Nguyen Hoang Ha, Senior Program Officer[1]

ILO Hanoi

The past few years have been marked by considerable changes in the labor field in Viet Nam, much of it engendered by the doi moi policy and by Vietnam’s accelerating insertion into the global market place, both of which are challenging existing labor institutions and pointing up shortcomings. In the area of labor law, Vietnam has now ratified 17 Conventions of which five of the eight core Conventions that are regarded as the “social floor for globalization” and the basis for the pursuit of labor rights. The Constitution of Vietnam (1992) and the Labor Code also support labor rights. The Constitution guarantees the right to work and enjoins the State and society to create that work (article 55), the right to training and instruction (article 59) and freedom of enterprise (article 57). The Constitution requires the State to enact labor protection regimes and policies and to establish working time, wage scales, rest period and social insurance (article 56). Article 69 provides for freedom of opinion and speech, and the right to assemble, and form associations and article 10 requires the trade union to look after and safeguard the rights and interests of cadres, workers, employees and other working people.

These rights are further developed in the current Labor Code which, very importantly, states that “every person has the right to work, and the right to freely choose an employment and occupation, to learn a trade and to improve professional skills, without any discrimination in respect of sex, race, social origins, creed or religion” (Article 5). In its entirety, this article echoes both the ILO’s Declaration of Philadelphia and the core standards on discrimination and equal pay for work of equal value. The Code specifies a number of other rights and duties of workers and employers, including wages, hours of work, overtime, holidays, labor contracts, collective agreements and overseas migration. Trade unionism is also supported by article 153, which requires that a union be formed in every enterprise and now places the onus for doing so on the umbrella trade union confederation, the Vietnam General Confederation of Labor (VGCL). The Code also covers the right of employers to recruit organize and direct labor in accordance with the needs of the business and the requirements of the Labor Code. They also have the responsibility to cooperate with the union in discussing labor issues and the obligation to implement labor contracts and collective agreements and to respect the “dignity” of workers. Again these articles reflect international labor standards and global best practice. The role of the State in labor administration, labor inspection and mediation and dispute settlement is also carefully delineated by the Code. The Code is supported by 150 implementing decrees and other by-laws which together make up a comprehensive body of labor law. The weakness of the system lies in the implementation of the law, especially now that the spectacularly rapid growth of the private sector has overstretched the capacity of labor administration and the labor inspectorate to monitor compliance. In the past year other initiatives (such as experiments with corporate codes of conduct) are emerging to bridge this gap and the Ministry of Labor (MoLISA) hopes to be able to set up a permanent facility for the training of its own staff and that of employers and workers organizations and enterprises on inspection and occupational safety and health and working conditions.

Chapter XII of the Code deals extensively with the rights to social security and its administration but new social security legislation that includes unemployment insurance for the first time. In addition, an unemployment insurance fund has been set up which provides for the support and retraining of workers, particularly where they are affected by the equitization (privatization) and restructuring of state-owned enterprises.

Vietnam has long had a “culture of dialogue and consensus” which now serves it well in the labor field allowing the country to build a consensus-based industrial relations system. While the VGCL and the Vietnam Cooperative Alliance (VCA) (one of the two employers’ organizations) are part of the State structure, the Vietnam Chamber of Commerce and Industry (VCCI) has emerged as a second recognized employers organization and participates with the other two in national level decision making. Neither the VCCI nor the VCA are present in all 63 cities and provinces so their influence tends to be stronger at national and enterprise levels. The VGCL on the contrary is the weakest at the enterprise level and has identified strengthening this level and membership drives as urgent necessities. A government decree (No.145/2004/ND-CP) opens up considerable space for tripartite and bipartite dialogue and the VGCL and VCCI have also signed a bipartite agreement which is intended to foster greater dialogue than had obtained in the past.

With the liberalization of the economy, the increase in foreign direct investment and joint ventures and the rapid growth of the private sector, social dialogue and industrial relations issues have achieved particular prominence. The increasing incidence of strikes and other labor unrest is of considerable concern to the Government and the social partners and various efforts are being made to address both the causes of strikes and their fallout. The current Labor Code was first adopted in 1994 and amended in 2002, 2006 and 2007. The Trade Union Law was adopted in 1957 and amended in 1990 to reflect the situation of Vietnam in late 1980s under the economic embargo and the previous Constitution (1980) only. MOLISA is leading the labor law reform process by inviting inputs from employers, trade unions, and other key stakeholders while VGCL leads the revisions of the Trade Union Law. MOLISA and VGCL are both aiming to submit draft amendments to the National Assembly in May 2010, with amendments to be adopted in October 2010.

Challenges Vietnam faces today

Representation

Representation gap is identified as one of the challenges of the industrial relations system Vietnam is facing today. How to deal with this issue? A concept of Workers’ Representative in the non-unionized enterprises has been recently been introduced by MOLISA, however, VGCL (trade union) raised concerns against that view.

For the employers, VCCI would like to propose a new chapter on the role and responsibilities of the employers and their organizations.

Collective Bargaining Agreements (CBA)

Both employers and trade unions have expressed a common interest in expanding the use of collective agreements and MOLISA/DOLISA has expressed its support of this goal. It appears that employers seek greater use of collective agreements to reduce strikes and therefore reduce risk of loss, in terms of man-hours, costs, and time targets for production and delivery. Trade unions and workers seek more collective agreements to establish their rights and improve their wages and terms and conditions of employment. MOLISA/DOLISA seek such agreements as a means of reducing the numbers of disputes, preventing strikes, reducing their negative impact, and promoting best practices in labor relations. They all agree that union representatives in particular and also employer representatives need more training in collective bargaining skills. The sectoral/industrial CBA is proposed as an appropriate means of action to go for the years to come, MOLISA has piloted the garment sector CBA for some time now.

Strikes

Vietnam has experienced a significant increase in strikes in recent years. The strikes appear to have the following characteristics:

· They involve large numbers of workers;

· They occur often in the manufacturing and garment industries;

· In many or most of them, the workers do not give the enterprises advance notice of their intent to strike and do not comply with the procedures set forth in the law;

· Most strikes occur in private or FDI enterprises in which the workers do not have union representation, with fewer occurring in state-owned enterprises with union representation; and

· Most strikes are motivated by the workers’ complaint that their pay is too low and their desire to obtain wage increases.

The nature of the strikes indicates that there are other deeper and more systemic problems in the labor relations system that involves the role and responsibility of unions, the limitations of the dispute resolution systems, and the lack of worker and employer skills and experiences regarding collective bargaining.

Dispute Resolution

Vietnam’s approaches to dispute resolution should be improved, though they have different complaints about the current system that may or may not require changes in the law. The Labor Court noted that its case load has greatly increased in the past few years. There are two types of disputes:

1) Disputes of rights, which involved the alleged violation of a right or entitlement established in law; and

2) Disputes of interests, which involve matters such as a wage increase or benefit that is above, beyond or outside of that which is legally required.

However, there may also be overlap between these types of disputes. Moreover, parties may resolve their disputes of interests by negotiating a collective agreement but then have disputes over the interpretation or alleged violation of its provisions. Thus, the labor law and labor relations system should allow and provide for a process for fair and independent interpretation of the agreements (which is often done through arbitration, mediation and conciliation) and their legal enforcement. The MOLISA drafting committee proposed to prohibit all disputes of rights and they should be dealt with through the judicial system.

Tripartite Consultation is key to promote sound industrial relations (IR)

It is essential to get to understand the different perspectives and concerns from all the IR actors and create a favorable environment where they can express their issues of concern and the dialogue with other partners to find an appropriate approach to address all of those concerns. The following is only a practical list of the issues being debated by the tripartite partners:

DOLISA/MOLISA Concerns:

· DOLISA/MOLISA need more inspectors with better training to conduct more inspections, consistent with their duty and the importance of economic growth, worker rights and other labor-related goals.

· Labor hire (dispatched workers) is a new reality that needs clear definitions of role and responsibilities of dispatching agency and receiving agency within the contracting period and beyond that.

· Administrative measure to demand enterprises to set up unions (article 153) did not work in practice.

· Many employers fail to make proper social insurance payments.

· In some cases, the rules regarding severance and unemployment allowances are unfair to workers in particular circumstances and in other cases are open to worker misuse.

· Low-skilled foreign workers coming to Vietnam to work (mostly from China and some African countries) with tourists’ visa and no work permits.

The Trade Union’s Concerns:

· Stronger penalties and remedies are needed for employer violations of the law.

· The workers’ wages in many state, joint venture and private enterprises are too low, particularly considering recent inflation.

· Workers in many foreign-owned and private enterprises are not represented by unions.

· Workers in some enterprises do not want union representation.

· Amendments to the Trade Union Law should be considered to improve the role of unions and its organizational structure and address issues of overlap with the Labor Code.

· Local trade union leaders are too dependent on their employers in part because they are paid by the employers who may promote them if they do not raise complaints on the workers’ behalf.

· Trade Union expressed real concerns on the “workers’ representative” and worried about its potential conflict with the union representative and/or union delegates from the upper level union.

The Employers’ Concerns:

· The dispute resolution process is not fair to employers. For example, the general managers are required to attend all disciplinary hearings, which is not realistic.

· The distinctions in the law between definite and indefinite contracts are not well tailored to the needs and operations of small- and medium-sized enterprises. Some suggest that the distinction between them be ended while others have suggested adding a new one for seasonal employment.

· In some cases, workers misuse the rules regarding severance allowances.

· Union representatives lack the skills to negotiate collective agreements.

· It is difficult to find qualified workers and hard to retain them, particularly after the employer has provided them with professional training. In this regard, they complain that they are often unable to recover the cost of invested training from the workers.

· There are many accidents because workers do not follow occupational health and safety rules.

· The minimum wage legislation is too detailed and complicated and does not sufficiently accommodate the differences between the enterprises’ ability to pay at certain wage levels.

· Small employers pay too much in social insurance because they do not keep proper payroll records for short-term employees.

· Need to raise the overtime limit of 200 hours per year to 300 hours.

Common Approach as a Way Forward

The present stage of Vietnam’s transition to a market economy and its deepening integration into regional and global markets, its obligations under existing trade pacts and its WTO membership are impacting on the labor field in all its aspects. While fierce competition for markets and investment could risk eroding terms and conditions of work, paradoxically, liberalization and economic integration expose the export-oriented sector to scrutiny by overseas consumers (and competitors) and to pressures for better labor standards. The burgeoning micro-enterprise sector provides jobs and incomes but often at the expense of working conditions, wages, social protection and the general quality of the work they create. Increasing numbers of workers (and enterprises) lie outside the strict purview of labor law and beyond the reach of labor administration and the IR actors are unable to articulate their concerns and desires. The IR actors themselves are undergoing their own transition in response to the changing needs of their membership.

Vietnam is undergoing rapid, dynamic, and generally successful change. Its potential is enormous, not least because the Government’s socio-economic development policy clearly subscribes to the concept of human-centered development.

Dialogue, dialogue and continue dialoguing is the KEY to address all the burning issues. That is where the social partners can play a proactive role in promoting international best practice and discussing practical measures with concerned parties for the best interests of all.

It is important that the Government and social partners could identify an appropriate approach in common so that they could make significant contributions to the country socio-economic development strategy and its proactive international integration policy. For this purpose, VGCL has been cooperating closely with MOLISA and the employers’ organizations (VCCI and VCA) to work towards sound industrial relations and comprehensive reforms of both the Trade Union Law and the Labor Code to provide a golden opportunity for creating a legal enabling environment and a fair playing field for all IR actors (the Government, the workers’ organization and the employers’ organizations) working to aim at the target of a modern and industrialized country by 2020.-

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