Meeting with National Labor Relations Committee (Ủy ban Quan hệ lao động)
Tue, Dec 16, 9:00 am – 12:00pm
Ministry of Labor, Invalids, and Social Affairs, Bldg A, Room 108, 12 Ngo Quyen, Hanoi
Labor Relations Committee
— Ministry of Labor, Invalids, and Social Affairs (MOLISA)
— Vietnam General Confederation of Labor (VGCL)
— Vietnam Chamber of Commerce & Industry (VCCI)
Other government agencies also participating:
Office of Government
Ministry of Planning & Investment
Ministry of Industry and Trade
Ministry of Construction
Ministry of Information and Communications
Ministry of Public Security
Korean Chamber of Commerce & Industry (KoCham)
Hong Kong Business Association in Vietnam (HKBAV)
Taiwan Business Association
Japan Business Association
Vietnam Textile and Apparel Association (VITAS)
American Chamber of Commerce in Vietnam (AmCham)
Tom Siebert, Chair/HCMC (General Director, Indochina Land)
Jocelyn Tran, Vice Chair/HCMC (Country Manager, MAST Industries)
Michael Pease, Chair/Hanoi (General Director, Ford Vietnam)
Chris Miller, Vice Chair/Hanoi (General Director, Emerson Electric Vietnam)
Liz Nightingale, Baker & McKenzie (for Fred Burke, Governor)
Reference and Background Documents
- KoCham Letter to PM, Dec 4, 2008https://www.amchamvietnam.com/download/1102
- HKBAV Letter to PM, Dec 8, 2008https://www.amchamvietnam.com/download/1103
- AmCham Letter to Labor Relations Committee, Nov 20, 2008 https://www.amchamvietnam.com/2525
- AmCham Statement at VBF, Dec 1, 2008 https://www.amchamvietnam.com/2555
- Summary of Decrees 110 and 111, Oct 10, 2008, Minimum Wage Increase for employees of Vietnamese factories (110) and FDI factories (111). https://www.amchamvietnam.com/images/1081.pdf
- PM Decision 1129, Aug 18, 2008 on the Action Plan to to maintain the harmonious, stable employer-employee relations, ensuring a stable investing environment and social order,https://www.amchamvietnam.com/2472
Some Key Points
- Appreciation for meeting and communications
We appreciate the efforts of MOLISA, and VCCI especially, to communicate with FDI factories and business associations as part of the “Tripartite Partnership” and the Labor Relations Committee.
This year we have had five or six meetings and workshops that have helped FDI factories and business associations understand much better the labor law and regulations, and the organizations that are involved in managing employer-employee relations, developing a stable investment environment, and good social order.
In particular, MOLISA 1stVice Minister Huynh Thi Nhan met in HCMC on Mar 24 and again on October 1 with FDI factory representatives, foreign business associations, and local government agencies such as DOLISAs and Departments of Planning and Industry, etc.
We especially appreciate that, after the October 1 meeting, the Government decided to accept the recommendations of the FDI factories and foreign business associations, and postponed any substantial change in regions. Without that change, we would have seen a minimum wage increase of 33% in areas proposed to move from Region II to Region I, such as Binh Duong and Dong Nai. That would have been an increase in the minumum wage for those factories from 900,000vnd/month in 2008 to 1,200,000vnd/month in 2009, which would have been unbearable.
FDI factories and foreign business association representatives also asked at the October 1 meeting that the time period between announcement of the minimum wage increase and the effective date be four to six months, so that there would be time to make changes in business plans vis-à-vis customers, and to communicate administrative payment plans to workers and local DOLISAs and unions.
They also informed the MOLISA that Oct, Nov, and Dec is the busiest production period during the year, and it is not helpful to have employers and employees distracted by major changes in wage levels, insurance payment costs, trade union fees, etc.
However, in this case, the MOLISA did not accept the proposals.
- Current Economic Situation
Many foreign business associations and FDI companies have expressed extreme concern about the current international economic outlook. We have sent letters to the Labor Relations Committee, to the Prime Minister, and communicated concerns at the Vietnam Business Forum on December 1, 2008. (see reference documents).
At this point, we would just like to say again that the situation in Vietnam’s export markets is bad and getting worse.
Vientam’s major export markets are in recession. The U.S., which accounts for 26% of Vietnam’s exports, EU, 19%, and Japan, 16%, all are in recession, which will most likely last until the end of 2009, or mid 2010.
Just recently, the U.S. reported October and November retail salesas the worst in 30 years or more. In addition, the U.S. reported job losses in October and November as the worst since 1974.Most economists forecast that the recession in the U.S. will last until the end of 2009, at least, while job losses will continue to increase so that the unemployment rate in the U.S. will continue to increase, from 6.7% in November to 8% next year.
We would like to give you a few specific examples of the impact on factories in Vietnam.
We representatives of FDI and foreign business associations want to share with representatives of the Labor Relations Committee and other Vietnamese government agencies the information we have from international sources about conditions in Vietnam’s export markets, which will have a major impact on Vietnam’s exports, export earnings and balance of payments, employment, and society in Vietnam.
We also want to share with you the responses of other countries that compete with Vietnam for export sales in the consumer products sector, especially apparel, footwear, and furniture (which account for 2/3 of Vietnam’s exports to the U.S.). Vietnam’s major competitors are China, India, Indonesia, Mexico, and Bangladesh.
In China, for example, the government has decided to rebate export taxes, postpone the minimum wage increase, reduce insurance premiums, etc.“In the light of the current economic situation and real conditions in companies, minimum wage increases have been suspended for the near term,” the Ministry of Resources and Social Security was quoted as saying. In addition, China announced a major domestic infrastructure construction campaign, at one trillion RMB, to create domestic demand, employment and incomes, and offset the drop in exports.
Especially, we would like to emphasize that when prospective foreign direct investors hear that the Government plans to increase labor and tax costs 20% despite the difficult economic environment, they will lose confidence in Vietnam as a good investment destination.
- Proposals for Action
In our letters and statements over the past month (see reference documents), we FDI factories and foreign business associations have asked that the Government seriously consider whether now is the time to increase costs to exporters – wage cost increases, social and health insurance increases, and trade union fee increases.
We also asked at the October 1 meeting in HCM City with MOLISA 1stVice Minister Huynh Thi Nhan, that the effective date of the Minimum Wage increase be postponed.
We realize that this is a very politically sensitive issue, and we understand that the Labor Relations Committee has a very heavy responsibility in making recommendations to the Government , to look after the interests of the employees, the investors/employers, and the nation.
We feel sure that the representatives of the Tripartite Partnership here today, the Government, the Employees Representatives, and the Employers Representatives, all feel their very heavy responsibility.
And we again express our appreciation for the opportunity to participate in this very important meeting so that each of the tri-partite partners can have a good understanding of the others, and so that we can feel that we have had a good, face-to-face, and heart-to-heart communication to share our views on the hardships we all face, and to discuss in a frank and friendly manner how we can cooperate to get through these very hard times we face now and in 2009.
As representatives of employers, we would like to submit the following proposals for consideration by the Government and by the employees representative, VGCL.
We propose that the minimum wage increase be postponed until July 1, for the reasons we have mentioned in many letters and in our comments here today. Faced with recession in major export markets of the U.S., EU, and Japan, factories in Vietnam have lost orders and many are already closing down. Increased labor, insurance, and tax costs will accelerate the closing. It will not do any good to increase the minimum wage, if the jobs are lost.
However, if it is not possible politically to postpone the minimum wage increase, we have some additional recommendations that we would like to make so that we in Vietnam can continue to be competitive with factories in China, India, Indonesia, Mexico, and Bangladesh, which are our leading competitors.
We propose that the Government and the Labor Relations Committee agree and communicate clearly to the workers and to the general public that only the minimum wage is to be increased, and not all wages to all workers in a factory.
If workers are already receiving more than the minimum wage, they should not expect an increase.
For the sake of comity and good relations, the employers may decide to give some small wage increase to those employees that are already making more than the minimum wage, but in no case will it be as large as the minimum wage increase.
We believe it is remarkable that the Government TAXES the workers so high on their minimum wage. Now is a good time to reconsider these TAXES. If we look at the AFTER TAX NET PAYMENT to the employee, and the AFTER TAX NET COST to the employer, we see that the Government TAX and TRADE UNION FEE is as much as 26%, which is a very high tax on both the employer (19%) and the employee (7%).
The Social Insurance Tax, which is 20% in 2008 (15% paid by employer and 5% paid by employee) will increase to 22% in 2009 (16% paid by employer and 6% paid by employee). This is an extremely high tax rate when viewed internationally. In addition, the Health Insurance Tax of 3% (2% by employer and 1% by employee), and the Trade Union Fee (1% by employer only) are additional taxes on the employee and employer.
For example, in Region I, the NET payment to an employee would be 1,116,000 (= 1,200,000 x 93% for 2009), while the NET COST to an employer would be 1,428,000 (1,200,000 x 119% for 200).
In effect the Government would receive taxes of 312,000vnd/month, of which the employee will pay 84,000 vnd (1,200,000 x 7%) and the employer will pay 228,000 vnd (1,200,000 x 19%).
And both the employer and employee may question the value of the service that is or will be received for the very high 26% tax payment.
We suggest that the Government reconsider these tax increases.
If and when widespread unexpected work stoppages occur without following the required procedures (̣ngửng công không đúng trình tự pháp luật quy định), we respectfully request that the Government issue a decision in accordance with Article 176of the Labour Code of Vietnam to suspend or stop such work stoppages for a “cooling off” period, while the Chairman of the People’s Committee in the location where the strike is taking place should convene a meeting of the employer’s representatives and the Executive Committee of the union to negotiate a mutually beneficial settlement of the collective labor dispute in accordance with the Labour Code of Vietnam, Chapter XIV, Section III.
Good employee-employer relations depend on cooperation and communication, in the Tripartite Partnership with the Government (MOLISA), with the representatives of employees (VGCL), and with representatives of employers (VCCI).
We highly appreciate the efforts of the Government in the last 18 months to improve the industrial relations environment, and in particular we highly appreciate the Prime Minister’s Decision 1129/QD-Ttg,18 Aug 2008 Action Plan for the Implementation of Directive No. 22-CT/CW of the Secretariat of the Central Committee, to maintain harmonious, stable employer-employee relations, ensure a stable investing environment and social order.
We would like to take this opportunity to learn more about what the relevant agencies have been and are doing, and how we as FDI and foreign business association representatives can cooperate with them to achieve our joint objectives. In addition to learning about policies at the national level, we would appreciate an opportunity to discuss the Action Plan specifics at the local level with representatives of People’s Committees, DOLISAs, VCCI, and VGCL.
Question 1: Please let us know the measures MOLISA has taken to support the local authorities in preventive measures to minimize illegal strikes, in accordance with article 1 a) of the Action Plan.
- a) The Ministry of Labor, War Invalids and Social Affairs
Accelerate the Labor Relations Committee’s activities; direct the establishment and operation of inter-industrial labor relations in a number of localities; develop the tri-partite coordinating mechanism representing the workers, employers and the local government regulatory agencies; inspect, monitor the process of negotiating and signing of collective labor agreement at enterprises; provide guidance, support local authorities in carrying out preventive measures to minimize illegal strikes; (page 3 of 6)
1.a) Bộ Lao động – Thương binh và Xã hội
Đẩy mạnh hoạt động của Ủy ban Quan hệ lao động; chỉ đạo thành lập và hướng dẫn hoạt động của tổ chức liên ngành về quan hệ lao động ở một số địa phương; xây dựng cơ chế phối hợp hoạt động 3 bên giữa đại diện người lao động, đại diện người sử dụng lao động và cơ quan quản lý nhà nước về lao động tại địa phương; kiểm tra, giám sát việc thương lượng và ký kết thoả ước lao động tập thể trong doanh nghiệp; chỉ đạo, hỗ trợ các địa phương triển khai thực hiện các biện pháp phòng ngừa và hạn chế đình công không đúng trình tự pháp luật quy định;
Question 2: Please let us know about Ministry of Construction policies for worker housing and communal facilities, in accordance with article 1 c) of the Action Plan.
- c) Ministry of Construction
Coordinate with Ministries, competent line agencies, to issue in a consistent manner, preferential policies on taxation, land use, credit, house rental standards, rental rates with aim to encourage participation from different economic sectors in worker housing and communal facilitiesprojects in the centralized industrial zones. To be submitted to the Government by Quarter I, 2009. (page 4 of 6)
- c) Bộ Xây dựng
Phối hợp với các Bộ, ngành liên quan nghiên cứu ban hành đồng bộ chính sách ưu đãi về thuế, đất đai, tín dụng, tiêu chuẩn nhà cho thuê, giá cho thuê nhà nhằm khuyến khích các doanh nghiệp thuộc các thành phần kinh tế tham gia xây dựng nhà ở và các công trình xã hội cho người lao độngtại các khu công nghiệp tập trung, trình Chính phủ quý I năm 2009.
Question 3: Please let us know about Ministry of Information and Communication plans for accurate, complete reporting on government policies and to avoid misleading reporting, in accordance with article 1 đ)) of the Action Plan.
- đ) Ministry of Information and Communicationin conjunction with the Central Propaganda and Training Committee to give instructions to the press and media organizations to proactively carry out education campaigns on legal aspects of labor relations and newly issued government policies; to direct and manage the press and media reporting activitiesto ensure accuracy, completeness, to avoid misleading reporting which has the potential of inciting workers to strike, to suspend work. (page 4 of 6).
- đ) Bộ Thông tin và Truyền thôngphối hợp với Ban Tuyên giáo Trung ương chỉ đạo các cơ quan thông tin báo chí đẩy mạnh công tác tuyên truyền về pháp luật lao động và chính sách mới của Nhà nước; chỉ đạo việc đưa tin trên các phương tiện thông tin đại chúngbảo đảm chính xác, đầy đủ, tránh đưa tin gây hiểu lầm, kích động đình công, bãi công.
Question 4: We welcome the activities of the Ministry of Public Security to enforce strict measures in accordance with the laws against illegal strikes, etc., in accordance with article 1 e)of the Action Plan. We would like to establish close relations at the provincial and district levels with the Public Security representatives to cooperate with them in their efforts.
- e) Ministry of Public Security to be vigilant, to stay constantly informed of local developments, to effectively avert any plot by hostile entities who may opportunistically seek to sabotage national public security and political stability; to enforce strict punishment measures in accordance with the laws against ill-intentioned individuals who instigate illegal strikes, oppose law enforcement agents, or prevent workers from entering the workplace, causing public disorder.
- e) Bộ Công antăng cường công tác nắm tình hình, ngăn chặn kịp thời các đối tượng thù địch lợi dụng nhằm chống phá, gây mất ổn định an ninh chính trị; có biện pháp xử lý nghiêm minh theo pháp luật các phần tử xúi giục, kích động công nhân đình công trái pháp luật, chống người thi hành công vụ hoặc ngăn cản công nhân vào làm việc, gây mất trật tự công cộng.
Question 5: We look forward to the opportunity to meet very soon, even next week, with the Chairmen of the People’s Committees of Ho Chi Minh City, Binh Duong, and Dong Nai, in cooperation with VCCI and VGCL, where many FDI factories are located, in order to discuss how we can cooperate with them to implement article 1 g)of the Action Plan.
- g) The People’s committeesof provinces and cities under the central government
- Provide direction for the establishment of provincial inter-industry labor relation organizations to support people’s committees, cities under central government to manage and resolve labor relation issues arising in the respective localities; coordinate with the Vietnam Confederation of Labor to establish unit trade union as workers’ representative at enterprise level in labor dispute resolution;
- Provide direction for the strengthening of information dissemination, education on labor law within enterprises, domestic private businesses and businesses with foreign invested capital in particular (using appropriate medium to specifically target workers and employers);
- Formulate plan to accelerate inspection work, ensuring strict labor legal compliance at enterprises in the localities; reinforce inspection capacity in line with the actual number of enterprises operating in the areas; regularly monitor and expediently resolve issues, conflicts arising from labor relations; prevent labor disputes from being prolonged and escalated into strikes;
- g) Ủy ban nhân dân các tỉnh, thành phố trực thuộc Trung ương
Chỉ đạo thành lập tổ chức liên ngành về quan hệ lao động cấp tỉnh để giúp Ủy ban nhân dân tỉnh, thành phố trực thuộc Trung ương chỉ đạo, xử lý các vấn đề về quan hệ lao động trên địa bàn; phối hợp với Tổng Liên đoàn Lao động Việt Nam chỉ đạo thành lập tổ chức công đoàn tại doanh nghiệp để thực hiện vai trò đại diện của người lao động, xử lý các vấn đề liên quan đến quan hệ lao động;
Chỉ đạo việc tăng cường công tác tuyên truyền, phổ biến, giáo dục pháp luật lao động trong các doanh nghiệp, nhất là doanh nghiệp dân doanh và doanh nghiệp có vốn đầu tư nước ngoài (bằng nhiều hình thức phù hợp, trực tiếp đến người lao động và người sử dụng lao động);
Xây dựng kế hoạch đẩy mạnh công tác thanh tra, kiểm tra chấp hành pháp luật lao động trong các doanh nghiệp trên địa bàn; củng cố lực lượng thanh tra viên lao động phù hợp với thực tế số lượng doanh nghiệp tại địa phương; thường xuyên theo dõi và kịp thời giải quyết các vướng mắc, mâu thuẫn phát sinh trong quan hệ lao động, không để tranh chấp kéo dài dẫn đến đình công;
Question 6: We have been meeting regularly with VCCI during this year as it seeks to implement article 2 of the Action Plan. We would welcome regular opportunities to meet jointly with VCCI and VGCL to discuss how we can cooperate with VGCL in the implementation of article 3 of the Action Plan.
- Appreciation for meeting and communications – THANK YOU
We deeply appreciate the efforts of MOLISA and VCCI especially to communicate with FDI factories and business associations as part of the “Tripartite Partnership” and the Labor Relations Committee.
We do recognize the challenges to Vietnam’s government and society with foreign investment and the difficulties in communications because of different languages and cultures. Here in this room we have Vietnamese, Korean, Taiwan, Hong Kong, Japan, U.S., and others, so we do appreciate that we all have to make an effort to understand and communicate with each other.
We do recognize also that 73% of the work stoppages in 2007 occurred in FDI factories, so we want to make a special effort to improve communications and understanding so that we can minimize work stoppages in the future.
Once again, thank you for sparing time today to meet with us.
We feel confident that we can succeed in a joint effort of Employers’ Organizations (VCCI and other FDI Business Associations, including KoCham, HKBAV, JBAV, AmCham etc.) working with the Government (MOLISA) and Workers Organization (VGCL) in the Industrial Relations field to develop a Tripartite Partnership between Government, Workers, and Employers, which can be successful in preventing and resolving labor / management conflict and reducing costly and disruptive work stoppages.
Developing this Tripartite Partnership could make a real contribution to the economic and social development of Vietnam.
This is a difficult task, but AmCham and other FDI Business Associations worked closely with the Vietnam Textile and Apparel Association (VITAS), Ministry of Industry and Trade, U.S. buyers and FDI partner factories from 2002 to support the healthy development of apparel trade between Vietnam and the U.S.
We can all be proud of the fact that U.S. imports of apparel from Vietnam in 2007 were $4.4 billion, over 42% of total U.S. imports from Vietnam, and may exceed $5 billion this year.
Working together with VCCI, MOLISA, and VCGL, we can achieve a similar success in the field of industrial relations.
Once again, thank you for your participation and cooperation today.
I wish all of you a happy, prosperous, and successful 2009.
Điều 176Khi xét thấy cuộc đình công có nguy cơ xâm hạinghiêm trọng cho nền kinh tế quốc dân, lợi ích công cộng, Thủ tướng Chính phủ quyết định hoãn hoặc ngừng đình công và giao cho cơ quan nhà nước, tổ chức có thẩm quyền giải quyết. Chính phủ quy định về việc hoãn hoặc ngừng đình công và giải quyết quyền lợi của tập thể lao động.