Foreign firms braced for industrial action

More actions need to be taken to prevent strikes expected at foreign-invested enterprises in Vietnam throughout 2010.

“The economic situation in Vietnam and the world is expected to be tough in 2010. This will likely result in more strikes in enterprises, particularly in foreign-invested ones, due to their inflexible salaries offered to employees,” said Nguyen Dinh Cung, vice head of the Ministry of Planning and Investment’s Central Institute of Economic Management.

During January 13, 2009, some 8,000 workers from South Korean-backed Taekwang Vina Company, specialised in making sports shoes in Dong Nai’s Bien Hoa 2 Industrial Park, triggered a two-day strike to demand higher supplemental pay and other subsidies.

“Employees said the salaries they were being paid were lower than salaries offered by another Japanese enterprise,” said Dong Nai Department of Labour, Invalids and Social Affairs’ director Le Thi My Phuong.

The strike ended with the help of the department and other local relevant authorities. The company decided to revise up workers’ welfare in 2010 such as increased monthly salaries and bonuses in holidays, especially bonuses for 2010’s Tet holiday.

“This strike is considered the biggest one since the start of 2010 and will likely be followed by many other big strikes expected to be seen in foreign-invested enterprises, particularly South Korean and Taiwanese ones,” said lawyer Cao Ba Khoat, director of Hanoi-based K & Associates Business Consultancy Company.

Khoat said in Vietnam, most of strikes happened at South Korean and Taiwanese enterprises. “It is due to the behavioral culture of these enterprises’ owners. I have studied many strike cases which revealed that South Korean and Taiwanese employers were more aggressive than employers from other countries and territories,” he said.

“Unlike European and Japanese enterprises which pay great attention to building corporate social responsibility and their employees’ livelihoods, South Korean and Taiwanese enterprises often offer their employees minimum salary levels stipulated by Vietnamese regulations, not based on their turnover as many other foreign enterprises do,” Cung said.

Phuong said most of the strikes related to employees demanding higher salaries, holiday bonuses, subsidies, severance pay, more sick days, reduction of overtime and working conditions, labour safety and hygiene improvements.

According to a Ministry of Labour, Invalids and Social Affairs’ report, in 2009 there were 216 strikes in Vietnam, equal to only 30 per cent of 2008’s total strikes. However, 157 of the 216 strikes were at foreign-invested enterprises, with 114 strikes staged at garment and textile enterprises and 155 strikes at the country’s southern key economic region.

For example, in Dong Nai alone, there were 42 strikes in the province in 2009. Of which, 34 strikes were at foreign-invested enterprises, seven at locally-owned enterprises and one at a US-Vietnam joint venture, according to Dong Nai’s Labour Federation.

“Such labour disputes and strikes are attributed to enterprises’ financial difficulties caused by the world’s economic crisis. Consequently, enterprises could not meet their agreements with their employees.

“Labour regulations and laws are still being violated, particularly enterprises’ slow payment and illegally increased working time. Employees’ lives in many enterprises remains difficult,” the report said.

VietNamNet/VIR

Tags: Vietnam business news, Vietnam foreign invested enterprises