National Employers’ Conference 2011
On Industrial Relations and Labour Code Revision
Melia Hanoi Hotel, Mon, Oct 24, 2011

Background Information

Employers’ Representative Statement re Labour Code Revision (E)
Employers’ Representative Statement re Labour Code Revision (V)
Conference Handbook: National Employers Conference 2011 (E)
Conference Handbook: National Employers Conference 2011 (V)
Comments about Overtime in the Draft Revised Labour Code
Letter to National Labour Relations Committee re Revised Labour Code, 2011 (Eng)
Letter to National Labour Relations Committee re Revised Labour Code, 2011 (VN)
Ý kiến của Thủ tướng Nguyễn Tấn Dũng về xây dựng 9 dự thảo Luật, Bộ luật, 15/09/2011
ILO Vietnam Industrial Relations Project: Mid-Term Evaluation, Feb 1, 2005
From Rights to Interests: The Challenge of Industrial Relations in Vietnam, 2006
ILO Vietnam Industrial Relations and Labour Code Reform Project: Final Evaluation, Aug 2, 2011
Revised Labour Code, 2008-2010 • National Conference on Industrial Relations 2010

Introduction

Herb Cochran, Executive Director, AmCham VietnamMr. Chairman, Distinguished Guests, Ladies and Gentlemen,Thank you for the opportunity to consult today on the revised Labour Code.

I am pleased to see representatives of Vietnamese and Foreign Business Associations, representatives of business associations of major export markets and major FDI sources; and representatives of major export-oriented industries, that may account for more than one half of Vietnam’s exports. That indicates both our interest in this issue and the proactive and inclusive leadership of VCCI as the Employers’ Representative.

It is especially important that FDI representatives be included, since FDI factories represent 42% of Vietnam’s gross industrial production, and 57% of Vietnam’s exports in 2010.

Context of the Conference: 2008 – 2011

We are meeting today to consider a revised Labour Code. All of us here have been extensively involved in consultations on this issue since 2008; therefore, it may be helpful to consider the context of our discussions: how we got here.

In 2008, there was an unprecedented wave of work stoppages in Vietnam, caused in part by macroeconomic instability and inflation. In response to the widespread strikes with violence that occurred mostly in FDI factories in the Southern Key Economic Region, and the concerns expressed by FDI and Vietnamese business associations to the government, the Prime Minister’s Decision 1129/QD-TTg, 18 Aug 08, “Action Plan for the Implementation of Directive No. 22-CT/CW, 5 Jun 2008 of the Secretariat of the Party Central Committee established a framework for enhancing leadership, providing direction for the development of harmonious, stable and progressive labor relations within enterprises.

The Decision requested that Ministries, line agencies and competent local entities execute the Action Plan, and the very first priorities were to

• Review, revise, supplement the Labour Code and its implementing legal documents; amend, supplement Decree No. 113/2004/ND-CP dated 16 April 2004 of the Government on administrative sanctions for violation of labor law; provide guidelines on procedures for the negotiation and signing of collective labor agreement, building salary steps and scales in domestic private enterprises and businesses with foreign invested;
• Accelerate the National 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.

During the three years, 2008 – 2011, Foreign Business Associations have had many opportunities to participate in meetings organized by VCCI among ourselves, and with representatives from MOLISA and from local authorities and agencies (DOLISA, etc.) – more than 30 times over the last three years, since about March 27, 2008, when we had our first meeting in HCM City with members of the National Labour Relations Committee, represented by:

Ministry of Labor – Vice Minister Huynh Thi Nhan
VCCI – 1st VP Hoang Van Dung
VN General Confederation of Labor – Chairman Dang Ngoc Tung

In the Fall of 2009 and early Spring of 2010, we had intensive consultations about the revised Labour Code with MOLISA organized by VCCI and the “Tripartite Partnership,” including participation in a public hearing led by the National Assembly Social Affairs Committee Vice Chair, MOLISA, VCCI, and VGCL with 200 representatives in Dong Nai on March 26-27, 2010, and culminating with the National Conference on Industrial Relations in Hanoi with about 200 participants on April 1-2, 2010.

These meetings were part of a series of 26 meetings organized by MOLISA, VCCI, and VGCL across all of Vietnam. Not only were they interesting and fruitful from the point of view of engaging thousands of stakeholders to discuss the proposed revised Labour Code, but they provided a basis for a better understanding of the democratic process in Vietnam, with consultations on an issue of critical importance to the economic and social development of Vietnam.

Now, we are nearing completion of a revised Labour Code. Unfortunately, the number of work stoppages in Vietnam is again soaring, as workers struggle again to cope with macroeconomic instability and one of the world’s highest rates of inflation, about 20 per cent in June, July, August, and September. .

Specific Recommendations of Foreign Business Associations

Following extensive consultations led by VCCI, Foreign Business Associations have submitted comments and recommendations in a letter dated July 18, 2011 to the National Labour Relations Council, with copies to the Prime Minister and other interested national and local authorities.

In the interests of limited time, and considering that others will comment on some of the specific topics in our letter, I will not repeat all the recommendations here, but just highlight a few.

Resolution of Labour Disputes (Chapter XIV)

One of the most important issues is management of labor disputes and the legal process for initiating a strike. The right to strike must be recognized in a practical manner in the Labour Code. We need a simplification of the approval process for strikes that would automate the process and remove the discretionary element that makes it nearly impossible to have a “legal” strike as of today.

If a strike/work stoppage happens without following due process, procedures, and timelines in the Labour Code, then it will be deemed illegal by Labour Code definition without having to go to court. This is critical for the proper involvement of the appropriate government agencies (district, provincial level) to get involved and be responsible to help resolve the issues instead of just “bystanders”.

The process of dispute resolution and legal strike should be simplified at the enterprise and union level. When there is no progress in dispute resolution, the union can call for a strike vote by its members on a majority vote basis. Once a majority vote supports the strike, then the enterprise union can inform the upper level union and enterprise three days before the strike.

A critical role of the VGCL in dispute resolution is to guide the unions and workers to follow due
process so that a strike is the final step after other dispute resolution procedures have been
followed, and not the first step;

If a work stoppage happens without following due process, procedures, and timelines in the Labour Code, then that work stoppage will be deemed illegal by Labour Code definition without having to go to court.

A temporary lock out is allowed immediately without previous notice to the authority if the employer deems the situation dangerous for staff or corporate assets. The employer can notify the authority at the time of decision.

The District Level People’s Committee is the most suitable place to give authority to resolve work stoppages, since they have authority over district DOLISAs, police, etc. They should issue a “stop order” to unions/striking workers if the work stoppage does not follow procedures.

The Labour Arbitration Council at the district level needs to be established and used, and consist of district DOLISA, VCGL, and Employers’ Representative (or Industry Association Representative).

A flow-chart/timeline of our proposal is below.

Dispute Settlement Timeline

Working Time and Resting Time (Chapter VII)

Labour Code (revised) Chapter VII, Article 114. Overtime has two options

“1. Working overtime is the duration of work in the hours other than the ones indicated in laws, collective bargaining agreement of the enterprise, collective bargaining agreement of sector or internal working regulations of enterprise.

“2. Employers is entitled to request employees to work overtime with:

“a. Agreement of the employees;

“b. Option 1: (the same as the current Labour Code) Employer and employee can discuss and agree on working overtime. The number of overtime working hours must not exceed 4 hours per day, 200 hours per year, except in special cases . Then, it is permitted to work overtime not exceeding 300 hours per year as stipulated by the Government, after consulting with Vietnam General Confederation of Labour and representative of employer.

Option 2: Employer must ensure that the number of overtime working hours of employee does not exceed 50% of the official working hours per day and 36 hours per month. After each period with many days of working overtime in a month, the employer must arrange for compensation of days off for the employee.”

AmCham has proposed to the National Labour Relations Council (MOLISA, VCCI, VGCL) that the International Labour Organization (ILO) Working Hours Standard be adopted. As explained in non-technical terms by Social Accountability International, it is: “7. Working Hours: Compliance with laws & industry standards; normal workweek, not including overtime, shall not exceed 48 hours; 1 day off following every 6 consecutive work days, with some exceptions; overtime is voluntary, not regular, not more than 12 hours per week; required overtime only if negotiated in a Collective Bargaining Agreement (CBA).”

We would also like to add in special industry to be decided by the Prime Minister, that overtime not exceed 48 or 50 hours per month. This would help deal with the “hot seasons.”

Separate Provisions Concerning Female Employees (Chapter X)

In the draft Labour Code (revised) submitted to the Government, Article 163. Maternity leaves provides two options for consideration
1.
Option 1: A female employee is entitled to prenatal and postnatal leaves, in total of 6 months with given maternity allowances in accordance to regulations stipulated by the Law on Social Insurance. If she gives birth to twin upwards, judging from the second child upwards, for each child the mother will gain 30 more days off.

Option 2 (as the current Labor Code): A female employee is entitled to prenatal and postnatal leaves, in total of 4 to 6 months as stipulated by the Government, depending on the working conditions, the heavy and toxic nature of the job, and the workplace of distant and remote areas. In case the employee gives birth to more than one child at one time, she shall be entitled to 30 additional days of leave for each child counted from the second one.

The social insurance, which the employer pays into consistently, pays for their whole monthly salary during the leave, up to a maximum of about 16.6 million VND.

The proposed Code increase by 50% to 6 months will contribute to the current labor shortages and place expensive burdens on the social insurance system. Below is a comparison of Vietnam with other countries in the region. Vietnam’s current 4 months, about 17 weeks, is already the highest in the region, and well above the ILO Standard of “not less than 14 weeks.”

AmCham has proposed that maternity leave remain as at four months.

China90 days=12.9 weeks100% wage
Indonesia3 months=13 weeks100% wage
Malaysia60 days=8.6 weeks100% wage
Cambodia90 days=12.9 weeks50% wage
Hong Kong.10 weeks4/5ths wage
Singapore.8 weeks100 % wage
Thailand90 days=12.9 weeks100% for 45 days; 50% for 45 days
Taiwan.8 weeks100 % wage
VN Option 16 months=26 weeks.
VN Option 2 (current)4 months=17.3 weeks.
ILO Standard (as of 2000).14 weeks.

Wage (Chapter VI)

Salary Scale & Table need not be approved by the Trade Union and enterprise shall have final say and be responsible for the decision

It shall not be required to be posted in public as these are considered competitive commercial information and is not realistic nor practical to post in public.

We believe that the company management can communicate the information to the union “for reference.”

Conclusion: Vietnam’s Labour Code Revision Will Impact Current and Future FDI

In closing, we should all remember that Vietnam’s Labour Code revision and Industrial Relations environment will have a major impact on current and future FDI. Already, new FDI is lower. Vietnam is losing opportunities to attract modern manufacturing FDI, which is going to neighboring countries.

Once again, we especially thank VCCI, for its leadership role as the Employers’ Representative, for including FDI representatives in these consultations, since FDI factories represent 42% of Vietnam’s gross industrial production, and 57% of Vietnam’s exports in 2010.

We might say FDI in manufacturing is the “goose that lays the golden egg” for Vietnam’s economy; as such, we recommend that the Tripartite Partnership, the Government, and the National Assembly, give favorable consideration to and take positive action on our comments and recommendations concerning the Labour Code revision.

To do otherwise could likely “kill the goose that lays the golden eggs.”

Xin chúc toàn thể quý vị có mặt hôm nay nhiều sức khỏe, hạnh phúc và thành công.
I would like to wish all of you good health, happiness and success.

Xin chân thành cảm ơn.
Thank you very much.

Background Information

Employers’ Representative Statement re Labour Code Revision (E)
Employers’ Representative Statement re Labour Code Revision (V)
Conference Handbook: National Employers Conference 2011 (E)
Conference Handbook: National Employers Conference 2011 (V)
Comments about Overtime in the Draft Revised Labour Code
Letter to National Labour Relations Committee re Revised Labour Code, 2011 (Eng)
Letter to National Labour Relations Committee re Revised Labour Code, 2011 (VN)
Ý kiến của Thủ tướng Nguyễn Tấn Dũng về xây dựng 9 dự thảo Luật, Bộ luật, 15/09/2011
ILO Vietnam Industrial Relations Project: Mid-Term Evaluation, Feb 1, 2005
From Rights to Interests: The Challenge of Industrial Relations in Vietnam, 2006
ILO Vietnam Industrial Relations and Labour Code Reform Project: Final Evaluation, Aug 2, 2011
Revised Labour Code, 2008-2010 • National Conference on Industrial Relations 2010