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Top House Democrat cites Labor, enforcement concerns about new NAFTA (USMCA)

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Letter to Prime Minister re Industrial Relations in Vietnam, May 20, 2008

Tiếng Việt – Vietnamese

May 20, 2008

Respectfully to:The Prime Minister
Copies to:The Office of Government
.Minister of Labor, Invalids, and Social Affairs
.Minister of Industry & Trade
.Minister of Planning & Investment
.Minister of Foreign Affairs
.Chairman, People’s Committee of Ho Chi Minh City
.Chairman, People’s Committee of Binh Duong
.Chairman, People’s Committee of Dong Nai
.Ambassador of the United States of America
.Consul General of the United States of America, Ho Chi Minh City
.Chairman, Vietnam Chamber of Commerce & Industry
.Chairman, Vietnam General Confederation of Labor

Based on Decree No. 08/1998/ND-CP of the Government dated 22 January 1998, promulgating the Regulations on the Establishment of Foreign Business Associations in Vietnam;

Based on Article 4.5 of the Regulations that provides for the Leadership Board to represent the Association in putting forth proposals and measures to Vietnamese state management authorities for the purpose of protecting the lawful rights and interests of member businesses and contributing to the creation of a healthy business environment.

There were widespread strikes with violence that occurred in many FDI factories in the Southern Key Economic Zone in the spring of 2008, just as there were in the spring of 2006. A few years ago, there were 200 strikes in a year. In 2008, there have been 200 strikes in the first two months of the year.

There has been little or no government reaction or assistance in solving or preventing these strikes by helping better communication between workers and management of FDI factories. While workers have legitimate problems caused by inflation of 20%/year this spring, for which the government bears a certain amount of responsibility, the central and local governments need to develop better communication between workers and management to address and resolve differences in a constructive and peaceful way.

Some believe that Illegal strikes are a “social disease” in Vietnam, spreading rapidly. They are mostly focused on FDI factories at the present time, but it is very likely that they will spread to Vietnamese factories as well, if appropriate remedial action is not taken promptly.

It seems that during every one of the strikes that occurred, the workers did not follow the procedures outlined in Chapter XIV, Section 3 of the Labour Code of Vietnam for Collective Labor Disputes Settlement. In particular, they did not follow the procedures for conciliation of collective labour disputes by submitting disputes to the Labour Conciliation Council, the Labour Arbitration Council, or the People’s Court.

Furthermore, the workers did not follow the procedures for initiating or settling a legal strike as provided for by Articles 172-179 of Chapter XIV, Section 4 of the Labor Code of Vietnam regarding Strikes and Settlement of Strikes.

Article 176 provides that “When it is considered that a strike may cause serious threat to the national economy or public safety, the Prime Minister of the Government shall have the power to issue a decision to suspend or to stop the strike.”

We believe that the rash of illegal strikes directed against FDI enterprises, sometimes with violence, that do not follow the procedures established in Chapter XIV, Sections 3 and 4 of the Labour Code of Vietnam by their very nature cause a serious threat to the national economy, and we respectfully request that the Prime Minister of the Government issue a decision to suspend, or to stop, such strikes when they occur in the future.

The reason that such strikes cause a serious threat to the national economy is that FDI enterprises have made and are making a major contribution to the national economy, to the economic and social development of Vietnam, and allowing illegal strikes will lead to a result of stopping additional FDI and driving out existing FDI.

At a meeting in Ho Chi Minh City on March 27, 2008 organized by the Vietnam Chamber of Commerce and Industry, with the participation of the Vice Minister of the Ministry of Labor, Invalids, and Social Affairs, and the Chairman of the Vietnam General Confederation of Labor, together with major U.S. and European buyers of apparel and footwear and Korean, Taiwanese, and other “partner factory” representatives, the following representative views were expressed.

“Our company has been in Vietnam since 1996. We source apparel and shoes, and manage over $800 million in exports. We employ over 100,000 workers directly and indirectly, and account for over 8% of Vietnam’s apparel and footwear exports.

“Vietnam is key to our business plans, and we have been working with partners to develop business across the supply chain. We have brought jobs, new manufacturing technology. We have trained workers in health, safety, as well as manufacturing.

“To achieve our plans, we need a stable and reliable work force. We need the Government to create, communicate, and enforce good policies in labor-management relations.

“However, recent labor strikes and other issues have caused us to pause and re-evaluate our assumptions about Vietnam’s ability to manage the economy.”

And

“We have been in Vietnam since 1995 with both apparel and footwear factory partners. We employ directly and indirectly 230,000 workers. We account for $1 billion in exports of apparel and shoes and 30% of VN’s shoe exports.

“However, we saw approximately 200 illegal strikes across industries in first quarter of 2008. Our own supply chain has been disrupted by some significant production stoppages. Collectively, it is costing millions of dollars to us and our partner factories. There are no MOLISA regulation/guidance standard operating procedures to deal with these wildcat strikes, which has led to this ‘radical situation.’ FDI factories have a hard time to find anybody to talk with, representing the workers, during the strikes. We need to clarify the role and responsibilities of authorities (DOLISA) and labor organizations (Federation of Labor), local and provincial police, in solving these illegal strikes.

“We want to develop business in Vietnam for mutual interest and benefit, but we need a stable labor environment, and we ask the Government to find solutions to these labor problems. If the labor environment should remain unstable, we will need to review our sourcing strategy and potentially reconsider our commitment.”

Major U.S. buyers and their “partner factories” from Korea, Taiwan, etc. have indicated that they will leave Vietnam if the labor situation is not improved, constructive and peaceful collective dispute settlement procedures followed, and illegal strikes stopped.

This is a clear and present danger to the national economy, since Foreign Invested Enterprises (FIEs) accounted for

  • 38% of industrial output;
  • almost 60% of total exports;
  • almost 20% of the total labor force, Average compensation in FIEs was double the level in Vietnamese private companies, and almost 50% higher than in State Owned Enterprises; and
  • paid 37.2% of taxes.

Accordingly, we respectfully request that the Prime Minister, whenever such strikes occur in the future, issue a decision in accordance with Article 176 of the Labour Code of Vietnam to suspend or stop such strikes for a “cooling off” period.

In addition, we respectfully request that the Prime Minister direct the Chairman of the People’s Committee where the strike is taking place to 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.

We believe that such positive action will help create a more favorable labor / management / government environment in Vietnam, and this will help retain and attract more Foreign Direct Investment, which has contributed and will continue to contribute to the economic and social development of Vietnam.

Respectfully,

/signed and sealed/

Thomas Siebert
Chair, AmCham Vietnam
Ho Chi Minh City

Tiếng Việt – Vietnamese

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