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Official Gazette

Tuesday, March 31, 2020

Labor relations issues in foreign-invested enterprises

Updated: 16:54’ - 02/05/2008

Labor relations issues in foreign-invested enterprises

Labor relations at foreign-invested enterprises have not always gone smoothly despite improvements in recent years, researchers of the Worker and Trade Union Institute revealed, citing a rising number of strikes.

Strikes at foreign-invested enterprises accounted for 66% of the total number of strikes of 1,333 from 1995 to 2006, with 2006 alone posting a 70.7% rate, according to a July survey by the Institute.

The survey was conducted at 60 foreign-invested enterprises with some 80,000 workers in eight cities and provinces, namely Hanoi, Ho Chi Minh City, Dong Nai, Binh Duong and Ba Ria-Vung Tau in the south, and Vinh Phuc, Bac Ninh and Hai Duong in the north, all of which boast a large number of foreign-invested businesses.

The survey team had working meetings with local trade unionists, enterprise managers and workers of foreign-invested enterprises and gathered information from nearly 1,000 respondents through questionnaires.

Rising strikes at foreign-invested enterprises were largely attributed to workers’ low salaries despite high work pressure, the survey report said, pointing out that most strikes took place in March and November - the time slated for wage increases - at businesses in industries paying relatively low salaries such as garment, footwear, and packaging.

According to the survey, most workers involved in direct production earned between VND 800,000 - 1,000,000/month. Some 80% of garment and footwear workers received approximately VND 1 million/month, including VND 800,000 in base salary and VND 200,000 in other allowances.

This salary level was roughly equal to the minimum wage of VND 710,000-790,000 set by Government Decree No. 03/ND-CP,  Mr. Nguyen Manh Thang of the Worker and Trade Union Institute said, stressing, however, that workers of foreign businesses merely received this pay without any wage coefficient.

 


Average monthly income of employees in foreign-invested enterprises

 

Total­

Agro-forestry-fisheries

Construction -
Transport

Garment - Footwear

Trade - Service ­

Industrial production­

VND 300,000 - 600,000 (probation)­

4.2%­

­

27.4%­

1.0%­

1.7%­

1.9%­

VND 601,000 - 800,000 ­

10.5%­

1.9%­

­

16.7%­

­

11.6%­

VND 801,000 - 1,000,000 ­

29.9%­

17.3%­

1.6%­

33.3%­

41.5%­

29.9%­

VND 1 million - 1.5 million­

24.7%­

36.5%­

­

29.0%­

28.0%­

22.9%­

VND 1.5 million - 2 million­

9.1%­

17.3%­

3.2%­

2.7%­

12.7%­

12.5%­

More than VND 2 million­

7.1%­

11.5%­

45.2%­

1.3%­

5.1%­

5.6%­

This income was also not higher than that of domestic businesses even though foreign businesses used to pay higher than local ones, surveyors said, blaming foreign employers’ delays in raising salaries. Around 20% of workers did not have their salaries increased after three years of working as required by law, the survey disclosed.

Wage increases at foreign-invested enterprises were mostly based on workers’ educational level, productivity and performance evaluation rather than their work duration, resulting in low payment for many veteran workers.

Meanwhile, a number of foreign-invested enterprises built up salary schemes with as many as 40 levels, but each level was just VND10,000 - 20,000 different, making their wage hike merely formalistic.

Therefore, only 30% of interviewed workers said their incomes were sufficient while a majority had to work overtime or lived in privation. To get more income, 42.5% of workers had to work overtime, especially in the garment industry, where the rate hit 54.7%.

The survey showed that only 52% of workers worked 8 hours/day while 18% worked 8-10 hours/day, and 6.5%, over 10 hours/day. As many as 65% of workers worked 6 days/week and 25%, 7 days/week.

Most foreign-invested enterprises, especially garment, footwear, seafood processing and industrial businesses, extended work shifts and work times, according to the survey. Garment, footwear and wood product makers often extended daily work time by 2-3 hours, violating regulations on overtime work. Worse, some avoided paying overtime allowances by paying work-based salaries, thus forcing employees to work overtime to be able to complete their assignments.

The survey found that many businesses violated legal provisions on labor contracts as they mostly signed temporary rather than permanent employment contracts even though many workers had entered into 1-3 year labor contracts several times. Over 3% of workers who had worked for 11-15 years could still enter into oral contracts and 1.6% signed under-one-year employment contracts. Only 42% of elgible workers were able to secure permanent contracts.

Due to these types of problems, 14% of respondents were unsatisfied with the relation with their employers, with 11% of them saying they received poor treatment. Some 16% complained about regular overtime work while 12% did not fully receive allowances. Only 26.3% of workers said they were pleased with their employers.

Workers’ evaluation of their relation with employers

 

­All industries­

Agro-forestry-fisheries

Construction - Transport

Garment - Footwear

Trade - Service

Industrial production­

No opinion­

3.9%­

3.8%­

1.6%­

5.3%­

4.2%­

3.2%­

Good­

26.3%­

48.1%­

37.1%­

21.7%­

44.1%­

20.6%­

Normal ­

64.7%­

42.3%­

58.1%­

69.0%­

50.0%­

69.4%­

Not good­

5.0%­

5.8%­

3.2%­

4.0%­

1.7%­

6.7%­

The survey showed that workers having worked for 1-5 years accounted for 60% while those having work experience of 6-10 years represented only 16%. Some 13% of laborers had worked for less than one year, reflecting regular personnel changes at foreign-invested enterprises. Between 5-10% of workers were recruited every month to replace resigning ones, a common personnel problem for foreign employers.

The survey also pointed out that Vietnamese workers’ lack of labor discipline as well as their poor knowledge about labor laws were also a reason behind conflicts with employers. Due to lack of legal knowledge, workers could not distinguish between their lawful rights and those which needed to be negotiated with their employers, leading to many spontaneous strikes.

Given this not-so-good relation, the voice of trade unions at these enterprises was weak. The survey found that 80% of foreign-invested enterprises set up trade unions, but only 59.3% of workers joined the unions, a low rate compared to domestic enterprises. Of these enterprises, only half had collective bargaining agreements, most of which were made formalistically, according to the survey. Over 10% of workers even did not know whether or not their enterprise had a collective bargaining agreement.

It was also notable that only 28.3% of workers wished to join trade unions, reflecting the low effectiveness of grassroots trade unions at foreign-invested enterprises, researchers said.

Experts of the Worker and Trade Union Institute suggested that inspection and sanctioning of foreign-invested enterprises which violated regulations on social insurance, health insurance and working conditions for workers must be intensified. In addition, the drafting and signing of collective bargaining agreements must be improved, the experts recommended, pointing to the Ministry of Labor, War Invalids and Social Affairs’ responsibility to elaborate model agreements for each specific region or industrial park as a legal basis for enterprises.

They also recommended that provisions on settlement of labor disputes and strikes should be improved since existing procedures for strikes remained complicated. All mechanisms and policies on rights and interests of laborers needed to be specified by law or regulation to facilitate trade unions in negotiation, the experts suggested, adding that regulations on wage schemes must be reformed to ensure regular wage increases at foreign-invested enterprises.

Surveyors suggested that the Vietnam General Labor Federation should work with Vietnam Television to introduce the labor law, especially provisions concerning rights and interests of laborers, through game shows as the survey found that 70% of workers watched television after working hours.

According to the survey, female workers accounted for 58% of foreign-invested enterprises’ employees, while female workers in garment and footwear businesses made up 76%. Workers aged between 18-30 accounted for 70% and half of the workers were single. The educational level of foreign-invested enterprises’ workers was not higher than those of other businesses with 63.4% completing general education, 10% holding college or university degrees, and 30% having not received vocational training (VLLF).-

 

THE END

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