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VIETNAM: No Easy Answer to Wildcat Strikes

Tran Dinh Thanh Lam

Ho Chi Minh City, Jan 26 2006 (IPS) - Prime Minister Phan Van Khai’s intervention, this week, to find solutions to strikes raging through Vietnam’s foreign-owned companies was a sign that the unrest was turning critical and beginning to infect local enterprises.

Tens of thousands of workers in the southern industrial parks (IPs) and export processing zones (EPZs) have been on strike through January, demanding that the government adjust basic wages to meet inflationary trends and the rising cost of living.

The ‘Nguoi Lao Dong’ (Worker) newspaper said on Tuesday, that the premier had advised the Ministry of Planning and Investment (MPI) to propose solutions to the strikes in provinces and cities hosting foreign direct investment (FDI) companies.

The intervention was a sign of government recognition that workers at the FDI companies were unhappy with a decision to postpone to April, a 40 percent increase in basic wages, originally proposed to become effective from the beginning of February.

Since the country joined the market economy, Hanoi has been trying hard to attract foreign investors to Vietnam by offering them incentives, including a cheap and stable labour environment.

But lately, it has become difficult to balance the interests of workers and those of foreign investors, as the ongoing restiveness on the issue of ”basic wages” have clearly shown.

Official statistics show that Vietnam has until Dec. 2005, attracted close to eight billion dollars worth of FDI, much of it from Taiwanese and Korean companies, looking for labour that is cheaper than in competitive China where basic wages are currently at 63 US dollars a month.

For Vietnam’s FDI companies, basic wages were initially set at around 45- 50 dollars but the government, in 1999, ‘’adjusted” it to between 35 and 45 dollars (depending on the location) to please investors.

However, basic wages have not kept pace with inflation and the rising cost of living in Vietnam since then leading to the current worker unrest.

Early January, workers at FDI firms like Kollan, Latek, Danu Vina, Hugo, Sprinta and Quint Major companies in HCMC’s Linh Trung EPZ, and their colleagues at Chutex, and Plantation Grown Timbers in Binh Duong province’s IP at Song Than walked out, saying they could no longer bear the unrealistic wages.

Communist Vietnam’s labour codes allow workers to go on strike to defend their rights; however, strikes must be legal. ”We support strikes that were prompted by delayed payment of salaries and labour law violations,” said Pham Van Hung, head of labour management HEPZA, short for HCM city’s authority for IPs and EPZs.

Hung said the current spate of strikes was illegal as they were organised spontaneously, without a trade union. Timely intervention by labour unions could have prevented strikes, he said.

Immediately after the strikes began, the HCM City Labour Federation began working with affected companies, some of which admitted to paying low salaries are low, but insisted that they were acting within the state policy framework.

”Wages are low in relation to the cost of living,” said Dao Ngoc Hoang, an official at southern Dong Nai province’s department for labour and social affairs.

Last week, the Prime Minister issued a decree raising the minimum monthly salary of unskilled workers at FDI enterprises by 40 percent from April. In the case of skilled workers, the lowest level of their salaries must be at least seven percent higher than the minimum rates.

While the new decree did not satisfy workers at FDI companies, it stirred up bitterness among employees at Vietnamese-owned companies who felt discriminated against and began a separate agitation.

”If workers at FDI companies could not live with their basic monthly salary, how could we do at locally-owned companies as our minimum wages are even lower,” said Nguyen Van Tu, a worker at a private footwear company on the outskirts of HCM City.

Now that workers at FDI companies have succeeded in asking for higher basic salary, Tu and his co-workers think that they should do the same. ”We just want to remind the government of our hard living conditions,” he said. ”While everything became more and more expensive, our basic salary remained the same and that for many years,” Tu said. ”With so little income, the lives of workers at local companies are becoming increasingly difficult and many work over-time for extra money, often until exhaustion.”

Nguyen Thi Phuong, a worker at a private garment factory said: ”Only a leader who dares to live in HCM City with only 600,000 VN dong (38 dollars) per month could understand our lamentable conditions.” Phuong has been working for 10 years without ever receiving a raise.

But for officials in HCM City, workers’ living conditions are not their biggest concern. Most of them fear that the rising number of strikes would damage the investment environment in the IPs and EPZs in the city, which are currently home to 700 enterprises employing more than 130,000 laborers.

Pham Duy Bac, a HEPZA official, said the strikes were spreading quickly. ”This situation will continue and some companies will have to close to protect their assets. If the government does not quickly issue a decision on salary adjustments, it will be difficult to prevent strikes.”

Bac is right to worry. A report by labour ministry shows that nearly 900 strikes have taken place in the country in the past decade. ”In most of the cases, disputes over payment and social welfare were the main reasons behind the strikes,” he said.

Bac remarks that although there have been improvements to workers’ rights in some factories and plants, there are still businesses that do not bother to outline detailed salary regulations over raises and bonuses. Some plants still use the basic salary structure as the only basis for employees’ pay.

Many workers with significant work experience and professional skills are still paid at the same rate as unskilled entry-level workers. Some employers also fail to give allowances for work in harmful or dangerous conditions.

”If only the government had taken a closer look at our interests, we would not have walked out,” said Tran Van Ba, a worker at a private footwear company.