STRIKES AND LIVING STANDARDS IN VIETNAM: THE IMPACT OF GLOBAL SUPPLY CHAIN AND

MACROECONOMIC POLICY

Anita ChanUniversity of

Technology, Sydney

Kaxton SiuAustralian National

University

1

The Vietnam Strike Wave20

00

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Jan-

Aug

2011

0

100

200

300

400

500

600

700

800

900

71 89 100139 125 147

387

541

762

310

424

799

Number of Strikes

2

Some New Observations about the Strikes in Vietnam

• Comparative perspective: Vietnam and China.• Characteristics of Vietnamese workers more defiant

than Chinese workers from Taiwanese investors’ observations.

• Periodization—changing factors driving the strikes• Government’ macroeconomic policy as an important

factor.• Perspective of Taiwanese investors.

3

Methodology• 2 factory-gate surveys– 2007 China and Vietnam footwear industry ; sample size =

2000– 2010 China and Vietnam garment and Vietnam) industry ;

sample size = 600• Documentation (VN and TW newspapers & blogs)• Interviews with VN workers, TW managers and VN officials• Official Statistics:– VN Statistical Yearbooks, – Vietnamese Household Living Standard Survey (VHLSS)

2002-2010, – Urban Poverty Assessment (UPA) 2010

4

Definition of Strike• The ILO's definition for strikes:

A strike is a temporary work stoppage effected by one or more groups of workers with a view to enforcing or resisting demands or expressing grievances, or supporting other workers in their demands or grievances.

• Data collection varies from country to country• Vietnam strike figures released without definition• When workers withdraw their labor at one

workplace that is counted as one strike

5

From Relative Labour Peace to a Strike Wave

• Pre-2006: Period of Relative Labour Peace• 2006: The Year the Strike Wave Sets in• Post-2006: Period of Labour Unrest

6

7

Pre-2006: Period of Relative Labour Peace

8

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Jan-

Aug

2011

0

100

200

300

400

500

600

700

800

900

0

20

40

60

80

100

120

140

71 89 100139 125 147

387

541

762

310

424

799

Number of Strikes in VN Minimum Wage Minimum wage adjusted by CPI food

Minimum Wage adjusted by CPI

Num

ber o

f Str

ikes M

inimum

Wage, Adjusted M

inimum

Wage by CPI &

CPI Food (Unit: 10,000 VN

D)Fig. 1: Relationship between Number of Strikes and Official Minimum Wage (adjusted by CPI),

Industrial Zones outside Ho Chi Minh City, 2000-Aug 2011

Number of Foreign Enterprises and Number of Strikes, 2001-2010

9

20012002

20032004

20052006

20072008

20092010

0

1000

2000

3000

4000

5000

6000

7000

8000

0

100

200

300

400

500

600

700

800

900

Number of Foreign Funded Enterprises (FEEs)

Number of Strikes

Number of FEEs Number of Strikes

Cumulative FDI 1988-210 of the Top 9 Investors

10

2005 2006 2007 2008 2009 20100

5000

10000

15000

20000

25000

30000

35000

Korea

Taiwan

Singapore

Japan

Malaysia

United States

British Virgin Is-lands

Hong Kong

Netherland

France

Cumulative FDI since 1988 (Unit:

Million USD)

Enterprise Ownership Types

11

2006 2007 2008 2009 2010

N % N % N % N % N %

Number of Foreign Funded Enterprises (FFEs)

4220 3.2 4961 3.2 5626 2.7 6546 2.6 7200 2.5

Number of Non-State Enterprises 123392 94.0 147316 94.6 196776 95.7 238932 96.0 280762 96.4

Number of State Enterprises 3706 2.8 3494 2.2 3287 1.6 3364 1.4 3283 1.1

Total Number of Enterprises 131318 100 155771 100 205689 100 248842 100 291299 100

Source: Based on census and survey data from the GSOV website: http://www.gso.gov.vn/default_en.aspx?tabid=479&idmid=5 (downloaded 1 May 2012).

Why Disproportionate Number of Strikes in Taiwanese (39%) and Korean (29%) Owned

Factories?1. These two nationals have become the biggest investors in

Vietnam, which means their factories are likely to have a proportionally larger number of strikes.

2. Taiwanese and Korean managers are notorious for their harsh and disciplinarian labor regimes in their offshore factories. The same when they go to China.

3. The defiant character of the Vietnamese workers and their higher awareness against foreigners’ mistreatment.

4. Lack of grievance procedure.5. Absence of or weakness of the Vietnamese workplace trade

unions in FDI factories to act as a moderating player to assuage workers’ grievance mechanism.

12

Vietnamese Workers Rights Awareness from the Perspective of Taiwanese Investors

• The human rights awareness of Vietnamese workers is very high.

• In Taiwan when we served as army conscripts we had to obey blindly as if this was natural. But not here at all.

• That is why I think Taiwanese who are into shoemaking here have to face a lot of labor disturbances and strikes.

• Vietnamese workers readily stage mass protests.• This is not just a problem at my factory; it is a problem

for the entire society.

13

Vietnamese and Chinese Workers’ Attitudes towards Factory Trade Unions

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Do you think the trade union in your workplace represents workers’ interests?

Vietnam ChinaYes 894 (85%) 100 (10%)No 58 (6%) 203 (20%)Don’t know 100 (9%) 672 (67%)Missing 2 (<1%) 33 (3%)Total 1054 (100%) 1008 (100%)

Characteristics of Strikes in Vietnam

• Peaceful• No open organizer• Sympathetic press coverage• Union and government officials negotiate on behalf

of workers• Repeated strikes in the same factory (e.g. Hue

Phong)• All players getting used to the strikes—routinized

strike pattern

15

Workers’ Repeated Strike Experiencein Five Footwear FDI Factories, 2007

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Number of strikes experienced by a worker in the same factory

1 2 3 4 5 6 7

Number of workers (N = 686)

274 315 72 15 6 3 1

Percentage of workers 40% 46% 10% 2% 1% 0.5% 0.5%

Table 2. Repeated strike experience of workers in five sampled Vietnamese footwear factories (N = 686)

Routinized Strike Pattern• As strikes became common occurrences and widely

reported in the press, all “stake holders” have gotten used to it.

• Workers have become accustomed to using strike as an effective bargaining tool to get what they want.

• Taiwanese investors have come to consider strikes as normal like having “a meal at home.”

• As one of them said, they have even developed an “immune capacity” against strikes.

• When calculating production cost, they have already factored in strike contingency cost.

17

Post-2006: Period of Labour Unrest

18

19

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Jan-

Aug

2011

0

100

200

300

400

500

600

700

800

900

0

20

40

60

80

100

120

140

71 89 100139 125 147

387

541

762

310

424

799

Number of Strikes in VN Minimum Wage Minimum wage adjusted by CPI food

Minimum Wage adjusted by CPI

Num

ber o

f Str

ikes M

inimum

Wage, Adjusted M

inimum

Wage by CPI &

CPI Food (Unit: 10,000 VN

D)Fig. 1: Relationship between Number of Strikes and Official Minimum Wage (adjusted by CPI),

Industrial Zones outside Ho Chi Minh City, 2000-Aug 2011

State Policies & Macroeconomic Factors Legal minimum wage:– Legal minimum wages set by the government to sell

workers’ labor in the competitive global labour market

– Tension between lowest possible selling price as against lowest possible compensation to reproduce labour (physical survival).

– But the government couldn’t strike the balance between the former and the latter. Thus, the legal minimum wage was set too low in favour of capital.

– Government cannot control inflation

20

The Two Standard of Living Surveys

21

2010 Garment

Industry Survey

For migrant workers VND 2,413,765

2010 VHLSS For nation

as a

whole

3rd quintile VND 2,018,000

4th quintile VND 2,727,300

2010 UPA For migrant workers VND 2,162,000

Table 3. Comparison of average monthly income of migrant workers in the three surveys

Deterioration in living standard

22

Rice an

d Rice eq

uivalen

ce (kg

)

Meat (k

g)

Grease,

Oil (kg

)

Shrim

p, fish (k

g)

Egg (

piece)

Toufu (k

g)

Suga

r, Molas

ses, M

ilk, C

ake,

Candy,

Candied

fruits

(kg)

Wine, Bee

r (Litre

)

Vegeta

ble (kg

)

Fruit (

kg)

02468

10121416

Consumption Amounts of Some Main Food Per Capita Per Month (3rd Income Quintile, Whole Country)

Deterioration in living standard • Decrease in rice consumption not compensated for

by other food items. • Rice in Vietnam contributes 59% of the diet’s calories

(70% for Bangladesh, 65% for Cambodia, 50% for Indonesia).

• Before 1989 under the ration system, each person was entitled to 15 Kg of rice per month. In 2008 workers consumed 12.8 Kg per month.

• Economic boom has little trickle down effect on food consumption in the last decade.

23

Reports on Some Workers’ Going Hungry

• In 2011 a VGCL report said that 30% of workers were malnourished.

• Wages can only satisfy 60-70% of workers’ basic needs.

• Some workers try to remain physically inactive to conserve energy in the hope of staving off hunger.

• Eating rice brought from home in the countryside. Rural sector subsidizing urban industrial sector.

• Quite a lot of media report on factory lunches serving too small a quantity of food and workers going hungry. Never such reports in China.

2424

The Government Rice Export Policy

• Government controls all rice exports in Vietnam (possibly much corruption in this area)

• Government continues to increase rice export even when price of domestic rice increases

• Government reneged its promise to lower rice export in 2008

• Current flooding in Southeast Asia is likely to adversely affect rice prices and consumption severely

25

2011: Runaway double-digit inflation continues

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Dec-

10

Jan-

11

Feb-

11

Mar

-11

Apr-

11

May

-11

Jun-

11

Jul-1

1

100

105

110

115

120

125

130

CPI

CPI Grain Food

CPI Foodstuff

Unit: % (Dec-10 as 100%)

Fig. 7: Consumer Price Index, Whole Country, December 2010- July 2011

Conclusion and Prognosis (1)• Taiwanese and Korean & other investors urging the VN

government to suppress strikes and to enforce its own law on strikes, threatening capital flight

• Taiwanese investors trying to befriend the Vietnamese police.• Vietnamese government continues to resist pressure to

suppress strikes, instead it puts the blame back onto factory owners for violating the law and paying low wage.

• Vietnamese government provides lower standard and lax labour regulations but demands investors to comply.

• It seems the VN government has recently finally realized that basic wage has to be raised. Plan 25% to 35% increase since 2013.

27

Conclusion and Prognosis (2)Corporate Social Responsibility (CSR) and

Global Production Chain– Multinationals should also be held responsible.– Production imperative overrides human right

imperative– Big brand companies do not ask suppliers to

increase workers’ wage– When wages have to go up with minimum wage

increase big brand companies do not put in their fair share.

– CSR cannot solve the problem28

Conclusion and Prognosis (3)

Prognosis–Can the Vietnamese government control

inflation?– If strikes turn violent, will the Vietnamese

government suppress the strikes?– Economic strike Political strike?–Possible split within the trade union?

29