V I E T N A M  U P D A T E


 September 6, 2002                                               Vol. 4: 2002



News Briefs:


Unemployment insurance fund to be launched

The Ministry of Labour, Invalids and Social Affairs (MoLISA) has announced plans to launch an insurance scheme for unemployed workers who signed long-term contracts.

Insurance payments are to equal 3 per cent of the workers’ salary, made up of equal contributions from the employer and employee. The insurance will be compulsory for eligible workers.

If an employee pays insurance for at least 12 months, they will receive full unemployment benefits (equal to half the value of the insurance) for 6 months, according to Le Bach Hong, head of MoLISA’s Social Insurance Department.

"The subsidy just helps laborers to stabilize their life – they still need to search for another job," he said.

Hong explained that unemployed workers would be required to report their employment status to local labor management agencies, which will offer further vocational training courses or job services.

MoLISA has drafted the employment insurance scheme and is preparing to launch it in the country’s major industrial centers, including Hanoi, HCM City, and Dong Nai.


Labor accidents soar in HCM City

The southern Ho Chi Minh City of Vietnam has reported 804 workplace accidents so far this year, up 360% year-on-year. These accidents resulted in 28 deaths and 815 injuries, according to the local Service of Labor, Invalids and Social Affairs, not counting material damages of nearly VND1.4 billion ($92,105).

Half of all reported accidents (407 cases) occurred at foreign-invested companies, with another 40% at State-owned enterprises.

Footwear producer Pou Yuen in Binh Chanh district, a Taiwanese invested company employing 28,000 workers, reported the most accidents among foreign-invested companies.

Private enterprises reported only 10% of total accidents, but were responsible for the largest number of fatalities (60%), followed by the State-owned sector with 39.5%.

Nationwide Ho Chi Minh City ranked second in the number of workplace accidents last year with 601, after neighboring Dong Nai province with 676, Saigon Times Daily reported.



Overdue wages spark walkout at Hiep Hung

Over 30 workers at the Hiep Hung Footwear Company (HCM City, District 8) stopped work on August 30 to protest management’s failure to pay salaries and back wages, which have been overdue since June. Hundreds of other workers did not take part in the strike but left the factory, which has experienced a series of labor disputes.

The company still owes five-months salary to 300 contract workers. In addition to the unpaid salaries (estimated at VND2 billion), the Hiep Hung Footwear Co. Ltd. also owes VND8 billion in social insurance payments, Lao Dong (Labor) newspaper reported.



Strikers at Hai Van Tunnel return to work

Striking workers at the Hai Van Pass tunnel project near Hue resumed work on Thursday, after a three-day strike was resolved through negotiations with company management.

Work on the northern section of the project, which is being undertaken by Japan’s Hazama Company and the local Civil Engineering Corporation No. 6 (Cienco 6), slowed considerably after workers walked off the job, complaining of dangerous working conditions and reduced pay.

"We went on strike to protest the contractor’s decision to increase our working hours, thus lowering our pay," said a striker, who declined to be named.

The contractor recently added a one hour, unpaid break to workers’ shifts in order to move them away from mine blasting areas. As part of an agreement reached between the joint venture management and the workers’ union, the workers will now be paid for the one-hour break.

Striking workers also complained that they were being required to move further into the tunnel and were being exposed to increasingly dangerous conditions, without being provided with proper safety clothing and equipment.

"Work safety is not good enough when we are working in a tunnel 1.5 km underground and are exposed to the smoke from mining explosives, vehicles and machinery," said Nguyen Ba Du, a welder on the construction site.

On Tuesday, the joint venture’s management issued a notice calling for the 69 striking workers to return to the job, saying they would consider employee demands if they were put forward in writing through union representatives. Strikers countered that a grass-roots Labor Union organization had not been established at the construction site, so workers were compelled to defend their own rights.

After meeting with the joint venture’s management, Pham Van Duoc, a representative of Thua Thien-Hue Labor Union, said that a grassroots labor union would be set up at the construction site soon. A comment box will also be placed at the construction site in order to collect workers’ complaints and requests.

The Hai Van Pass tunnel project is being funded by a US$251 million investment, 85 per cent of which has come from Japanese government official development assistance (ODA) loans, provided through the Japan Bank for International Co-operation.



Vietnamese labor exports take off

Vietnam sent more than 16,700 workers abroad in the first half of this year, according to a report by the Labor Export Management Department of the Ministry of Labor, Invalids and Social Affairs (MoLISA).

Vietnamese workers are employed in 40 countries and territories around the world with Taiwan, Japan, and the Republic of Korea being key markets. Malaysia has emerged as a new market for Vietnamese labor, taking in more than a 1000 workers since March this year. Saudi Arabia will receive its first Vietnamese guest workers in the third quarter of this year.

The ministry has also worked to improve labor management and instructed labor export agencies to strictly follow guidelines on sending workers abroad, however these guest worker programs have experienced a number of problems.


Vietnam and Taiwan recently held meetings in Taipei to discuss issues surrounding Vietnamese contract labor.

At the meetings, Taiwan expressed its concern over "run away" workers, as well as Vietnamese brokerage companies charging workers excessive commissions and collecting taxes on workers' wages. These practices have caused a number of disputes in Taiwan and fueled workers' desire to run away from their jobs, the Taiwan News reported.



Lack of certification threatens wood exports

Lack of certification for local forests means Vietnam could lose out to regional rivals on exports of wood products if more companies and countries require environmental certification of forest management standards to permit wood products to enter their country.

Vietnam has yet to obtain certification for any of its forests, in contrast with rivals Malaysia and Indonesia who have pursued programs under The Forest Stewardship Council (FSC).

Vietnam currently compiling its own set of standards based on FSC guidelines, which it is piloting in some areas. Many timber processors have signed up.

Export products carrying such labels can earn up to 30 per cent more, making these certifications economically attractive. Pressure is also mounting to certify all wood products worldwide by 2010.

The Ministry of Trade (MoT) estimates that by 2005, the country's exports of wooden home appliances and other products like handicrafts could reach US$1 billion. But domestic timber supplies are under threat: availability is expected to be only 900,00 cu.m per year while the 1,200 timber processors have a capacity of 2 million cu.m.

Meanwhile, the industry has been hacking down natural forests to feed its factories, threatening irreversible loss of canopy and ecosystems.

One solution lies in rapid reforestation to produce 2 million cu.m per year. If an ambitious project to plant 5 million ha of forest by 2010 can be successfully executed, it will supply more than 10 million cu.m. of wood a year.



Rural unemployment and underemployment rampant

Unemployment and underemployment remain widespread in rural areas according to a report from a local Hanoi paper. In Ha Tay province in the north of Vietnam, many farmers have taken up handicrafts to supplement their farming income and often employ famers from poorer areas as temporary farm help during the rice harvest.

Poor farmers from neighboring areas often come to earn extra money. Most of the job seekers are women aged 20 to 50, who gather at temporary labor markets each day during harvest time starting at 5am. Most can earn VND25,000-30,000 ($ 1.64-1.97) for a days work early in the crop and an additional VND50,000 ($2.3) later at the peak of the harvest. Once the crop is finished, after about 10-15 days, the hired workers return to their family homes where they usually work without pay.

"I don't want to work as a paid worker far from my home in the city," one of the women explained. "I wish I could find a stable job in my home town for a salary of VND10,000 (65.8 US cents) a day."

On average, a farmer in Vietnam spends only 75% of their time working. During the rest of the time, most are underemployed with no secondary occupation or work skills.

Around 23 million rural people are of working age, accounting for 62.56% of the country's 38.6 million workers. Only 140,000 have received any technical training, or just 3.37% of the country's total rural labor force.



Poor working conditions reported for female workers

Many female workers in Vietnam suffer from excess overtime and harsh working conditions, local media reported, while those working in industrial zones are often at risk from crime and unsafe living conditions.

In garment and textile companies, many workers have to work well in excess of 300 hours overtime per year or more, despite regulations that extra hours are not to exceed 200 hours per year, or four hours per day.

According to a survey conducted by the Vietnam Labor Confederation, 83.4% out of 504 surveyed female workers in 84 enterprises where women making up the majority of the workforce, said they have to work an additional 10-15 hours per week, and 14% have to work 10 hours each shift for only VND500,000-800,000 ($ 32.9-52.6) per month, much less than the average level of over one million dong ($65.8).

Another survey showed that some 8,120 out of 21,113 test samples taken from 475 local factories did not meet environmental safety standards regarding temperature, noise, toxicity and other factors. Meanwhile an estimated 44% of firms have do not conduct regular health checks for their workers.

As a result of poor working conditions many working women become infected with gynecological diseases. Statistics indicate that up to 32.7% out of 34,000 females undergoing health checks are infected with such diseases, which tend to increase with the amount of time worked.

Robbery, violent crime and rape have also been reported as problems around the industrial zones especially for workers coming home late or from night shifts.

Most workers are migrants from poor rural areas who come to the industrial zones in order to earn a living. Most stay in rented rooms and boarding houses. In southern Dong Nai province, which is home to ten industrial parks with thousands of factories, an estimated 300,000 migrant workers have rented rooms.

Overall women account for over 50% of the country’s workforce of 40 million workers. Garment and textiles and education employ the highest proportions of female workers, estimated at over 70%, followed by food processing and healthcare (60%) and agriculture (53.3%).



Garment and footwear exports continue to grow

Vietnam's garment and textile exports grew 14 per cent year-on-year to $1.56 billion in the first eight months of 2002, according to officials at the Ministry of Trade. Orders worth $450 million went to the EU, with orders of $420m to the US, $310m to Japan and $145m to Taiwan.

The industry exports most of its production to the EU (some 72 per cent), but exports to the US are gaining ground.

Meanwhile, footwear exports grew almost 21 per cent to US$1.25 billion during the same period, putting the industry on track to top its annual target of US$1.9 billion in exports.

However Vietnamese officials warned that firms need to pay more attention to socially responsible production accreditations covering labor rights and health and safety issues to increase orders from the US and EU.



ILO expert raises union concerns

A senior expert from the International Labor Organisation’s (ILO) Regional Office for the Asia-Pacific, Raghwan, paid a five-day visit to Vietnam to discuss co-operation with the Viet Nam General Confederation of Labor (VGCL) in August.

He expressed concern about trade union activities in Viet Nam’s non-State sector and discussed with authorities the ILO’s priorities for Viet Nam and the labor situation in the Asia-Pacific.

Raghwan was received by VGCL Vice President Nguyen Dinh Thang in Hanoi and visited the Viet Nam Trade Union College.



AAFA workshop on exporting to the US

The American Apparel and Footwear Association held a seminar on exporting to the US in Hanoi in August to raise awareness among local producers about the requirements of US buyers. The workshop was attended by some seventy manufacturers.

Vietnamese apparel and footwear manufacturers need to ramp up production, increase efficiency and timeliness in order to crack the US market, Fawn Evenson of the American Apparel and Footwear Association told the seminar.

However, she urged local producers to raise production capacity by 50 per cent, to reduce costs and retain their price edge.




Vietnam-US Garment Exports on a roll


During the first half of 2002, Vietnam exported to the US garments totaling 67.96 million square meters of fabric, worth over $163 million, according to US statistics.

This ranked Vietnam 32nd in volume (up 172.5% from a year earlier) and 41st in value (up 287.8% from a year earlier).

By both measures Vietnam posted the fastest growth in exports to the US of any country in the world.

However the country started from a very small base and still claims less than 0.5% market share of US garment imports, lagging far behind smaller neighbors such as Cambodia and Burma (Myanmar).

These statistics were drawn from the Major Shippers Report (MSR) from the US Office of Textiles and Apparel (OTEXA), which may be found online at the OTEXA website.

MSR by Volume (M. Square Meters): http://otexa.ita.doc.gov/msr/cat1.htm

MSR by Value (Millions of US$): http://otexa.ita.doc.gov/msr/catv1.htm


BSR Workshop on Labor Practices and CSR in Vietnam


Business for Social Responsibility (BSR) will hold a seminar in Ho Chi Minh City on September 24-25 aimed at improving factory management systems, and strengthening compliance with codes of conduct and legal requirements on issues including: wages, and working hours; health and safety; child labor; forced labor; and other labor issues.

The two-day workshop is designed for contractors and suppliers.
More information is available on the BSR website at:


World Bank project proposal on CSR in Vietnam


After our last newsletter, several readers contacted us to request more information about the World Bank's project proposal on Corporate Social Responsibility (CSR) in Vietnam’s footwear industry.

In response, we have posted the proposal, “Corporate Social Responsibility in Vietnam: The athletic shoe industry and labor issues,” on our web site for those who are interested.


To download the full text of the proposal, please follow this link:





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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News Briefs are compiled from news reports and dispatches.  While the information they contain comes from published news sources, Global Standards cannot verify the accuracy of all information contained.


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