POST-SOCIALIST TRADE UNIONS, LOW PAY AND DECENT WORK
VIETNAM RESEARCH TEAM
CASE STUDY
EVOLUTION OF A NEW PATTERN OF STRIKE IN VIETNAM
By Do Quynh Chi
Ha Noi, April 2007
Introduction
There have been almost 1,500 strikes in Vietnam since the introduction of the Labour Code in 1995 but labour disputes and industrial relations in general have just become a topic of research for the last four or five years. From 2004 to early 2006, Ministry of Labour (MOLISA), Vietnam Chamber of Commerce and Industry (VCCI) and Vietnam General Confederation of Labour (VGCL) - the tripartite constituents in Vietnam - each carried out their first research on labour disputes and strikes. Despite their difference in focus and coverage, the three researches share a common view of the picture of strikes in Vietnam, that is: strikes mostly occur in FDI sector in the South of Vietnam with strong concentration in labour-intensive industries such as textile, garment and footwear, and strikes are spontaneous reaction of workers to violations of workers' rights by employers rather than organized industrial actions[1].
Chang Hee Lee and Simon Clarke (2004)[2] for the first time pointed out the evolution of a new pattern of strikes and labour disputes in Vietnam, which is the shift from right-based disputes to interest-based disputes. In other words, rather than walking out to claim their rights in law, workers now go on strike to demand for better meals, higher salaries, less overtime - working conditions that are higher than what is stipulated in law or labour contracts.
The unprecedented wave of strikes in 2006 and the most recent spurry of strikes in March 2007 reaffirmed the above pattern of labour disputes and unveiled other changes in the nature of strikes in Vietnam and in the psychology of workers. For instance, strikes now are more about demands for better interests of workers; they are organized by hidden leaders who, no matter for good or bad reasons, have managed to mobilize hundreds, even thousands of workers to strike.
The aspiration to provide a comprehensive analysis of strikes in Vietnam has been hindered by shortage of strike statistics and information. There are two channels of strike reporting in Vietnam: one is through the union system and the other through the labour administration reporting system. The unions at district level used to report monthly to the provincial VGCL which, then, reports back to the legal department of central VGCL. The Legal department of VGCL would prepare a synthesis report every quarter which is published in the Lao Dong daily and other related press. Since 2007, however, due to the surge of strikes in the South, the VGCL requires provincial unions to report every week. In MOLISA, there is no single focal point for strike-related issues. DOLISAs used to report on labour disputes, strikes, labour standards to the Legal Department and collective agreements to the Employment and Labour Policy Department. However, after the issuance of Decree 03 on 6 January 2006, the Wage and Salary Department was appointed the focal point in the implementation of the Decree and automatically, they also received quarterly strike reports from provincial labour administration. It is expected that with the coming foundation of the National Labour Relations Council (NLRC), these overlappings will be removed and the strike reporting task will be handed over to the Secretariat of NLRC which bases in MOLISA.
There is a significant difference between the strike statistics of MOLISA and VGCL. Normally, that of the latter is 10 -15 percent higher than MOLISA's figures. The following analysis is based on the synthesis reports from 1995 to 2006 and quarterly reports of both VGCL and MOLISA for the first three months of 2007. The synthesis reports provide a total number of strikes every year by ownership (SOEs, FDI, Vietnamese private), by nationality (Korea, Taiwan, Hong Kong and others) and by location (HCMC, Binh Duong, Dong Nai and other locations). The report for the first three months of 2007 is more detailed with names of companies, date of strike, location, sector, number of workers involved and causes of strikes as reported by strike taskforces.
With the goal of sketching a picture of new patterns of strike in Vietnam in the late 2006 and early 2007, given the availability of information, this paper will be split into two parts: a general observation of trends of strikes from 1995 to 2006 and a more detailed analysis of new features of strikes which emerged in the early 2007.
Regulatory framework for industrial actions in Vietnam
The 1994 Labour Code together with the 2002 Amendment to the Labour Code lay out a lenghthy and complicated procedure for industrial actions and settlement of labour disputes. As stipulated by the law, a dispute has to go through the company conciliation council or district labour mediator, then arbitration council and the court before workers are allowed to go on strike - a process that takes weeks to be completed. Also, there are a number of conditions to be satisfied if a strike is to be considered a 'legal' action, such as: strike decision has to be made by the company union after all conciliation and arbitration measures have been exhausted, and the strike decision is endorsed by a majority of employees. None of over 1,000 strikes so far has gone through all the above steps and neither were they organized by the union.
As a result, in 2006, Chapter 14 of the Labour Code on strike resolution was revised. Now labour disputes are distinguished into two types: right-based and interest-based, each of which will go through different procedures of settlement. Another major change is that in non-unionised enterprises, representatives elected by workers are allowed to organize strikes and negotiate with the employer on the former's behalf.
However, as a common practice in Vietnam, the revised Chapter 14 will not be implemented until a government decree and ministerial circulars that provide detailed instructions on the implementation of the legislation are promulgated. This process is expected to take approximately one year after the new Chapter 14 was approved. In the mean time, strikes are still settled in an informal way which actually has been adopted so far by local authorities - that is by the intervention of adhoc strike taskforce The strike taskforce, set up by provincial local authority, consists of representatives from the labour administration (DOLISA) and union (provincial VGCL). Unfortunately, VCCI and other employers' organisation are rarely a part of the taskforce. When a strike happens, the taskforce would visit the enterprise, gathering workers' demands, negotiating with the employer and persuading workers to get back to work[3]. This approach, to some extents, has been successful in recovering social peace and stability. Nonetheless, as explained later, this approach is being challenged.
Strikes in Vietnam from 1995 to 2006
Strikes are most pervasive in the foreign-invested sector. In eleven consecutive years from 1996 to 2006, strikes in this sector account for over 50% of the total number in the country. There is no sign that this trend is diminishing as in 2006, the number of strikes in this sector triples that of 2005 and accounts for 74.2% of the total figure of strikes in the country. Together with the equitization process, the SOE sector is shrinking rapidly and strikes in this area has decreased significantly from 18.3% in 1995 to 1.0% in 2006. No strike has been recorded in the SOE sector in early 2007. Encouraging trend can be observed in the private sector which includes both the equitized SOEs (commonly referred to as joint-tock companies) and private businesses owned by Vietnamese despite the fact that the percentage of strikes in the private sector over the total number fluctuates around 25%-30%. The reason is that the private sector has been booming at a much higher rate than its labour relations problem.
Taiwanese companies seem to have more strikes than any other investors (see table 2), including Korea and Hongkong and this trend is getting worse, especially in 2006 when the number of strikes in Taiwanese enterprises doubles that in Korean ones and accounts for 44.6% of the total number of strikes in the whole country. However, it does not mean that the problem in Korean companies is decreasing as the number of strikes here keeps rising every year from 12 cases in 1995 to 76 in 2006. Possible reasons provided by VGCL (2005) and MOLISA (2005) include language and cultural differences between the foreign employers and local workers, the authoritarian management style adopted by Korean and Taiwanese employers, and the employers' violations of the Vietnamese labour legislation. However, as discerned by the recent wave of strikes, the labour-management relations of Taiwanese and Korean companies, as well as all other enterprises, have been significantly affected by the enhanced bargaining power of workers and increasingly fierce competition among old and new investors after Vietnam's accession to the WTO. These causes will be discussed in further details in the following section.
By location, Ho Chi Minh city has always been facing with more strikes than any other provinces in Vietnam. Since 2004, it appears that Dong Nai and Binh Duong have been catching up. This trend will become more visible in the later analysis of the first three months of 2007. Though the data available from 1995-2006 does not elaborate the number of strikes in IPZs and outside but according to unofficial sources of information, a wave of strikes is often initiated in IPZs, normally in FDI companies, then spread to companies outside the zones. This was also the case of the wave of strike during Tet 2006.
It is difficult to define causes of strikes as workers' demands as reported by the union and labour administration may only reflect the tip of the iceberg. Yet, according to the VGCL (2005), over 90 percent of strikes in the last 12 years is employers' violation of labour legislation/workers' legitimate rights. Common types of violation include: exceeding the legal limit of overtime hours, delayed payment of wages and salaries, paying below the minimum wage, among others. Members of provincial strike taskforces, particularly those in the South, however, point out the increasingly common mixture of right and interest demands or in other words, combination of claims for legitimate rights and higher-than-law benefits. For example, workers walked out not only because of delayed payment, excessive overtime hours, but also due to the quality of food provided by the company, low bonus, or unsatisfactory wage increase rate. This new feature was captured and analysed further in the mentioned paper on "Strikes and Industrial Relations in Vietnam" by Chang Hee Lee and Simon Clarke (2004).
Neither reports of MOLISA nor VGCL include information about the industries where strikes happened. A recent survey on strikes and labour disputes carried out by MOLISA in the framework of ILO/Vietnam Industrial Relations Project in 2005 showed that strikes are most pervasive in labour-intensive, export-oriented industries such as textile and garment, footwear, engineering, wood processing, and electronics. As most companies in these sectors are small suppliers of bigger brand names, exporting to the lower-end markets, they are exposed to market fluctuation and the pressure to keep production cost, including labour cost, at the lowest level possible. Also, as these sectors concentrate in certain provinces/cities, particularly Ho Chi Minh city, Binh Duong and Dong Nai in the South, after exhausting the local labour force, now most of these companies rely on migrant workers. Unfortunately, due to a deficiency in economic infrastructure development policy of the State and company policies, migrant workers are now suffering from shortage of decent accommodation, high living cost, and poor spiritual life[4]. All these factors exacerbate the conflict of interests between labour and management, making the possibility of strike more visible than any where else.
No strike since 1995 was organized, initiated or led by the official union cell in the company. As mentioned in the introduction, strikes are described by the labour authority and VGCL as spontaneous reactions of workers against the violation of employers over their rights, implying that there is no organizing force behind these industrial actions. In other cases, they blamed on 'bad elements' (bad workers who have personal conflict with the company and wish to retaliate by inciting other workers to stop working) or 'gangster-like workers' for inciting others to walk out. However, a recent study[5] show that most strikes were organized, not by the formal union but the informal union leaders. These people can be relatively divided into two types: (i) bad workers who incite others to strike for retaliation or for other personal purposes and (ii) workers who have influence over others and wish to protect the interests of themselves and other workers. Some of the latter have managed to set up their own networks of informal union in the company. They are protected by other workers and enjoy sympathy and support of formal union and white-collar workers who, in turn, benefit from their protest.