petitions presented by the strikers have been reasonable," says Dung of VGCL, adding that workers’ demands were generally met by employers.


Cu Thi Hau, President of VGCL, stated that strikes should be a measure of last resort for trade unions seeking to resolve labor disputes. "The first weapon used is negotiations, based on which the rights of employees are protected and production activities are maintained. However, trade unions have to launch strikes if the employers continue to violate [workers' rights] after negotiations."


In fact, no formal strikes have been initiated by trade union organizations to date. Most strikes were initiated by small groups of workers, and none of these strikes complied with legal procedures.


Participants at a general meeting of the VGCL in Hanoi this month, acknowledged that the local trade unions have not lived up to their responsibilities.  Only 27.5% of a total of the over 10,100 trade unions were judged to be active and effective in carrying out their duties.


As a result, many unions have come to be viewed as ineffective both by management and the workers they are intended to represent.  Factory managements often resist establishment of the trade union, seeking to avoid conflict.  Workers meanwhile show little interest in union activities, lacking understanding of their rights and the role of trade unions, while wanting to avoid paying monthly fees out of their limited salaries.


Union leaders who depend on management for their salary are often complacent and reluctant to defend workers, even in cases where workers’ rights are violated or they are illegally terminated.  Most trade union leaders lack adequate experience and training.


The VGCL attributes many problems and legal violations to the ineffectiveness of the trade unions, including growing issues with salary, social insurance, and labor contracts for workers.  According to VGCL, workers in only 40% of non-State enterprises have signed labor contracts and of these almost two-thirds were only short-term.


Only 40% of foreign-invested firms have collective labor agreements and the figure at other companies is even lower, at only 15-20%. In Ho Chi Minh City, 33% of such firms have not bought social insurance for their workers, local media reported.

[VET, Labor, The Laborer]


Local enterprises neglect health and safety


Many local firms continue to neglect health and safety issues, viewing workplace safety training as time consuming, costly and unnecessary, according to a local media report. Many companies fail to implement preventative measures to protect workers from accidents and occupational diseases.


The Service of Labor, Invalids and Social Affairs (SoLISA), the Service of Health (SoH) and the Labor Federation (LF) of HCM City lack the resources to enforce existing workplace health and safety regulations.


Last year, SoLISA investigated only 65 cases, while SoH and LF investigated 413 and 1,414 respectively.  Such inspections cover only a small fraction of the total of 10,000 enterprises and 60,000 small production establishments in the City.


These investigations netted only three violators, who received fines ranging from VND400,000 ($26.3) to VND2 million ($131.5).  However such small fines are unable to deter continued violations, according to Tran Trung Mau, chairman of the Labor Federation of District 10.


SoLISA recorded 18 fatal work-related accidents resulting in 18 fatalities since January, triple the figure from a year earlier. These accidents included eight deaths from electric shock, six from falls and one from the inhalation of poisonous gases. The majority of reported incidents occurred at private enterprises.  In all, official statistics recorded over 3,600 workplace accidents last year nationwide, many of which resulted from poor safety practices and inadequate protection.


Statistics also show an increasing number of workers infected with gynecological, muscular, ophthalmologic and ear, nose and throat diseases. Around 1,250 out of 14,000 workers undergoing regular health checks displayed symptoms of occupational diseases, mainly occupational deafness, silica and cotton pneumoconiosis and skin discoloration.

[The Laborer]  


Draft on unemployment insurance discussed


Vietnamese labor experts are asking the Ministry of Labor, Invalids and Social Affairs (MoLISA) to ensure fair treatment for laborers in the draft on unemployment insurance, which was put to discussion at a joint seminar held in Ho Chi Minh City by the Ministry and the International Labor Organization (ILO) at the end of May.


Under the draft, laborers with indefinite term or one to three year term contracts will be eligible for unemployment insurance. The draft makes no mention of seasonal workers or workers in craft villages and cooperatives, who often do not sign labor contracts.

Participants also proposed raising employers’ contributions in the draft from 1% to 2% of total monthly salary paid.


According to Dr Kenneth Thompson from the ILO, Vietnam should pay attention to building vocational training and job service centers capable of meeting the labor market's demand, as they would ease the burden on unemployment insurance funds.


The draft is due to be submitted to the Government for approval this October.  The current unemployment rate in urban areas is 6.28%. The program on State-owned enterprises' and cooperatives' restructure may make an additional 500,000 laborers redundant over the next three to five years.

[VET, The Laborer]


VN trade delegation wins US support for WTO bid


US Commerce Department officials expressed support for Viet Nam’s bid to enter the World Trade Organisation (WTO) and committed to provide technical assistance to Viet Nam in carrying out the Viet Nam-US bilateral trade agreement (BTA), Deputy Trade Minister Luong Van Tu told the VNA.


Tu led the first official delegation of the Vietnamese Trade Ministry to explore the US market since the BTA came into effect, from May 19-31.  During Tu’s meetings with US trade officials, he pressed for a quota-free period for Vietnamese garments.


As a result of the trip, Vietnamese businesses won export contracts worth more than US$10 million, including orders for textiles and apparel valued at $4 million, according to VNA reports.


Garment and textile industry growth plan


Vietnam's garment and textile industry has targeted exports of $4 billion a year by 2005, as part of an official growth plan for the industry.


The state Vietnam Textile and Garment Corporation, together with regulatory agencies has launched an initiative to lower production costs and boost exports by slashing the cost of electricity, telecommunications and shipping to increase competitiveness.


Vietnam is concerned about increasing competitive pressures from China and ASEAN in its domestic market as well as the need to increase the competitiveness of its exports to EU, Japan and the US.


Vietnam's garment and textile exports have grown by an average 26 per cent a year over the last decade, topping US$2 billion last year.  In the first five months of this year, exports climbed 7.7 per cent to $820 million from the same period one year ago, VNA reported.


Vietnamese garment companies face shortage of skilled labor


Vietnamese garment makers, especially in Ho Chi Minh City, are facing a labor shortage as they expand production to meet demand for exports. 


Skilled garment workers are in short supply, with some HCM City companies recruiting workers from distant provinces in central regions of the country.


Vocational training centers, both public and private, have been hard pressed to keep up with demand.  The official industry forecast to 2005, foresees the need for over 800,000 workers and 6,000 technicians, VNA reported.


Despite the shortage of skilled workers in the apparel industry, general unemployment remains high nationwide.



Report Links Garment Quota with Labor Standards for Vietnam


A recent report from the Fund for Reconciliation and Development in Washington makes the case that Vietnam’s garment agreement with the US will likely follow the Cambodia model, whereby quota allocation for garment exports to the US will be linked with labor standards.  The follwing is an excerpt of this report:


The Politics of Textiles and Labor in Vietnam by Andrew Wells-Dang


What is the likely outcome as Congress and the executive branch consider a textile agreement for Vietnam along Cambodian lines? The potential economic benefits to Vietnam are beyond dispute. Before the BTA was passed, Vietnam exported only $47 million worth of textiles to the U.S. in 2001 and faced tariff rates ranging from 48-90%. With NTR garment tariffs averaging closer to 10-12%, trade analysts estimate overall Vietnamese exports to the U.S. will double within one or two years. Vietnam’s Ministry of Industry hopes to export as much as $400 million in garments to the U.S. in 2002.


A textile agreement has yet to be formally negotiated or signed, but the main components of it are already known to both sides, a product of the long delays in approval and implementation of the U.S.-Vietnam BTA. Unlike NTR, a textile agreement does not require congressional approval; the USTR has standing authority to negotiate such agreements, but Congress can play a significant role in shaping their contents.

On the pro-agreement side are longtime congressional supporters of normalization with Vietnam (notably Senators John Kerry (D-MA) and John McCain (R-AZ)), the Bush administration, and Vietnam’s ministries of Foreign Affairs, Trade, and Planning & Investment. Some congressional Democrats who opposed the BTA, such as Senator Russell Feingold (D-WI), might look more favorably on a textile agreement that includes labor incentives. Vietnam may also become a test case or carrot to attract support for other items in President Bush’s trade agenda.


Opponents of a textile accord with labor provisions include certain critics of human rights in Vietnam, the Vietnamese Communist Party-sponsored trade union, and both Vietnam’s Ministry of Labor, Invalids and Social Affairs (MOLISA), and its Ministry of Public Security. Many U.S. corporations are also opposed. In March 2001 testimony before the Senate, U.S. Chamber of Commerce President Thomas Donohue used economic-nationalist arguments: “Handing foreign governments the means to sanction U.S. companies under the guise of labor or environmental concerns will prove disastrous to American interests.” Donohue emphasized that U.S. business should support trade agreements only if they do not include “blue/green” linkages. Indeed, according to one source, Western companies pressured the Vietnamese government to weaken the power of trade unions, which had began to criticize labor practices in foreign-owned garment and shoe factories.


It is interesting to note how hard-liners on both sides often end up taking similar positions, as if Leninist party bureaucrats and their most strident U.S. opponents were actually working together. Conservative nationalists in Hanoi will view U.S. demands for labor standards both as an encroachment on Vietnam’s sovereignty and as hypocritical given the past U.S. role in Vietnam. The fact that labor provisions apply specifically to the garment sector may also raise fears of trade wars and protectionism.


Questions of nationalistic principle aside, Vietnam should have little to fear from the labor-related incentives that might be included in a textile agreement. Though less open than Cambodia in terms of freedom of association, labor conditions in Vietnam are arguably no worse overall. Vietnam’s unions are centralized under the Vietnam General Confederation of Labor (VGCL). The VGCL is viewed by labor experts as well-intentioned but ineffective, at best, although less restrictive in practice than the similarly structured labor regime in China. Strikes are permitted, in theory, and unions are given some freedom to organize, particularly in foreign-owned enterprises. Vietnam has ratified three of the eight core ILO conventions to date (on child labor, nondiscrimination, and equal pay for equal work), and it reportedly has plans to ratify others over the next several years. (The U.S. has only ratified two—on child labor and forced labor.)


Up to now, the Vietnamese government has resisted negotiation of a textile agreement, with or without a labor clause. Exporters would understandably prefer to operate without any quota restrictions. Unlike Cambodia, which may have benefited from quota allotments as it started up its garment industry, Vietnam’s export sector is already well-established. In the absence of a textile agreement, however, exports could still be subject to unilateral quota restrictions, which the Vietnamese would prefer to avoid. In the longer view, Vietnam also needs American support to join the WTO and take advantage of the more open ATC rules beginning in 2005.


Despite this mixed picture, Vietnam’s record of pragmatism in economic policy matters suggests that the government will accept a textile agreement as an intermediate step toward WTO membership. It is difficult to imagine the ILO taking the same sort of active role in Vietnam that it has in Cambodia, however, and decisions about compliance or noncompliance with labor standards will not be easy…


The full report from which this excerpt is drawn may be found at http://www.fpif.org/papers/txt-labor.html




ILO International Labor Conference


The ILO held its International Labor Conference in Geneva in the month of June, focusing on the eradication of Child Labor as its major theme for the year.  


Several papers and reports were published on the global state of Child Labor which are available online.  

These include:


A Future Without Child Labour



Every Child Counts, New Global Estimates on Child Labor



Also on the ILO web site are several useful introductory publications on Health and Safety Management, which are available for free download.


Guidelines on Occupational Safety and Health Management Systems



Fundamental Principles of Occupational Health and Safety




Links to other reports and resources are available from the Global Standards web site at http://www.global-standards.com/Links.htm.




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