Vietnam: Lack of Independent Union and Lack of Transparency Prevent the Realization of Benefits from Transferring of the Supply Chains from China
Despite vaccination campaigns, in order to limit the spread of the virus COVID-19, governments worldwide have imposed numerous containment measures and traffic restrictions, closures of businesses and public places. These measures have brought about the virtual paralysis of production and supply chains and caused devastating impacts on the economy on a global scale. With the emergence of new variants in countries that have not yet experienced a pandemic, such as India, many countries of South East Asia, the expected impact on the country health care systems, its economy, and the global supply chains will be profound.
In this context of pandemic and struggles for influence to impacts from the pandemic, many companies have been transferred their supply chains from China to other countries in East and South East Asia, including Vietnam. The transfers of production plants to Vietnam benefit the Vietnamese economy whose production costs remain lower compared to those of China, which is no longer an emerging power, but indeed a second economic power, just behind the United States with all the implications in terms of labor, storage and transport costs. In addition to these costs, there are many other hidden costs of corruption, unfair competition, pressure to acquire trade secrets and manufacturing techniques, if the companies still want to operate on the Chinese market.
According to US International Trade Commission, Vietnam has just overtaken China to become the number one supplier in furniture. However, the past and current negative labor practices, which have severely limited the performance of employees in Vietnam, are always prevalent due to the absence of independent unions. Flagrant violations of the employees’ rights, such as deduction/reduction of wages without justification, non-compliance with break time regulations, and the lack of compliance with health & safety conditions in the work environment, persist as acceptable norms, especially in the absence of independent unions.
Since January 1, 2021, the conditions related to independent labor unions stipulated by the EVFTA Treaty became enforceable, there isn’t any indication that there will be an independent labor union to be formed in Vietnam at any time in the near future. According to the EVFTA Treaty, Vietnam must promote and authorize the formation of independent unions that are not affiliated with the government run official General Federation of Labor Unions, which is controlled by the Vietnamese Communist Party.
The government of Vietnam has not made any serious effort to disseminate information related to the new regulations allowing the formation of independent unions. From many observers, it seems that the Vietnam government currently pursue the approach to hide and ignore its obligation to allow independent unions to co-exist along with its owned state-run General Federation of Labor Unions.
With the strong and recent outbreak of COVID-19 in Vietnam which has caused the closure of production factories in Bac Giang province, it is more important than ever that Vietnam respect all the International Conventions of the ILO, the CPTPP, EVFTA Treaties on workers' rights, fair competition, financial transparency and respect for the environment, apart from health measures. Otherwise, the Vietnamese market will undoubtedly resemble the Chinese markets with constraints, dubious practices that severely limit performance, obstacles to fair competition, all of these issues lead to uncontrollable hidden costs. These issues are opposite to what the Vietnamese government wants, when it opens the country as an alternative environment for businesses to move their supply chains away from China.
The Labor Code 2019 and Its Impacts on Independent Unions
The Labor Code 2019 went into effect on January 1, 2021; it recognizes the rights of workers to setup their own workers’ representative organization (WRO’s). Yet until now, 150 days have passed, yet Vietnam does not have any WRO other than the state-run unions under the umbrella of the Vietnamese General Confederation of Labor (VGCL).
This is an unusual sign due to the following reasons:
1. The salary of Vietnamese workers is very low compared to other countries in Southeast Asia;
2. From 1994 to 2018, there were more than 6000 strikes by Vietnamese workers, who could not work under the exploitations of their employers, particularly due to issues related to wages, working hours, working conditions and the lack of safety measures. From 2018, there were at least 150 strikes organized by workers annually;
3. From NBCN (Friends of Vietnam Labour) perspective, it is not possible that 53 million workers were suddenly changed their mind and became satisfied with their working conditions and pays, as of January 1, 2021. For example, it is unlikely that four million workers in the garment and shoes industries, which are notoriously known for long working hours and meager salary, suddenly became happy with their working environment and pay standards. Since the inception of the Vietnamese Communist Party in 1930, this is the first time that it is under obligation to allow the formation of independent trade unions under the format of Workers’ Representative Organizations (WROs), as stipulated in the Labor Code 2019.
However, the government of Vietnam does not want the 53 million Vietnamese workers to be free to form independent WROs, to fight for their rights and interests because:
“The government of Vietnam has not made any serious effort to disseminate information related to the new regulations allowing the formation of independent unions”
“From 2018, there were at least 150 strikes organized by workers annually”
“The government of Vietnam does not want to lose its annual income as the middleman, which is amount to billions of dollars, Vietnam government collects 2% of the workers’ salary from foreign businesses, and 1% of the salary from the workers”
1. The government of Vietnam does not want 53 million workers to escape its control
2. The government of Vietnam does not want to lose its annual income as the middleman, which is amount to billions of dollars, Vietnam government collects 2% of the workers’ salary from foreign businesses, and 1% of the salary from the workers.
Main Remarks About the Labor Code
1. Although the Labor Code allows workers to form independent workers’ representative organizations, there are many Articles allow the government of Vietnam to strictly control the establishment of independent workers representative organizations, its internal activities, and union its dissolution;
2. Workers have the right to form workers representative organizations within an individual enterprise. However, these WROs from different enterprises are not allowed to link horizontally to form a Federation, nor can they link vertically to form a General Federation of Labor Unions. Furthermore, these WROs cannot associate with any international union. All these restrictions are designed to limit the strength of WROs in negotiating with employers on their employment contracts, and their working conditions. Vietnam has been a member of the ILO since 1992 and it has committed a severe violation of Convention 87 related to the Freedom of Association and Right to Organize;
3. According to the “Global Human Rights Report 2019: Vietnam” published by the State Department of the United States of America, on March 11, 2020, the important points of the Labor Code 2019 are:
a. The activities of independent trade unions (also known as WROs) are easily controlled by the Vietnamese government;
b. The freedom of association, the right to collective bargaining, and the right to strike of individuals are subjected to multiple restrictions or prohibitions, that are inconsistent with ILO standards Convention 87.
4. The government of Vietnam amends the Labor Code to be used only for the purpose of taking advantage of the tax incentives between the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) and EVFTA (European Union-Vietnam Free Trade Agreement) agreements; however, it is not the government intention to help workers to establish independent WROs or to protect their rights and interests in the workplace.
Vietnamese government reactions after the Labor Code comes into effect
1. The government of Vietnam does not widely promote the Labor Code on the media, television, nor provide public training courses for workers about independent WROs; The government does not encourage companies to support workers to form independent WROs within the company. Furthermore, the government view is that independent workers unions will hinder the development of the economy;
2. The government of Vietnam deliberately delay the establishment of independent WORs, despite its obligations under international treaties: The Labor Code No. 45/2019/QH14 approved by the National Assembly of the Socialist Republic of Vietnam was passed on November 20, 2019.
“Vietnam has been a member of the ILO since 1992 and it has committed a severe violation of Convention 87 related to the Freedom of Association and Right to Organize”
“The government of Vietnam deliberately delay the establishment of independent WORs, despite its obligations under international treaties”
The Code takes effect from January 1, 2021. Technically, the Labor Code has been completed and went into effect since November, 2019.
3. As of June 1, 2021, nearly 18 months after the law went into effect, Vietnamese government has not announced:
• Which agency under the Ministry of Labor is in charge of regulating and issuing licenses for independent trade unions;
• Government decree detailing the process of setting up an independent union;
• Name and address of the official contact point within Vietnamese government, under the CPTPP agreement, to continue receive information, correspondence from the public;
• Name and address of the Vietnam official contact point in the Free Trade Agreement VN-Europe EVFTA.
Workers' reactions after the Labor Code came into effect
For employees, there are two streams of thought:
1. From past experience, under the exciting atmosphere that Vietnam joined the World Trade Organization, on October 20, 2006, the Independent Trade Union was born. A few days later, On October 30, 2006, the Association of Solidarity of Workers and Farmers of Vietnam was born. Both were the first two independent unions to be formed under the communist regime. However, only a week later when Vietnam officially joined the WTO on November 7, 2006, both independent trade unions were disbanded. Just like 15 years ago, there is no indication that the union activists will not be prevented or suppressed by the Vietnamese government. Therefore, workers don't believe the Vietnamese government is honest in helping workers set up independent unions to fight and protect their rights.
2. The fear of employees from being dismissed, when joining or forming a union in the company, are very real, especially under the current context that the government of Vietnam, the General Confederation of Labor and its associated unions at all levels are closer to the employers than to the employees.
Support from international NGOs and trade unions
Vietnamese workers must try to overcome the difficulties of establishing new independent WRO, which can fight for their rights and interests. At the same time, the goal of these WROs is to work in harmony with the employers, so that the employees can have stable life and career advancement.
In the current difficult period, Vietnamese employees need the support of the labor unions around the world to:
Create a forum for Vietnamese workers to voice their concerns and issues around the world;
Conduct training courses on the process of setting up independent workers’ representative organizations under difficult environment;
Support NGOs with the goal of guiding Vietnamese workers to establish independent workers’ representative organizations ;
Pressure Vietnamese government and prevent it from punishing and oppressing workers who start to form their own workers’ representative organizations.