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Beginning late in 2005, tens of thousands of Vietnamese workers downed tools at dozens of foreign-invested enterprises (FIEs) in southern industrial zones around Ho Chi Minh City. While strikes are legal and common in Vietnam - there have been some 900 reported since 1995 - this wave of strikes was the most massive in recent Vietnamese history.
Most reportage indicated that this wave of strikes was brought to a close around 6 January 2006 when the Vietnamese government allegedly 'caved in' to the strikers demands for a 40-48 per cent pay increase and other demands.
The 28 January Economist reported:
'What is especially unsettling for investors is how the workers got their extra dough. Since late December, wildcat strikes have swept through the industrial zones surrounding Ho Chi Minh City. Apparently caught off-guard, the government issued a decree earlier this month raising the minimum wage in foreign-owned factories & investors are fuming over production stoppages and a higher wage bill.'
However, the fact that the Vietnamese government can tell foreign investors that it is doing them a service in ending the wave of strikes by giving the workers a victory and decreeing a large wage rise appears tongue in cheek, as the government had decreed the wage rises long before this wave of strikes.
As the Vietnamese daily Saigon Giai Phong (Liberated Saigon) had reported on 25 September 2005, 'The Ministry of Labour, Invalids and Social Affairs has called on FDI (foreign direct invested) enterprises to increase the minimum wages they pay their employees. It wants firms based in Hanoi, HCM City, Dong Nai and Binh Duong to pay at least 870,000 Dong (about US$55) per month, those in Hai Phong, Ha Long, Da Nang, Nha Trang, Vung Tau and Can Tho to pay 790,000 Dong ($50), and those in other areas to pay 710,000 ($45).'
The new minimum salaries replace the previous minimums of 626,000, 556,000 and 480,000 Dong respectively, with the biggest percentage rise, of 48 per cent, going to more poorly paid workers in small cities and semi-rural areas.
This government decision had come about due to a demand for a minimum 40 per cent increase by the Vietnam General Confederation of Labour (VGCL), the country's peak trade union body.
The reason for this wave of strikes was that many foreign investors asked the government to defer the wage rise until after the Tet (Lunar New Year) holiday, which began on 28 January 2006, because they 'couldn't afford' to pay the wage rise and also pay the Tet bonus. The Tet bonus is the equivalent of a thirteenth month salary that Vietnamese workers are legally entitled to. The government, thus, left it up to the bosses and workers to bargain over when it would be implemented before Tet.
Feeling they had waited long enough, workers downed tools with the full knowledge that they had the law, the open sympathy of most Vietnamese, the discreet sympathy of the government and the active support of the official trade union leadership on their side.
According to the 11 January 2006 Viet Nam News, the VGCL claimed 'the reason for recent strikes is that companies have announced wage policies and bonuses late'.
Thus the government did not announce a new policy to end the wave of strikes, but merely stated that its policy now had to be implemented no later than 1 February. Far from 'caving in' to the workers, the actual chain of events suggests that the government's wage rise decree last September set off the strikes, which aimed to see that the decree was enforced.
Foreign investors and the western media responded with hostility to the workers' struggles. The Economist quoted bosses claiming that 'outside agitators stoked the protests, distributing notes at factory gates while police stood idly by', and noted that 'some observers find it implausible that they could occur without the prior knowledge of the ruling party, which forbids independent trade unions. As in China, workers are allowed to join only a pliant, party-affiliated union.'
But this discourse about 'a pliant, party-affiliated union' looks rather ironic, considering the Economist complained about the strike action and accused the government and its 'pliant' union of being behind the strikes.
This irony is capped when the Economist went on to ask 'why didn't Vietnam crush the illegal strikes?' The Christian Science Monitor also noted that 'some observers were surprised by the failure of authorities to suppress the strikes - police on the scene stood by idly.'
The European Chamber of Commerce wrote to the prime minister, Phan Van Khai, to warn him that investors will set up shop in Vietnam because, they imagined, 'the workforce is not prone to industrial action', that is they wanted pliant workers and plaint unions.
Yet in reality, the reason the Vietnamese government did not do the bidding of these investors and 'crush' the strikes is because it does not usually do so. As the US Department of Commerce noted, although most strikes were led by spontaneous workers' groups rather than official unions, and though most 'did not follow proper legal procedures, they were tolerated by the government with no reports of retribution against the strikers' (Socialist Republic of Vietnam - Determination of Market Economy Status, November 2002).
It is common for the official Communist-led unions to step in and force bosses to relent to workers' demands. In one example, during a similar wave of strikes last October-November, the 1000 workers who struck at the Hong Kong-owned Rieker Viet Nam footwear factory only returned to work 'after a meeting between company's management and the provincial authorities and [the] Quang Nam Labour Federation on Thursday morning, the company's management agreed to a worker pay raise, better lunch and better working conditions', that is, to the strikers' precise demands.
The VGCL and its campaigning newspaper Lao Dong continually give support to strikes, even though they rarely organize them. Many plants employing rural migrants do not yet have union chapters, because migrants initially want to keep out of trouble; however, once they discover the nature of the exploitation and launch 'wild-cat' strikes, the VGCL then helps them win their demands and they subsequently sign up as union members. While virtually 'every strike' to date has not followed the lengthy procedures of the Labour Law, the VGCL also claims that 'every one' has been justified.
As the Economist Intelligence Unit has claimed, 'labour rights sentiments are backed by a conciliation system and a judiciary sympathetic to labour demands' (Risk Wire, Vietnam risk: Alert: Labor Reform, April 2, 2002). Likewise, investors complain that Vietnam's law protects employees more than employers, and according to the manager of Nike Vietnam, when workers go on strike unlawfully, officials support them (VDC Business Newsletter, December 21 2004).
Moreover, when the fact the government unwittingly set off the wave of strikes by decreeing the increases is combined with the openly supportive attitude of the VGCL and the extraordinary degree of apparent coordination among the strikers, the intriguing idea arises that VGCL activists may have had something, unofficially, to do with the strikes.
In other words, the ways in which the Communist Party and the various mass organisations it leads, such as the VGCL, navigate unsteadily between socialism and capitalism may encompass much more behind-the-scenes movement than the overly economic-pragmatist face it feels compelled to show the world.
As always, Vietnam will do things its own way, and the success rate of 'that way' remains high.
WATCHPOINT: Will the VGCL emerge as a more independent social actor as workers' traditional benefits and certainties are threatened in the near future by the combination of increased 'equitisation' of state enterprises and further trade liberation with WTO membership?
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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