Reforming labour relations in Vietnam

Author: Tu Phuong Nguyen, ANU

The Vietnam General Confederation of Labour (VGCL), the peak organisation overseeing trade unions and industrial relations in Vietnam, established the Committee of Labour Relations in April this year. This reflects an ongoing process of legal and regulatory reforms to deal with labour disputes — mostly in the form of workers’ strikes — that have hampered production activities in Vietnam. Strikes peaked at almost 1000 in 2011, raising the government’s concerns over social order and labour productivity.

The establishment of the committee supports other programs conducted by the VGCL and its continued move to ‘care’, ‘support’ and ‘commend’ factory workers in their contribution to the overall industrial output. It’s also supposed to reassure them that harmonising industrial relations is one of the key concerns in the government’s internal restructuring in order to resolve social and economic tensions in Vietnam’s socialist market economy.

The committee claims to have a list of objectives to serve workers’ interests and enhance the standing of unions across the nation, including continuing to build harmonious and stable labour relations, with an aim to pre-empt future labour disputes; instructing unions at all levels to facilitate the resolution of collective disputes and work stoppages; and monitoring the legal compliance of enterprises, especially in the social and work-related insurance schemes.

Although workers are granted the right to strike under the second amendment of the Labour Law in 2006, in reality strikes have broken out beyond the stipulated process, and most strikes have been met with a certain level of tolerance by local authorities. As trade unions have proved to be unrepresentative of workers at the enterprise level, taking their grievances to the streets would appear to be a good strategy for workers to assert their rights and interests.

The decrease in the number of strikes over the past two years seems to suggest that industrial relations in Vietnam have improved. The government has increasingly acknowledged the need for open dialogue between employers and workers and the importance of having collective agreements in the workplace. Still, it is not yet time to be complacent. Nguyen Duy Vy, head of the Committee of Labour Relations, has stated that such relative ‘quietness’ could mask ongoing tensions that might potentially lead to future unrest.

This concern reflects the entrenched shortcomings in the management of labour conditions in Vietnam. The loose enforcement of legal obligations regarding the standard wage and working conditions in the foreign-funded sector, as well as the inefficiency of workplace unions, are just a few examples of these shortcomings.

Mediation and arbitration committees, which are set up by local authorities, have been rarely reliable channels for workers to voice their grievances. The guidelines for dispute resolution set out in Vietnam’s Labour Law have seen the relegation of tasks and responsibilities go to a range of mediating and arbitrating agencies at provincial levels or the so-called ‘referees’ at municipal levels. Local officials have the power to observe and facilitate the process of resolution, and consult with its outcome. This effectively constitutes a restructuring of the current mechanisms dealing with challenges in labour relations through indirect control, rather than a retreating presence of the state in such affairs.

Since 2012, the wage scales/tables of enterprises no longer require approval from authorities before being put in place. Local authorities currently only monitor the implementation of the wage scales/tables, which must conform to minimum wage standards. Given the large number of wage-related strikes, the government is now tightening its inspection and supervision of the managers’ wage policies, especially for foreign-funded factories. This, alongside its monitoring of working conditions and social support, has revealed a range of violations. While workers may benefit from further regulation, implementing stricter labour laws might risk scaring off current and potential foreign investors, most of which come from Taiwan, Japan and South Korea.

Recent changes to Vietnam’s labour institutions have been twofold: fostering legal compliance and awareness of workers’ rights and strengthening dispute resolution mechanisms. Reforming trade unions, especially at the enterprise level, is also essential — but it cannot be achieved without allowing workers to exercise their bargaining power. The state’s continuing grip over unions, coupled with new regulatory measures, has helped decrease the number of disorderly strikes without engendering the rise of labour activism, which could be harmful to political stability. Assessing ongoing reforms in labour relations in Vietnam provides a useful dimension to see how internal state restructuring is instrumental in resolving social and economic tensions.

Tu Phuong Nguyen is a PhD candidate at the Department of Political and Social Change, The Australian National University.

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