Labour Regimes in Vietnam and China: Parallels and Contrasts

I have previously written about the labour relations crisis in China. Vietnam makes an interesting comparison to the Chinese situation, both for the broad similarities of the labour history of the two countries and because, beneath the surface, there are a host of subtle differences.

As the rural migrant workforces that have fuelled the economic development of both countries become increasingly organised and assertive, the question of if and how they may be effectively represented becomes increasingly urgent. In some cases, Vietnam may have a substantial advantage.

Central Unions

Both China and Vietnam have strong central unions with a monopoly on official labour representation, the All-China Union of Trade Federations (ACFTU) and the Vietnamese General Confederation of Labour (VGCL) respectively. Both are trying to drive up membership. Both are also limited by national leaderships which fear empowering grassroots movements, especially labour. Thus, unions are formed in collaboration with management and initially staffed with management appointees, typically the director of human resources.

To quote one VGCL official, approaching workers directly “would infringe the rights of the employer.” Although the Vietnamese Labour Code suggests that Vietnamese unions may form organically and apply for VGCL membership, in reality, Vietnamese officials attest that only unions founded under the VGCL umbrella will be considered legitimate.

As in China, foreign-invested companies in Vietnam frequently defy their legal obligation to establish a union branch, although joint-venture companies may sometimes inherit a pre-existing union and have to put up with it. Vietnam, however, has one significant advantage over China: a central Ministry of Labour which takes a role in all labour disputes. Whereas in China, labour disputes are funneled through progressive levels of mediation and the courts under the auspices of local government, Vietnam has a central responsible authority.

Thus, the Ministry of Labour is a structural ally of unionization, and sometimes has better leverage in forcing companies to live up to their legal obligations. Local Labour Departments in industrial zones often set up union branches on their own initiative, since they find it much easier to settle a strike in an enterprise with a union than without one. The VGCL claims that its membership now includes 50 percent of the workforce in the foreign-invested sector. One interesting phenomenon is the policy in some localities such as Dong Nai Province for unions to send “directive working staffs” to companies refusing to set up unions, either overtly or covertly, to encourage the workers to set up their own union branch. It is questionable whether this is the beginning of a grassroots approach to labour representation, but it certainly bears further study.

Enterprise Unions

There are, in theory, provisions in the Vietnamese Labour Code which would lend increased legitimacy to workplace unions, as detailed by scholars Anita Chan and Irene Norlund. Whereas enterprise unions in China depend on enterprise funding, and often management salaries, Vietnamese unions should subsist on union dues and government funding. Vietnamese labour law expressly forbids the union from exercising management functions, i.e. becoming an arm of human resources as often happens in China. Vietnamese workers also have the theoretical right to self-organise, as new unions must only notify the government, not seek approval from it.

In reality, although Vietnamese union members contribute 2 percent of their wages as union fees, and despite the labour law, many enterprise union presidents are paid by their company, due to VGCL funding shortages. While unlike China, workplace trade union elections are the norm in Vietnam, most candidates are managers and sponsored by management.

Structural Advantages

Labour enjoys several kinds of structural advantage within the Vietnamese party-state compared with its Chinese equivalent. First and most obviously, the VGCL is a smaller organisation with only three levels of organisation to deal with. The chairman of the VGCL is a minister and a Central Committee member, reflecting the historical importance of the union to the Vietnamese party. The VGCL also enjoys considerable leverage with the Ministry of Labour, which is even more pronounced at the local department level.

Not only is there significant overlap between VGCL and Ministry of Labour functions, their departments often share personnel. In Ho Chi Minh City, the Director of the Labour Department is also deputy head of the local union, while his counterpart in Hanoi is head of the Hanoi union. While some interpret the close cooperation between the VGCL and the Ministry as union subordination to the state monitoring apparatus, it should be recognised that, in a system of labour rights that depends heavily on state legislation and enforcement, this close relationship confers enviable structural leverage on the VGCL.

Local Departments of Labour (DOLISA) often seem to be more proactive in representing labour interests than their union equivalents. One local Department of Labour official asserted that since the VGCL does not provide much support for collective bargaining, the Departments of Labour end up counselling workers on how to negotiate for concessions beyond the legal minimums. One HCMC Department of Labour official, Nguyen Thi Dan, has not only created workshops for workers on labour rights, but has been conspicuous in advocating the workers’ positions at the scenes of numerous strikes, where workers defer to her rather than to the workplace unions that consistently ignore their interests. One could say that in a Western sense, Vietnam has no unions but has a powerful state-sanctioned worker advocacy group.

Role of Unions Contested

While it is legally possible for the VGCL to move into a genuine collective bargaining role, the organisation places little emphasis on developing this capacity, with little training or support provided, especially to workplace unions. Vietnamese unions in the foreign-invested sector continue many of the traditions of their predecessors in the state sector, using union budgets to provide sports and entertainment as well as wedding and funeral bonuses, one union president claiming that there is no other way to attract members.

One tactic used to control unions in both countries is for management to cultivate a set of workers with exceptional benefits and ensure that these workers form the core of the union, while transferring anyone who criticises the company to dead-end positions. Workers at one shoe factory in Ho Chi Minh City attested that the enterprise union had thrown their petitions over management labour violations “in the trash can.” Effective worker organisation is difficult to achieve because organisers tend to be victimized even while the state capitulates to worker demands. Occasionally, the enterprise union may successfully mediate a dispute, as in one tailoring company where the union asked management for disciplinary action against an abusive manager and asked workers for calm.

Dispute Resolution

While China has made the legal mechanisms for resolving labour disputes a going concern, Vietnam’s equivalent structure is all but non-functional. Numerous sources attest that enterprise conciliation committees have seldom heard cases. Informal bargaining and wildcat strikes seem to be the two pillars of the extra-legal reality that industrial relations has taken on. Strangely enough, this may be a positive sign.

In Vietnam, the legal procedure for redressing violations of labour law presumes collective representation by the trade union filing the grievance, which in other circumstances would constitute an improvement on the Chinese process. The procedure calls for the grievance to be dealt with first by the enterprise conciliation council, and then by a regional Arbitration Council, or the labour court. Having exhausted these avenues, the trade union can decide, with the support of the majority of its members, to call a strike. In practice, the workplace unions are usually too well controlled by management to initiate the grievance, and the workers know that the “employee” representatives on the conciliation council are managers.

Only in Ho Chi Minh City does there appear to be some progress, where 84 collective and 1118 individual cases had been heard between 1995 and 2006, largely because the local Department of Labour does not wait for a complaint but intervenes as soon as it hears of a problem, sometimes from managers eager to head off a strike.

Among foreign-invested enterprises with unions, less than 50 percent have signed collective agreements, according to VGCL figures. The issue seems in some ways redundant, since the collective agreements that are signed seldom exceed legal minimums, while other concessions were made through informal negotiation. Even when contracts are signed, management often does not honour the terms, and does not have clear policies on basic matters such as raises, bonuses and sick leave. The labour code violations of foreign-invested factories in Vietnam include the familiar arsenal of illegal overtime, short pay and intimidation.

Creative Response to Strikes

Strikes in Vietnam elicit an intriguing official response. The Ministry of Labour attempts to persuade management to meet workers’ demands, while the local VGCL branch persuades the workers to return to work. Most strikes in Vietnam are short, many stoppages being short enough they are not reported as strikes, with the Department Of Labour usually intervening to persuade employers to give in to worker demands. The VGCL consciously embraces the role of mediator, working with the employer to maintain industrial harmony. In contrast with China, there is seldom any direct police action against protesters in Vietnam, although this has changed somewhat in the past few years.

Alternate Channels of Representation

The VGCL has evolved a number of alternate means of representation and labour advocacy which bypass the ineffective workplace unions. The VGCL-run labour newspapers, especially the national Lao Dong (Labour) and Ho Chi Minh City Nguoi Lao Dong (Labourer), can provide an alternate channel for worker grievances. Workers can tip off the papers to abuses and impending disturbances in person, in writing or via 24 hour hotline, and the newspaper will send investigative journalists. These papers sort, analyse and publish grievances, as well as he causes of strikes. They have some freedom to criticise ineffective government monitoring and sanctions, as well as harmful industrial practices such as maintaining shell companies.

With independent budgets based on advertising, staffed by young journalists responsible for discrete areas who know the workers’ conditions and backed by a loyal readership, these papers can effectively facilitate conversations between workers, government and industry. This public forum not only puts pressure on the union and government to act, but moves the issue of labour rights into the realm of public input and debate, a conversation that may be the most direct and effective link between workers’ concerns and official action.

International Support

Unlike Chinese unions, Vietnamese unions may also join international unions and accept international donations. In China, distrust of “foreign interference” has all but eliminated the possibility of unions gaining support and experience from international counterparts. Vietnam, by contrast, sees improved labour practices as a means of attracting investment. The VGCL has been able to take advantage of the anti-sweatshop movement and emerging international standards, for example by collaborating with Social Accountability International with funding from the US State Department to improve labour standards, simultaneously urging factories to apply for SA8000 certification. The “foreign” nature of these standards is not seen as outside interference nor is it a cause for debate. If anything, these efforts constitute a new kind of effort to expand market access and investment.

The VGCL notably also permits its constituent regional and industrial organisations to engage with international labour organisations. Several of the industrial unions have taken the opportunity to connect with international unions in corresponding industries. While VGCL officials have made it quite clear that “propaganda… about independent/multi-labour unions, apolitical labour unions, labour unions fighting for economic goals etc.” is to be resisted, this political boilerplate has not deterred it from productive engagement.

The VGCL, and particularly the National Union of Industrial Workers, has been able to translate its freedom to associate with international unions into both a knowledge of international labour issues and considerable freedom of action. The VGCL delegation to an International Garment, Textile and Leatherworkers’ Federation workshop which proposed negotiating a Southeast Asian framework agreement with Pou Chen, the largest footware production company in the world, was able to immediately pledge participation without consulting with higher authorities. The head of the delegation was vice president of the NUIW.

The VGCL and Ministry of Labour have benefitted from the technical assistance and training provided by the ILO and international unions, although this does not filter down to workplace unions. Corporate codes of conduct originating overseas seem to be gaining ground enforcing labour rights in Vietnam where the VGCL is not. Third party international monitoring of labour practices is increasingly common. In all of these areas, the VGCL and Ministry of Labour have shown themselves politically able to both accept foreign assistance and use it pragmatically to enhance their own domestic programs and goals.

Rights Awareness and Labour History

Rights awareness on the part of migrant labour has been identified by several authors as a key distinguishing factor of the Vietnamese workforce. Taiwanese managers interviewed in Vietnam spoke of Vietnamese workers’ high awareness of labour rights and “democratic consciousness,” the ease with which they stage protests and the impossibility of applying the same harsh methods as they themselves had previously used in China.

Anita Chan and Hong-zen Wang claim a measurable difference between rights awareness of Vietnamese and Chinese workers, including awareness of maximum legal work hours and minimum wages. More importantly, not only were the Vietnamese workers aware of their rights, but indicated that they would strike if significant amounts of illegal overtime were required. Chinese laws regarding maximum hours and working conditions are generally honoured in the breach until a precipitating event causes the workers to strike.

This difference in worker awareness may come down to history. In China, the ACFTU was suppressed for many years due to intra-party conflict, and labour was never more than a tool for Party policy. In Vietnam, unions and labour remained strong and were a core element of the communist party’s strength and appeal throughout the French and American wars.

Expanding Basis of Action

A tripartite study between the University of Warwick, the ILO and the Vietnamese Ministry of Labour, published in the Journal of Industrial Relations, scrutinises the root causes of labour disturbance in Vietnam and has come up with something interesting.

The authors argue that Vietnamese workers have ceased to be satisfied with pressing their legal rights, which the state is no longer capable of enforcing, and wish to pursue their interests. While VGCL interpreted the demands of 30,000 workers striking in Ho Chi Minh City for a pay rise and better working conditions as being mainly a request to increase the minimum wage, these authors argue that they missed the point. The Director of the Wage and Salary Department at the Ministry of Labour, by contrast, acknowledged that the strike had nothing to do with minimum wages but with actual salaries. A VGCL official in Ho Chi Minh City acknowledged to the press that reasons for strikes have expanded to include shorter working hours, bonuses and even better food, in contrast to the previous situation where strikes generally revealed employers who were in breach of the Labour Code.

In this situation, the government must choose between continuing to support workers and suppressing them. The same trend can be seen in the fact that although the majority of strikes in Vietnam occur in foreign companies, and wages are usually the main issue in dispute, the foreign sector pays nearly twice as much as the domestic equivalent. Workers are clearly concerned with more than their subsistence needs.

A 2006 Labour Code revision recognised the distinction between rights-based and interests-based disputes. Following recent strike waves, the Ministry of Labour and VGCL acknowledged the need to shift from ad hoc actions to quell labour disputes to strengthening collective bargaining. For the VGCL, unfortunately, this means developing bargaining capacity at levels above workplace unions, despite government pressure to improve representation at the workplace level. The VGCL may well fear providing the extremely effective but anonymous leadership of the wildcat strikes with a public platform for organising workers.

A Pillar of State Legitimacy

Managers imported from the PRC to work in Taiwanese factories in Vietnam not only noted the marked difference in the power of factories to violate labour laws, for instance through illegal overtime, but attributed it to a proactive attitude on the part of the government. One said, “In China, we had to work much longer, sometimes until 1:00 or 2:00 am… In Vietnam, you cannot force workers to work after 10:00 pm. Why is there such a difference? The government. The Chinese government wants to make money and therefore just neglects workers’ rights.” Likewise, the VGCL’s struggles with the government have been widely reported, giving it significant credibility, while the ACFTU cannot hope for such ideological autonomy.

One explanation is that labour is a key pillar of state legitimacy in Vietnam to an extent that it never was in China. The Vietnamese Communist Party takes a much more sanguine attitude toward worker protest and its possible political implications than their Chinese counterparts. The Vietnamese government has historically perceived strikes in foreign companies as an opportunity to intervene and thus demonstrate its pro-labour ideological commitments. One author even goes so far as to suggest that the 1997 strike wave was a public relations exercise provoked by the government.

Vietnam’s Potential

Vietnam has the mindset at the tools to create one of the first really sound labour regimes in the region. To do so, it will have to overcome its inborn fear of genuine grassroots representation, but there are comparatively few other major obstacles to overcome.