Vietnam plans to raise labor standards before FTA negotiations

In order to negotiate for free trade agreements (FTAs) with partners, Vietnam needs to the labor standards.

Until now, Vietnam has signed FTAs with 15 countries within the framework of the six FTAs within ASEAN: China, Republic of Korea, Japan, Australia-New Zealand and India. However, according to the Ministry of Industry and Trade (MOIT), Vietnam has not signed any bilateral or multilateral agreements with the associated provisions on the labor standards.

The issue on labor standards has just been put forward in the negotiations for the Trans-Pacific Strategic Economic Partnership Agreement (TPP).

However, in fact, this is not for the first time Vietnam faces the issue relating to the labor standards in negotiations. Vietnam ratified 17 conventions on labor with the International Labor Organization (ILO).

Nguyen Kim Phuong, Deputy Director of the International Cooperation Department under the Ministry of Labor, War Invalids and Social Affairs (MOLISA), said that in FTA negotiations, partners always refer to international recognized labor standards, or the basic principles at work outlined in the ILO Declaration in 1998, such as the freedom for setting up associations, organizing and building a collective labor agreement, or the principles on no forced labor, on working hours and safety labor.

“Despite the considerable progress in the labor issue in the conventions signed with ILO, many problems still have been existing in the labor relations in Vietnam, including in the legal framework which needs to be settled,” said Nguyen Duy Vy from the General Confederation of Labor of Vietnam.

The violations of the Labor Code by employers have been taking place regularly, while labor disputes, collective work stoppage and spontaneous strikes tend to increase.

“The problems have been causing difficulties for the negotiations for FTA,” Phuong, a member of the Vietnamese negotiation team for TPP, said, adding that this is the problem that most of developing countries are facing.

Unstable labor relations, low wages, and the ineffective union system’s activities could be used by partner countries as a non-tariff trade barrier when they negotiate with Vietnam.

Under the Trade Union Law, Vietnam still does not allow to establish the trade unions independent from the General Confederation of Labor of Vietnam.

Meanwhile, many Vietnamese enterprises do not have collective labor agreements. When the US and EU raised the anti-dumping lawsuits against Vietnamese enterprises in the tra and shoes lawsuits, they cited the above said problems.

Franz Ebert, an ILO specialist in Geneva in Switzerland, noted that the wages in Vietnam remain low because of the cheap living costs and low labor productivity. Therefore, one cannot accuse Vietnam of dumping its products if only reasoning the above said factors.

However, he thinks that Vietnam still needs to gradually settle the problems. When the national economy develops, and the added values laborers can create for enterprises become higher thanks to the productivity improvement, the wages also need to be raised, or Vietnam will violate the conventions it has signed with ILO.

Experts believe that though the labor standard amendment may cause some disadvantages to the negotiations, the requirements relating to the labor are all positive, ensuring the interests of employees, increase social responsibility of enterprises. Basically, the requirements all come in line with Vietnam’s Labor Code.

However, Pham Lan Huong, Head of the Macroeconomic Policies Research Division under the Central Institute for Economic Management (CIEM), has warned that some enterprises would face two big difficulties when they are required to meet the labor standards.

Firstly, many enterprises still do not have experiences in keeping account books clear and transparent. Secondly, many enterprises would be not financially capable enough to improve working conditions. – DTCK

Tags: ASEAN Free Trade Agreement