V I E T N A M      U P D A T E


February 12, 2003                                                      Vol.6:2003

Chúc Mừng Năm Mới !

Best Wishes for a Safe, Happy & Productive New Year from Global Standards !

Seasons Greetings to all this Tet (lunar new year) from the Global Standards team. 

2002 came to a very hectic close and 2003 is already off to a fast start. 

The Vietnamese garment sector marked a banner year in 2002, posting record exports of $900 million to the US, according to local press reports, which it hopes to almost double to $1.5 billion in 2003. While this represents only a small sliver of the $70 billion US garment import market, the industry remains a key driver for Vietnam’s development and especially for its nascent SMEs. 

Of course the industry’s remarkable growth has not come without growing pains. Skilled workers remain in short supply and, as factories add orders and expand production, overtime has become a chronic problem at many manufacturers. A shortage of experienced managers and a tendency by some foreign firms to import managers and supervisors unfamiliar with local laws and regulations has also contributed to violations and abuses at certain factories. (See News Briefs below)

For Global Standards, the New Year means new initiatives and new projects. In addition to our ongoing audit and independent monitoring work, we will be expanding training and other programs.

Labor Law Compliance Training seminars due to launch in March will be aimed at helping factory management to understand local legal and regulatory requirements as these relate to international labor standards and Codes of Conduct. As part of these trainings we will also offer suggestions on improving management transparency and openness and documentation systems for compliance.

+  The Global Standards Labor Law Compliance Reference CD-ROM will be available from this month, compiling key Vietnamese laws and regulations together with their amendments into a searchable database organized by subject categories including Working Hours, Wages & Benefits, Health & Safety. The CD will include the full text of the laws in Vietnamese and in English translation designed for easy reference by managers and HR staff.

Last but not least, we are launching a WRAP Certification pilot program together with the Mekong Project Development Facility (MPDF) which will be getting underway with the selection of a group of local SMEs in the garment sector who will seek WRAP certification while receiving technical and financial support from MPDF.  Progress and results of the pilot will be tracked and reported on by MPDF.

Anyone who would like more information on our upcoming trainings, the Labor Law CD-ROM or the project with MPDF, please send us an email at info@Global-Standards.com

FORTUNE shines a light on contract labor abuses

We have watched with great misgivings the growth of foreign contract labor, commonly called  "export labor" in Vietnam, which is becoming a major supplier of such workers to other regional countries (See story in News Briefs below).  Given the long history of abuse of such labor arrangements around the world, not to mention Vietnam's own experiences in places like Samoa, great caution is in order.  While there may be legitimate and responsible uses of contract labor, due to its nature and potential for abuse, it is an industry trend that bears close watching.  In fact, as the article suggests, independent monitoring of facilities employing foreign contract workers may be necessary to safeguard worker's rights in working situations overseas where they are inherently more vulnerable.  As the article also points out, the use of foreign contract labor is now widespread in high tech assembly operations of companies such as Motorola and Ericsson and is no longer limited to more traditional industries such as garments and footwear.

The following is an excerpt from the article
"No Way Out" by Nicholas Stein, dated January 8, 2003 (Asia's January 27 edition).  The full text of the article appears at: http://www.fortune.com/fortune/print/0,15935,406059,00.html

...The plight of overseas contract workers is just starting to enter the consciousness of big corporations. A year and a half ago Gap launched a new division of its global compliance department devoted solely to monitoring the treatment of foreign contract workers by its subcontractors abroad. "The presence of foreign workers is now one of the core issues we look at when we evaluate a new supplier--just like product quality or safety standards," says Dan Henkle, the apparel giant's vice president of global compliance. If a factory does employ foreign workers, Gap requires that factory management let the workers control their own travel documents and wages. Management must also agree to assume the workers' debt and travel costs if they choose to leave. "We want workers to feel they can leave at any time for any reason," says Henkle. Even with those rules in place, Gap remains wary of the possibilities for abuse: Only 5% of the company's production comes from factories that use overseas contract workers. 

Gap's active response is unusual. "Companies are only beginning to understand this issue," says Doug Cahn, vice president of Reebok's human rights programs. "Although there are instances where some progress has been made, generally the abuses facing migrant laborers remain widespread." As a result, Reebok pays particular attention to subcontractors who use those workers. 

Because of intense criticism over human rights abuses in the apparel and footwear industry over the past half-decade, companies like Gap, Reebok, and Nike are generally alert to labor issues. Many now monitor factories, and judging from FORTUNE's visit to the Yng Hsing tannery in Taiwan, which last year supplied leather for a million pairs of Nike Air Jordan basketball shoes, physical working conditions have improved as a result. "After we started working with Nike, we had to change our philosophy," says Philip Lo, the tannery's vice general manager. "They have strict requests about how you treat safety, health, attitude, environment." Nike is so sensitive to potential criticism that when the company learned of FORTUNE's visit to Yng Hsing, it immediately informed the tannery that unless it passed a hastily arranged inspection, it would be removed from Nike's supplier list. 

The debt burdens and abuses of foreign contract workers, however, don't get the same level of attention as factory conditions. While Nike is aware of the abuses often faced by the workers, the company has no policy specifically governing supplier behavior on the issue--beyond a general statement in its code of conduct prohibiting forced labor. And this is a company whose brand was famously slammed in the late 1990s over the conduct of some of its suppliers. Nike's audit of Yng Hsing, which the tannery passed, did not even address the crushing debt loads carried by some of its Thai workers. "We checked out Yng Hsing," says a senior Nike official, "and all their employment contracts conform to Taiwanese law." (Nike declined to comment for attribution because of a pending lawsuit on another matter.) 

In the high-tech sector, there appears to be even less attention paid to potential abuses. "I wasn't aware of this at all," said Pia Gideon, Ericsson's vice president of external relations, when first informed about the experiences of Revolledo and other foreign workers at a Taiwanese factory producing the Swedish company's modems. "I've never heard any indication about this situation in Taiwan." During a subsequent conversation, Gideon made a distinction between Ericsson's direct contractors, which it audits periodically, and subcontractors, which it expects to do "self-assessments" of the conditions in their factories. "I don't think you can have a law that says if you don't do this or that we will punish you," says Gideon. "Business doesn't work that way. We want our subcontractors to act a certain way, and we have to trust them." (Motorola representatives declined to be interviewed but issued a written statement saying the company "has a strict policy of adherence to the laws and labor practices in the countries where it operates, in addition to a rigorous code of conduct.") 

FORTUNE visited factories and spoke with workers who make products for Nike, Motorola, and Ericsson, but they are not the only companies whose subcontractors rely on overseas contract workers. And with so many independent monitors now assessing labor rights and working conditions in manufacturing plants, it's hard to believe they could be completely ignorant of debt bondage in their supplier companies. "Five years ago, clients could say, 'I didn't know,'" says Verite's White. "There were no monitors. There was no awareness. They can't say that anymore. They have to acknowledge what is going on." 

Companies' acknowledgment of the debt burden--and their doing something about it--is the best hope for the factory workers. And it's not an altogether quixotic one. After all, when companies believed their brands were at risk because of the sweatshop issue, they took action. The alternative is bleak. People like Mary and Edwin will continue to go to Taiwan or other countries as long as jobs remain scarce at home. "There are so many problems if I stay in the Philippines," says Edwin. "So what's more if I go abroad?"And when they do--barring pressure from Western corporations--they will continue to owe nearly everything they earn to the labor brokers.

News Briefs

Vietnam & US launch $1.7m ILO labor relations project

Vietnam and the US launched a three-year International Labor Organization project to strengthen Vietnam’s industrial relations and improve private sector labor relations.

The US Government will fund the US$1.7 million project, while the Vietnamese Government will contribute personnel and logistical support.

The project aims to boost and develop labor institutions, laws and practices at the national and provincial levels, as well as within enterprises.

The project is one of several labor initiatives receiving US backing. The SMART Work Program Another (Strategically Managing AIDS Responses Together) to combat HIV/AIDS in the workplace was also launched recently with $600,000 in funding from the US Department of Labor. 

SMART Work brings together Government, labor unions and employers at national and provincial levels, with a US-based NGO, the Academy for Education Development, to provide education for the prevention of HIV/AIDS in the workplace and to limit the social and economic impacts of the disease.

The project takes a multi-pronged approach, providing training for workers and managing campaigns to prevent the spread of the epidemic, they will also work towards developing policies at the workplace and supporting workers and families affected by HIV/AIDS.


Rush on orders as quota talks loom

Orders continue to mount as a delegation of US trade representatives prepares to arrive in Hanoi for negotiations on a garment and textile agreement. The talks, scheduled from February 19 to 21, are expected to cover quota and related issues, which were excluded from the Bilateral Trade Agreement between the US and Vietnam.

Though garment exports to the US rose 20-fold last year, Vietnam has so far escaped quotas on its garment exports, which last year accounted for less than 1 per cent of the US market.

Even if quotas are imposed, Vinatex Chairman Mai Hoang An signaled that there would be no change in the textile sector’s plan to gross an export turnover of US$3.1 billion in 2003, including $1.5 billion from the American market.

The domestic garment industry last year earned record revenues of $900 million from the American market, about one-third of the sector’s total export turnover, putting garments first among Vietnamese exports to the US.

Domestic garment enterprises are preparing to meet the 2003 target by quickly securing orders from foreign partners, particularly American firms during the first six months of the year, An said. He noted that any quota imposed by the US would hurt both Vietnamese manufacturers and American importers.

Hosted by the MoT, the negotiations will bring together officials from the Ministry of Industry, the Ministry of Planning and Investment, the Ministry of Foreign Affairs and the Vietnam National Textile and Garment Corporation (Vinatex). 


Strikes increase before Tet holidays 

Five strikes in Ho Chi Minh City in the first two weeks of January pointed to a rise in labor disputes, said officials from the city’s Department of Labor, Invalids and Social Affairs.

The main reasons for the strikes included uncontracted labor, unpaid salaries, insufficient healthcare insurance and bonuses, lunch fees and salary cuts and discrimination against workers.

Labor agencies in Go Vap District, HCM City and Dong Nai Province announced on January 10, that they had successfully resolved labor disputes at two enterprises.

Over 300 workers at the Thien An Gold and Gemstone Company Limited in Go Vap District went on strike in early January to protest agents breaches of the Labor Code by company management, including a refusal to sign collective labor contracts and a ban on the establishment of a staff union.

In a separate incidence in Dong Nai Province, 800 workers at the Nam Yang Company, a Korean-owned garment export enterprise, went on strike to demand bonuses and travel allowances.

Labor officials said they were able to persuade management at both companies to abide by the Labor Code and satisfy the workers’ demands.


Taiwanese firm apologizes for attack on workers

The general director of a Taiwan-invested company offered a public apology to his Vietnamese staff, after they were attacked by managers during a seven-hour riot on November 26.

Seven workers sustained serious injuries during the attack and were rushed to hospital for emergency treatment.

The general director of Doanh Duc company, Chen Chun Hoan, promised to grant workers 15 days leave while the company worked to settle the dispute. The factory produces furniture for export.

The riot was sparked when hundreds of night-shift workers walked off the job over low salaries and overwork.

Twenty Chinese managers and supervisors then attacked the strikers with meter-long steel bars and tubes. Witnesses say the managers chased the fleeing Vietnamese staff for half a kilometer in a running battle.

Despite the presence of local authorities, including the provincial police force, the riot continued until 2am the next morning.

Only 72 out of 687 employees at the factory have labor contracts. The strikers complained that managers could fire those working without contracts at any time and said they could no longer tolerate the harsh working conditions. Earlier the same week the company sacked 34 workers who refused to work overnight.

"We were forced to work overtime five hours a day and many of us had to work around the clock without any extra pay," one worker said.

Another said the company had set up a "harsh" system of fines, between VND15,000 and VND135,000 for any mistakes, even minor, the workers might make. He said the company had not taken out either health or social insurance for its employees. 

The chief inspector of Binh Duong Province’s Labor, Invalids, and Social Affairs Department, Nguyen Van Hiep said the company had "seriously violated the Vietnam Labor Code."

Earlier this year in June, Binh Duong authorities warned the Doanh Duc company about its violations of the labor code, telling managers to change their practices. However, no changes were reported. 

The President of the Vietnam General Confederation of Labor (VGCL) sent official letters to relevant agencies requesting them to investigate the company's implementation of the labor and trade union laws. He also asked for severe punishment for the company and a return to stability in labor relations. Those foreigners who beat Vietnamese workers during the strike must be brought to court, the VGCL President said. Investigations into the case are ongoing.   


Labor export fraud gets death sentence

Hanoi’s People’s Court has sentenced to death a senior company officer for swindling US$450,000 from 97 people seeking overseas jobs. 

Dam Van Manh, 25, former director of the Investment Production, Import and Export Company’s (CIEPICO) labor export department, received the death penalty on Monday for defrauding and appropriating other people’s property, and a further two years in prison for organizing for people to flee the country.

His deputy, Nguyen Van Tu, 44, will serve a life sentence and another staff member, Ngo Tat Nguyen, 57, will serve nine years in prison for the same charges.

The convicted men will have to repay their victims VND5.3 billion ($353,000), on top of the VND1.5 billion ($100,000) they had paid before the case went to court.

Saying they were from the company, Manh and his two associates charged people who were seeking work in Taiwan and the Republic of Korea, US$3,000-6,000 each.

They received VND6.8 billion (US$453,000) from 97 applicants from all over Vietnam from late 2000 onwards, but did not send the money or the applicants’ details to the company. Among many other tricks used to fool the job applicants, Manh introduced himself as assistant to the minister of Labor, Invalids and Social Affairs.

According to the Department of Overseas Employment, a record 46,122 Vietnamese skilled workers were sent overseas last year, up 25 per cent on 2001.

Almost 20,000 went to Malaysia, 13,191 to Taiwan, 2,202 to Japan, 1,990 to the Republic of Korea and 381 found work in Libya.


Maximum Overtime Regulations Explained

The BizLine column in the Vietnam News recently responded to some common questions on overtime regulations. What follows is a series of questions and answers (from Invest Consult Group). The original column may be found at http://vietnamnews.vnagency.com.vn/2003-01/22/Columns/Bizline.htm.

  Q: We understand that the country’s Labor Code restricts the maximum extra (overtime) working time to 200 hours per year. However, we have received a large order and want our employees to put in more overtime hours than that. Please advise. 

An old Decree, No.195/CP, dated December 31, 1994 fixed the maximum extra working time at 200 hours per year. Exceeding this was acceptable only in case of disaster or epidemic. However, on December 27, 2002 the Government issued Decree No.109/2002/ND-CP superseding the old one by which maximum overtime may reach 300 hours per year with certain caveats:

– The employer reaches an agreement with employees.
– If employees work 10 hours a day, they must have a further break of 30 minutes during the working time.
– Employees must have at least 24 hours rest after seven working days.
– Enterprises other than those operating in the textile, garment, leather and fishery processing sectors must obtain approval from the ministry or Provincial People’s Committee before raising overtime beyond 200 hours per year.

  Q: Further to our question last week on maximum over-time allowed, we would now like to know the wages to be paid for such work. 

On December 31, 2002 the Government issued Decree No. 114/2002/ND-CP to guide some articles of the amended Labor Code regarding remuneration.

It provides for overtime remuneration at the following rates compared with standard working time:

– Normal days: at least 150 per cent
– Weekend as per Article 72 of the Labor Code: at least 200 per cent.
– Public holidays such as National Day and Liberation Day as per Articles 73,74, 75 and 78 of the Labor code: at least 300 per cent.

This Decree shall take effect from January 1, 2003, replacing Decree 197/CP dated December 31, 1994.


Negligence the cause of increased work accidents, Union reports 

Poor safety standards and inspection procedures have caused an alarming rise in the number of work-related deaths and accidents across Vietnam, with new research showing that accidents in the workplace have increased by more than 130 per cent in just five years.

Statistics from the Vietnam General Confederation of Labor show that Vietnam had 1,545 labor accidents that killed 285 people in 1996. In 2001 the number of accidents reached 3,601, killing 395 people.

The statistics, which are not yet are not yet official, show a 133 percent increase in accidents and a 58 percent rise in fatalities but labor safety experts believe these figures fail to reflect the full extent of the problem, as the majority of accidents go unreported.

The Institute of Scientific Research on Labor Protection has found that most workplace accidents occurred in cities, urban areas and industrial parks, particularly those with high economic growth rates.

HCM City accounted for 55 per cent of the country’s total labor accidents in 2000 and Hanoi recorded 53 per cent of accidents in 2001.

The construction, transport and industrial sectors recorded the highest numbers accidents, responsible for between 25 and 34 per cent of workplace deaths across the country.

Workplace deaths have declined at State-run enterprises but increased by between 18 per cent and 31 percent at private ones.

Despite the drastic increases, institute researchers estimate the statistics for occupational accidents account for only one-eighth of actual accidents taking place because only a handful of enterprises declare accidents in accordance with labor laws. 

Authorized agencies have admitted that they seldom received specific reports on labor accidents from agricultural and fishery operations, in particular from private enterprises such as co-operatives and limited liability companies.

The institute said apathy from employers and labor inspection teams towards occupational safety and health standards was the main reason for the rise in labor accidents.

Between 67 percent and 82 per cent of labor accidents could be attributed to violations of labor safety regulations by employers or mistakes made by individual workers, the institute has reported.

Employers have failed to meet adequate requirements regarding worker safety conditions, while most labor accident victims have failed to use protective equipment or to follow set working procedures.

Institute official Nguyen Van Chien said many employers paid insufficient attention to the safety of their workers and some tried to save money by cutting back on labor safety activities. 

The result was that between 75 and 80 per cent of laborers did not receive any safety training.

Also, the failure of employers to replace obsolete or worn out machinery was another major cause of accidents at construction sites, textile mills and mechanical factories, he said. 

Chien said the number of labor accidents would only fall when employers and employees gained an adequate awareness of the importance of implementing and following safety procedures.

Dr Tran Mai, an official from the Ministry of Labor, Invalids and Social Affairs, said employers must be made aware of their responsibilities for occupational accidents and of providing safe working conditions.

Mai said punishments for breaches of labor safety regulations were currently not harsh enough and only five per cent of violations detected were being punished. 

The result has been some employers treating occupational accidents as little more than occasional bad luck that can be settled by paying out between VND10 million and VND15 million.

Another hurdle is the size of the nation’s force of labor accident inspectors, Mai said. 

There are only 250 labor safety and hygiene inspectors throughout all relevant agencies – a number too small to monitor conditions for 90,000 enterprises and 37 million workers across the country.

The confederation has called on the Government to force enterprises to take responsibility for their employees. It has also suggested that the Government require all enterprises to establish compulsory compensation funds. 

This would provide workers with rapid compensation in the event of an injury and would also require enterprises to direct funds towards improving working conditions.


Workplace accidents up amid weak safety oversight

Labor accidents were up 5.8 per cent and fatalities rose 4.1 per cent from 2001, according to findings presented by the State Inspectorate at a conference in Hanoi. 

There were 2,367 labor accidents in 2002 with 2,553 victims, of whom 411 were killed and 656 severely injured. Labor inspectors visited 3,300 enterprises and issued 88 of them with fines totaling VND340 million ($22.1 million).

Accidents involving obsolete agricultural machinery are a particular problem according to Dr. Ngo Van Toan, director of Viet Duc (Vietnam-Germany) General Hospital’s Trauma and Orthopedics Department in an interview with the Hanoi Moi (New Hanoi) newspaper:

Could you let us know about the recent state of workplace safety?

Viet Duc General Hospital received 777 victims in the last six months of last year. Noticeably, traffic accidents kept increasing.

While there were only 141 victims in June last year, the figure soared to 157 the next month.

Most of the victims were wounded in the arm and that adversely impacted on their working ability. As many as 36.8 per cent of the victims had to amputate their right arms.

The initial survey also found that 95 per cent of victims were aged between 15 to 60 years of age. Most of them were men.

According to a hospital survey, small and medium-sized obsolete agriculture machines, such as rice pickers, were one cause. Many victims were also injured by sharp and heavy objects.

Labor accidents in the small handicraft industry made up the highest proportion, 64.37 per cent. The proportion of labor accidents in agriculture was only 12.64 per cent.

The survey indicated that the number of labor accidents reported in the private sector was much higher than in the State sector.


MoLISA Hosts WB sponsored CSR Workshop

The Ministry of Labor War Invalids and Social Affairs and the Institute of Labor and Social Sciences (ILSSA) hosted two-day workshops in Hanoi on December 16-17 and Ho Chi Minh City on December 19-20, to exchange views and gather experiences on Corporate Social Responsibility (CSR) and Codes of Conduct in order to develop CSR strategies for the footwear and garment sectors.  

The workshops entitled "CSR and Vietnam's National Competitiveness" brought together representatives from the government, the trade union federation, companies and NGOs and opened a dialogue seeking to make the business case for the importance of CSR to business competitiveness both for individual companies and the entire country.   

The workshop was sponsored by the World Bank as part of a project to encourage Corporate Social Responsibility in Vietnam. Presentations and materials from the workshop are to be published online.  We will post this link as soon as it becomes available.  In the meantime, we have posted our presentation to the workshop on our website:

CSR Codes of Conduct & Vietnamese Competitiveness:


In February MoLISA and ILSSA also held the first meeting of the project's CSR Advisory Group to get feedback and advice on selecting case studies and conducting research into factories in Vietnam's garment and footwear industries that have implemented CSR programs with a view to measuring the results they have achieved. 

Fair Labor Association (FLA) hosts NGO Conference in Bangkok

The FLA organized an NGO consultation entitled "Building Bridges Towards Sustainable Monitoring" in Bangkok Thailand in January, opening dialogue to encouraging participation from local stakeholders in the Independent Monitoring process. 

Attended by NGOs and Trade Union representatives from around the world, the conference brought together diverse participants with different view points and experiences to discuss ways to improve monitoring and make it more sustainable with increased participation and input from local monitors, NGOs and civil society groups. 

The Consultation included representatives from other (non-FLA) code monitoring and verification initiatives including the Worker's Rights Consortium (WRC), The Fair Wear Foundation (FWF), Clean Clothes Campaign (CCC), and Ethical Trade Initiative (ETI) who contributed their views.   

More information on the conference should be available shortly from the FLA website: http://www.fairlabor.org  Information is also available from the Lawyer's Committee on Human Rights at: 


World Bank Report on Labor Unions  

The World Bank has published an new report on "UN  Unions and Collective Bargaining: Economic Effects in a Global Environment Research."  The report is notable for taking a more positive stance on the contributions of Unions to development, finding that high unionization rates can lead to lower unemployment and inflation rates, higher productivity and faster adjustment to economic shocks. 

The report found that union members in rich and poor countries alike get significantly higher average wages than workers who are not affiliated with a trade union and that unionization can reduce wage gaps between skilled and unskilled workers and also between men and women. 

The full report is available for sale from the World Bank website at :



CSR Research & Resources from the UN  

The United Nations Research Institute for Social Development  (UNRISD) has compiled a number of reports and resources on Business Responsibility for Sustainable Development. This includes a collection of research reports and papers plus a bibliography and collection of links to internet resources.  The project was funded by the MacArthur Foundation and some of the research was done in cooperation with the UN Non-Government Liaison Service (UN-NGLS).  The project homepage is located at:


Research reports for the project (available in PDF format) include: 

Partners in Time? Business, NGOs and Sustainable Development

The Greening of Business in Developing Countries: Rhetoric, Reality and Prospects

Corporate Environmental Responsibility in Singapore and Malaysia

Several reports prepared in conjunction with UN-NGLS are available in full from the NGLS site in HTML format.  This includes a very comprehensive and useful Bibliography with an extensive collection of web links. 

Voluntary Approaches to Corporate Responsibility: Readings & Resource Guide

Corporate Codes of Conduct: Self Regulation in a Global Economy

Regulating Business via Multistakeholder Initiatives: A Preliminary Assessment

Corporate Social and Environmental Responsibility: Selected Sources of Information: Bibliography and Websites 

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


Resources on CSR, labor standards and the Vietnamese Labor Code are available at http://www.global-standards.com/DownloadResources.htm.  


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It is intended for informational use only and should not be relied upon as legal advice.  Should you have questions about specific situations or the application of particular laws, regulations or standards, please contact Global Standards or your legal counsel.  

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.

© 2003 All rights reserved, Global Standards Consulting Inc.