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Foreign employers blamed for labor law violations

Updated: 11:25’ - 01/12/2008

As the largest foreign investor in Vietnam with investment totaling over USD 15 billion, the Republic of Korea (RoK) was also leading foreign investors in the number of strikes which accounted for 27.7% of 2,600 taking place in this economic sector from 1995 to 2008. Cases of salary and social insurance arrears involving RoK businesses have repeatedly occurred in Ho Chi Minh recently, seriously hurting local workers. Officials said stiffer penalties must be imposed on violating foreign employers to ensure strict enforcement of the labor law.

In late August, 150 workers of the RoK-invested Quang Sung Vina Company in Ho Chi Minh City were stunned to learn that their director Kwon Ogyoon had fled without paying them two months of salary worth more than VND 500 million. Nothing was left for the unpaid workers except 150 sewing machines. But these only assets would be taken by Hai Cuong Co., Ltd, a local company leasing workshops to Quang Sung Vina without receiving a rent of USD 24,000.

In late October, 700 workers of Korean Vina Haeng Woon Industry Co., Ltd, in Ho Chi Minh City were also left empty-handed when  their director Noh Yeon Hong fled to the United States, leaving behind a debt totaling over VND 6 billion, including VND 2 billion of worker salaries. When the municipal Labor Federation and functional authorities came, the only assets left were 500 industrial sewing machines which, like Quang Sung Vina, were all mortgaged for the company’s debts.

Another Korean debtor was Anjin Footwear Co., Ltd, which owed job loss allowances to its 200 workers and maternity allowances to another 172. The company had also not paid workers two months of salary worth VND 900 million even though it was still in operation.

According to the Ho Chi Minh City Labor Federation (HLF), RoK enterprises recorded 57 (over 45%) out of 126 strikes occurring at foreign-invested enterprises in Ho Chi Minh City so far this year, the Saigon Giai Phong (Liberated Saigon) daily said.

By September, 87 out of 525 RoK enterprises in the city had also failed to pay nearly VND 42 billion worth social insurance premiums for their workers, the newspaper reported.

RoK businesses had also registered the second largest number of labor disputes with 347 cases from 1995 to 2005, most of which took place in Ho Chi Minh City and southern provinces, Mai Duc Chinh, vice president of the Vietnam General Federation of Labor told the Thanh Nien (Youth) online.

According to HLF, just 30% of 525 RoK enterprises operating in Ho Chi Minh City had adopted labor rules and only 34% (180) had set wage tables and scales. Only 35% of 187 enterprises which had formed trade unions had collective labor agreements.

Even for businesses which had set wage tables and scales, each wage level was just VND 10,000-15,000 different, making the wage increase merely formalistic, Mr. Chinh said.

Vice Minister of Labor Huynh Thi Nhan also pointed out that while enterprises did not buy social insurance for their employees, still they deducted 6% of worker salaries for what they said payment of social insurance premiums, the Tin Tuc (News) daily said.

Violations by RoK enterprises were related to most institutions of the labor law, the Thanh Nien online reported, citing their failure to set wage tables and scales; arrears of salary and social insurance premiums; unlawful extension of work probation periods; low pays to workers; illegal increase of work shifts and overtime work; and firing of employees without reasonable reasons, to name a few.

Given rising and serious violations of labor law by foreign-invested enterprises, the handling of such violations remained ineffective, experts pointed out. When a labor dispute takes place at a foreign-invested enterprise, the district-level labor federation and labor agency are the ones to protect employees. However, these bodies do not manage foreign-invested enterprises and thus could only report such dispute to the state management agency, the provincial-level Labor, War Invalids and Social Affairs Service, which, however, mostly manages enterprises on paper due to lack of personnel.

Therefore, most violations could be uncovered as late as when nothing could be done to violating employers who might have vanished into thin air. At enterprises where directors escaped, the solution was usually to request local governments and enterprises in the same industry to help provide other jobs for workers.

Even lawsuits by employees could yield little results since court judgments remained hard to be enforced in reality, experts said.

In an effort to redress these problems, the Vietnam General Federation of Labor and the Ministry of Labor, War Invalids and Social Affairs held a dialogue between Vietnamese trade unions and RoK investors in Hanoi this month.

At this dialogue, the HLF President Nguyen Huy Can pointed out that RoK enterprises were not very cooperative and lacked a sense of law observance, citing that only 10 out of 150 RoK enterprises in the city attended a recent meeting on labor law-related issues held by HLF and the Ho Chi Minh City Labor, War Invalids and Social Affairs Service, the Saigon Giai Phong reported.

Mr. Hong Sun of the RoK Commerce and Industry Chamber in Vietnam, said Vietnam’s numerous and fast-changing legal documents were a reason behind RoK investors’ failure to promptly comply with law. He said most Korean businesses strictly observed the labor law and the number of violating ones was small.

To improve relations with their local employees, RoK employers should adopt more appropriate wage scales and bonus schemes, restrict increase of work shifts and improve lunch quality - the main factors behind labor conflicts, Mr. Chinh told the dialogue.

At the dialogue, HLF asked for more cooperation from the RoK Embassy by supplying more information on Vietnamese labor law for RoK enterprises and adopting measures to force violating enterprises to fulfill their obligations.

However, experts said these solutions were a sort of proposal rather than sanction, pointing out punishment on labor violations remained too light.

Tougher sanctions such as heavy fines, business license withdrawal or examination of liability must be imposed on foreign violators, they said, even suggesting governmental-level cooperation on the settlement of serious cases.

According to HLF statistics, 57,000 Vietnamese workers are working at RoK enterprises.-


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