RESEARCH AND PRACTICE
IN HUMAN RESOURCE MANAGEMENT

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Collins, N. (2011). Vietnam’s Labour Relations and the Global Financial Crisis, Research and Practice in Human Resource Management, 19(2), 60-70.

Vietnam’s Labour Relations and the Global Financial Crisis

Ngan Collins

Abstract

Labour relations institutions and practices in Vietnam have changed since the economic reform that started in late 1980s. Since joining to the World Trade Organisation (WTO) in 2006, a new social imperative has emerged in which the country sought to reconcile economic growth with the protection of labour conditions within this context in which the Global Financial Crisis (GFC) has been experienced. This study examines the challenges of complex labour management relations in the new economic, political and social environment of the GFC in Vietnam. The paper explores changing labour management relations by investigating the evolution of labour relations policy and practice since Vietnam began its economic reform. During the transition from a planned to market economy, the former stable relationship between managements and workers has been replaced by widespread labour disputes, and a proliferation of labour strikes since the installation of GFC in 2008. These events have been due to a lack of regulations for labour management relations, an inadequate compensation system and working conditions, and inefficient trade union practices. The paper concludes that the changes in labour management relations reflect the impact of the global crisis on labour market diversity as well as the increasingly important role of trade unions in protecting workers' rights and interests. A new model for unions is urgently needed for dealing with labour and employment issues at firm's level in the new economic era.

Introduction

The economic reform (Doi moi) that started in the late 1980s in Vietnam has presented many challenges for the country’s labour issues in terms of transforming a centralised structure to a more market oriented one. Since then labour relations institutions and practices have changed. At the outset, labour relations were a function of the political priorities of the national government. By the 1980s a series of legislative changes placed collective bargaining at the heart of a system of labour relations in which the conditions of workers were defined by a combination of law and collective agreements. However, by the time the country joined the WTO in 2006, a new social imperative had emerged in which the country sought to reconcile economic growth with the protection of labour conditions. This arrangement is the context in which the GFC has been experienced, and holds ongoing challenges for Vietnam in the development of institutions and policies for labour relations.

Becoming the WTO’s 150th member in 2006 has placed another pressure on labour management relations in Vietnam. In particular there has emerged a greater tension between the market driven economy and institutional attempts to protect Vietnamese workers against the exploitation of globalisation forces (Collings 2009). This event can be seen in a wide range of challenges to economic policy relating to the further opening up of the economy as required by WTO. They include increasing difficulty in minimising the gap between rich and poor and trying to find a balance to meet the conflicts of interests that have arisen in society. The GFC, which hit Vietnam in early 2008, had a great impact its economic development.

This paper examines the challenges of complex labour management relations in the new economic, political and social environment of the GFC in Vietnam. The content argues that the poor performance of the Vietnamese economy in recent years cannot be attributed solely to the impact of the GFC. Rather, the current slowing down of the Vietnamese economy has led to a combination of difficulties with the economic reform process, the obligations associated with membership of the WTO as well as the immediate impact of the GFC. In other words, the GFC has added to the considerable economic tensions already existing in Vietnam. This paper explores changing labour management relations by combining analyses of secondary data, with findings from a series of indepth interviews of senior managers and government offices from Ho Chi Minh City and Hanoi. In the case of businesses, 20 people were interviewed representing several types of business. Ten people were interviewed indepth from government labour offices.

This paper will first outline the impact of the GFC on the current macro economy before exploring its relation to labour issues in general and labour management relations in particular. The paper also examines the history and reform of trade unions as well as labour legislation and changes in employment relations during the GFC. The manuscript will then investigate the impact of these changes on the grassroots level. The role of the state and trade unions in forming and enforcing new policies will also be described.

Impact of the GFC on Vietnam’s Macro Economy

The slowing down of the Vietnamese economy following the GFC is indicated by two major components that make up about 70 per cent of Vietnam’s GDP growth: exports and foreign investment (Nhung 2008). Exports grew from 17 to 24 per cent before and only 2.4 per cent during the crisis. This decrease was caused by the fall in exports of food processing, textile and leather shoes, all of which are major industries employing large numbers of people. According to the General Statistics Office (GSO), total export income in 2009 decreased about 13.8 per cent compared with 2008. Exported raw material is expected to decline by about 40 per cent compared with 2008 (The Economist 2008).

Although total investment capital in the first quarter of 2009 recalled some positive signs, rising by nine per cent, this growth rate was still below the average growth rate during the reform era (16 per cent). The FDI growth in the first quarter of 2009 fell by 32 per cent, and registered FDI capital fell by 40 per cent. Unsold inventory ‘piled up’ with a 67 per cent increase, causing many businesses possible bankruptcy owing to production inefficiency (Van Dao 2009, Trang 2008).

The Vietnam Index fell from around 900 points to less than 300 for the whole year in 2008 (The Economist Intelligence Unit 2008a). Entering 2009, a stimulus package of $US1 billion was released by the Vietnamese government, mainly to assist companies in difficult credit situations and to cut a variety of taxes and tariffs to boost domestic consumption.

Impact of the GFC on the Labour Market

Even though the GFC did not drag Vietnam’s growth down to below zero as it did in many economies. The decrease from 8.5 per cent pre crisis to between three and five per cent during the crisis was a serious decline which is a feature of Table 1. Besides reducing the economic growth some 15 per cent of total jobs were cut, causing high unemployment in urban areas and job shortages in rural areas. Unemployment encourages the life standards for a group of the population to deteriorate while rising unemployment causes people to migrate into big cities like Ho Chi Minh City or Hanoi, causing traffic congestion, accidents and environmental pollution. A low quality of life causes consumption to fall, and social disorder, fraud and increasing tension in labour management relations. Many labour strikes occurred due to the uncertainty of employment.

Table 1
Vietnam’s economic growth during the impact of the GFC (2008-2009)
2004 2005 2006 2007 2008 2009 2010
Economic growth rate (per cent) 7.8 8.4 8.2 8.5 6.1 4.6 6.8
Inflation rate (per cent) 9.5 8.4 7.3 8.6 8.1 7 11.8
Foreign investment (Trill. Dong) 51,1 65,6 129,4 190,7 181,2 214,5
GDP per capital (USD) 2700 2800 3100 2600 2800 2900 3100

Note. Source: GSO 2009, 2010, 2011.

The GFC and economic recession rapidly brought about a crisis in the global labour market. The level of unemployment was predicted by the Ministry of Labour, Invalids and Social Affairs (MOLISA) to result in approximately about 400,000 workers jobless in 2009 (Thanh & Quynh 2009). In Ho Chi Minh City about 55,000 labourers in the garment sector lost their jobs in 2008 (Cuong 2009). In the Dong Nai industrial zone 80,000 workers lost their jobs owing to their companies being closed down by the impact of the GFC (Lan 2009). However, this figure only accounted for labourers from the formal business sector. There was an absence of statistical data for non formal or free land labourers who comprised a much larger number of unemployed person (The Saigon Times 2009). This employment situation was one of the key reasons for an increasing number of labour disputes and numerous difficulties in labour management relations during late 2000s (Viet 2009).

Reform of Labour Management Relations

There is a close link between the nature of labour management relations and social culture and political ideology in Vietnam (Zhu 2003). A combination of Vietnamese traditional Confucian values of respecting harmony, collectivism and human relationships was mixed with socialist ideology in labour management relations during the pre economic reform era (Warner, et al. 2005). These ideas were influenced and reinforced by the experience of war as the nation was asked to unite against the invasions of outsiders. ‘Unity, unity, great unity, success, success great success’ (Doan ket doan ket dai doan ket, thanh cong thanh cong dai thanh cong) was a motto for Vietnamese society during war time (Collins, et al. 2011). Hence, no conflicts, not even small ones, were allowed to divide the society.

Prior to 1986, the Vietnamese government sought to follow a process of central planning and economic transformation based on collective farming and nationalised industries. During this period state owned enterprises (SOEs) dominated economic life and employees were guaranteed lifetime employment (bien che). This employment system was characterised by the government’s plans for all areas, such as recruitment, selection, compensation, training and performance (Collins & Zhu 2005). Under the dominant ideology of the communist party, workers in SOEs were regarded as ‘comrades’ and were able to participate in the enterprises’ important decisions through the workers’ congress. There were no conception of opposing interests in labour management relations because both management and employees were seen to be working for the people, as represented by the government, and both worked together to achieve the government’s goals (Collins & Zhu 2003).

The experience of the period up to the 1980s led the government to introduce more comprehensive economic reforms in 1986. This program aimed at transforming the economy into a ‘socialist oriented market economy’ (Woo, Parker & Sachs 1997) and included a liberalisation of the economic system, breaking the monopoly of SOEs over economic life and instituting a legal regime in which the economic system would be allowed to respond to market forces (Collins 2009).

As the economy has developed there has been a shift in ideology associated with the emergence of a new class of workers in the community which espouses capitalist market ideas. This group includes the managers and professions associated with the overseas owned companies, the reformed SOEs and younger graduates in the civil service, who have a direct interest in the extension of market oriented ideas (Zhu, et al. 2008). However, their influence has been relatively limited as the government has sought to protect the traditional (or socialist) ideology, because of the lack of a coherent organisational base. The process of introducing the new ideology in Vietnam during the globalisation process has been slowed by the surrounding environment, including government political interests and community cultures (Collins 2009). The mix of existing nationalism and ideology together with the new one can be seen in many aspects of society, especially in labour management relations. The new values have shaped the country’s approaches to labour relations and to the organisation of labour management relationships. The reformation can be observed in actions of government seeking to regulate a market oriented labour management system and protect workers’ interests by a reorientation of the trade union movement to embrace a new role in bargaining and representation, and by changes in the behaviour of SOEs towards their employees.

New Labour Legislation

The most fundamental change in employment relations under Doi moi was the introduction of labour contracts in 1994. This permitted enterprises to take charge of their own recruitment and dismissals. The new arrangement involved a basic shift in the relationship between management and workers, especially those in SOEs (Anh, Cuong & Thao 1999). However, while Doi moi has required all economic sectors to be more flexible in terms of their responses to market activities, a central objective of the reforms was that of maintaining stability and social order, while economic reforms were pursued. Until the late 1990s SOEs still enjoyed a relatively harmonious relationship and cooperation with each other. This also meant that maintaining a harmonious labour management relationship also helped to stabilise society and to keep the existing leadership in power (Collins 2009). This was a key reason for passing many labour policies during Doi moi.

The government continued its commitment to reinforcing social stability and formalising the labour relations system. This commitment was produced by issuing a series of new policies such as the Collective Working Conditions Agreements (CWCA) in mid 1990s, a 40 hour working week in 2000, and prescribing minimum wages in 1997 (Lao Dong 1999, Sai Gon Giai Phong 2000). The CWCA is an official document and the foundation for all enterprise activities in the field of labour relations. Along with employment contracts it is considered as a document to resolve disputes between employees and employers. The agreement for each enterprise is drawn up by the union representatives, and is officially signed at the Workers’ Congress by the director, representing the employers, and the union president, representing the workers (MOLISA 2002). In the late 1990s, the government continued to pass new policies and laws on social welfare, covering issues such as social security, health insurance, allowances and bonuses.

Organised Labour in the New System

Vietnam’s trade unions constitute one of three key elements in the labour management relations system, alongside the role of government and the changing nature of ownership and control in SOEs. It is useful to recount the history of unionism in Vietnam as a background for understanding their changing role in the post Doi moi period. Unions developed in parallel with the Vietnam Communist Party activities during the revolutionary process. In 1929, the Northern Confederation Red Union (Tong Cong Hoi Do Bac Ky) was established in Vietnam, leading to the birth of the Vietnam Labour Party (Dang Lao Dong Vietnam) in the following year (Collins, et al. 2011). The Vietnamese General Confederation of Labour (Vietnam Tong Lien Doan Lao Dong) was established in 1946 immediately after the Party claimed its revolution’s victory over France (Lao Dong 2002). This organisation has operated as an instrument of the government and the party in the area of production and labour control (Fall 1956, Law on Trade Unions 1990). In other words, the trade union was traditionally part of the socialist control system of economic and political management, assisting management to achieve its production plans, responsible for providing social welfare and sporting, cultural and entertainment facilities within organisations (Clarke, Lee & Do 2007). As a consequence, the economic transformation of the Doi moi period was accompanied by changes to the unions.

One of the first steps in labour reform was the replacement of the old union charter with a new charter in 1989(Van Huy & Van Nghia 1996). Since that time the role of the unions has expanded and unions have become more responsible for protecting the legal rights of employees in their working environment (Collins & Zhu 2003). In 1994, the Labour Code formalised the role of unions in Vietnam. For example, the Code not only protects the right of workers to form unions, but it also requires a union to be formed within six months in every enterprise regardless of its ownership type, and any business that has more than 10 workers must register a ‘Labour regulation’ with a local labour office. Previously, the majority of unions’ members were from SOEs, but since Doi moi their membership has expanded substantially into the new sector. In 2006, among 10.8 million members only 2.6 million were from SOEs, 4.3 million were from non state business, and 0.6 million were from the foreign business sector (Vietnam General Federation of Labour 2009). The Code also states further the condition of any dispute between two parties employees and employers, and addresses the matter of the workers’ right to strike (The Labour Code of Vietnam 2001).

The unions in Vietnam are now more clearly identified as working in the interests of their members then in the past. To some degree, unions have established themselves as independently from government activities and approval. Vietnamese unions can also join international trade union organizations (Collins & Zhu 2003).

Current Practices of Labour Management Relations

Parallel with the fast growth of the economy there has been a widening gap between the interests of managers and workers in SOEs. This has resulted in greater diversity of labour management relations. In the past, SOEs were popular because of their generous welfare policies, but in recent years SOEs have needed to lay off many superfluous workers to reduce costs and many faults have been revealed in their implementation of redundancy and unemployment benefits (Collins 2005). There are many instances of SOEs attempting to avoid implementing the welfare laws (Phu nu 1999). Declared bankruptcy, according to the bankruptcy law, SOEs would have to guarantee four payments to their employees including wages, social insurance, redundancy payment (one month’s wages for each year worked) and other monetary rights defined in the CWCA (Anh, et al. 1999), but after selling all their assets many companies still did not have enough money to pay their workers the amounts defined by the government. Consequently, it was very common for workers to resign without notice to await the government’s decision in those SOEs which had closed their doors, and many of these workers were forced to wait for years before they could get any compensation from the company (Collins 2009). Many other enterprises throughout Vietnam owed substantial amounts of money in compulsory social insurance, which seriously violated employees’ rights (Vietnam News Agency 2008a).

Inadequate compensation and working conditions under the pressure of economic recession have become a major cause of increases in labour strikes (Vietnam News Agency 2008b). The incidence of strikes suddenly increased in 2006. In 2007 there were 541 strikes across the country, 150 more than in 2006, but there was a peak of 762 strikes in 2008. They are also more widespread across the nation, with greater regularity and interconnected more widely in groups of workers across different firms, industries and locations. In the past, labour strikes typically occurred for one or two days, and only in a single firm, but now they can last for up to 10 or 20 days, and involve multiple locations and organisations. For example, in Ho Chi Minh City, a labour strike had 10,000 participants for three days in February 2008 (Tien 2006), and labour strikes in March 2009 in Hue Phong Shoe factory as well as the Top Royal Flash Co. had 700 striking workers, but this number increased to 4,000 the next day, which then expanded to involve a neighbouring company (Diu 2008).

The characteristics of strikes have become more complex and sometimes conflicts have occurred within the worker’s organisations. More than 15,000 workers at a Nike contracted factory went on strike to demand higher wages in the face of rising prices in March 2008. Although the strike was called off after the workers were offered a 10 per cent pay rise, the factory was forced to close temporarily owing to fights between returning workers, and those continuing to demand higher wages. In August 2008, more than 800 workers at one of the private businesses named Duc Quan Textile and Garment Company in Ho Chi Minh City were on strike for several days because the company had not paid social insurance for them for a year. The company still owes Ho Chi Minh City Insurance Company VND 2,000 billion (US$125,000), so the employees are unable to enjoy any social insurance support when ill or during pregnancy or retirement (The Economist Intelligence Unit 2008b).

The Implications for Institutional Reform

Previoulsy, the Vietnam government has called for unions to resolve labour management unrest. However, the implementation of this method has not succeeded as the current union models, which have been applied since Doi moi are no longer adequate to deal with the dynamic changes in the working environment. The roles of the unions have neither ensured of the reinforcement of labour legislation nor helped their membership organisations to bargain effectively with the employers. Furthermore, significant discussion of collective bargaining at the union’s national level in the recent years remains lacking (Clarke, et al.2007).

The roles of the unions involve the mediation process in resolving labour disputes rather than representing interests of the workers. The existing system for the resolution of industrial disputes has encountered barriers because the system is too complex and workers are not aware of the proper procedures (Clarke 2006). It is not surprising to learn that the majority of strikes in recent years have not been organised by the unions. According to a report by the Vietnam General Confederation of Labour Conference in September 2008, unions have not done enough to protect the rights of workers. This report stated that strikes usually occurred at individual enterprises, as opposed to collective strikes by workers across an entire sector, and most strikes were not carried in accordance with official procedures. Under Vietnamese law, strike organisers must get official permission to launch a strike (Vietnam News Agency 2008c).

At its annual conference in 2009, Ho Chi Minh City’s Trade Unions decided to send about 30 independent union representatives to work in some businesses as a trial activity. This decision was based on the response of self criticism of their current role by union representatives. These union officials will now receive their salary from the trade union fund, and not from the management as is currently the case. Unions intend to act independently of management when it comes to negotiating on behalf of their members’ interests. This initiative has been welcomed by the national trade unions, and if it is successful the result will be a major step in creating a new union model in Vietnam.

Unemployment and Social Security

Another important element influencing labour management relations in recent years has been the increasing unemployment rate. Table 2 delineates the labour and employment numbers in Vietnam for the period from 2000 for a decade. There are a number of contributing factors, which reveal an imbalance in development between urban and rural areas as well as the new Labour Code allowing managers to fire or hire employees directly. In recent years, SOEs have needed to lay off many superfluous workers to reduce costs, and the engagement of multi sectoral businesses in economic activity has given businesses great flexibility in dealing with labour issues (Collins 2005).

Table 2
Indicative figures of Vietnam’s current labour and employment
2000 2003 2004 2005 2006 2007 2008 2009 2010
Labour 37,609 45,740 42,980 44,390 44,580 46,420 47,410 46,510 46,210
Urban 6.4 5.8 5.6 5.3 4.8 4.6 4.7 6.5 4.4

Notes. a. Labour force in 1000s.
b. Urban is unemployment rate %.
c. Source: SGO 2009, 2010.

Since the Asian financial crisis of the late 1990s, Vietnam has experienced unprecedented growth and considerable reduction in the level of poverty. Rapid industrialisation has led to significant migration of labour from the agricultural sector to the industrial sector as well as the physical migration of workers from rural areas to urban centres and industrial areas. These shifts have been particularly high for people located close to the two largest cities of Hanoi, and Ho Chi Minh City. These migrant workers have been able to remit large amounts of funds to their rural homelands and have enjoyed an increased standard of living.

In the rural area, which is home to about 90 per cent of the population, many employed people do not have enough work. Underemployment in the rural area was about 10 million people 1999, while the amount of agriculture land per capita was declining as the population increased. Some agricultural land was transferred for developing infrastructure and industrial zones (CIEM 1999). This employment situation in rural areas has led to a wave of internal migrants from rural to urban areas in recent years. Thousands of farmers nationwide have also been unable to find jobs after having their land reclaimed for industrial or commercial projects. On average, about 30 per cent of rural youth travel to the cities looking for labouring jobs every year. About one million people in rural areas enter the job market annually (Vietnam News Agency 2003, 2008c) about 50 per cent have poor education and few job skills they are normally recruited to work at the many industrial and export zones. In some provinces, rural youth squandered the land compensation money they had received when they were forced to give up their farms to make way for development projects and looked for jobs in the urban areas (Vietnam News Agency 2008c).

The economic slowdown is particularly hard on Vietnamese workers. A survey of the social impact of the global economic crisis in Vietnam, carried out in February by the Vietnam Academy of Social Sciences, in collaboration with Oxfam GB and the World Bank, confirmed that migrant workers are having more trouble finding employment in urban areas as the economy slows. The survey findings indicate that both the informal and formal sector workers in all these places are experiencing a significantly reduced demand for labour. Indeed, the sharp fall in export orders and sales has led to lower production, job cuts and fewer working days leaving migrant workers particularly vulnerable. These workers have suffered a series of shocks, such as sharply higher prices for everything from food to rent that were not fully compensated for by higher wages, and reduced income and loss or risk of loss of employment since late 2008. Those people who have done temporary work in the capital city for several years said their hourly wage rates had gone up by 10 to 20 per cent from late 2007 to late 2008. However, this was more than neutralised by a 50 per cent drop in the average number of hours they worked a month. Many workers estimated that they had 20 days work a month during 2007, but only 10 days per month in late 2008. Specifically, the days working for civil construction projects were reduced by about 70 per cent, and the days worked for other jobs such as loading and unloading goods and cleaning were reduced by about 30 per cent. Consequently, monthly savings were reduced by about 30 to 50 per cent after a year (Anh 2009).

According to the GSO, the urban unemployment rate was 4.6 per cent in 2007 (GSO 2008) and was increased to 5 per cent by 2009. Many enterprises have reduced their staff numbers, and it has been predicted that unemployment rates may continue to increase (Vietnam News Agency 2008d). While large enterprises in industrial and processing zones have been faced with workers quitting their jobs and striking, the small and medium sized enterprises have reduced the number of employees with a loss of overseas markets. For example, in September 2008 the two million labour workforce (of the textile industry) was reduced by 15 to 30 per cent compared to 2007 (Lao Dong 2009). For the first half of 2008 the number of cars manufactured by the Viet Nam Automobile Corporation (Vinamotor) was reduced by 600 compared to the same period in the previous year. This decline in output caused a redundancy of labourers, so Vinamotor had to reduce their employee numbers (Vietnam News Agency 2008b).

The government reacted to the mismatch of labour policy and reality of labour unrest by taking further steps in labour policy reform. One of the most important policies that have been discussed and gained most tension in this area is the implementing of unemployment benefits at enterprise’s level. The unemployment benefit was first stated in the amended Labour Code 2002 (MOLISA 2002). However, as with many other policies, its implementation has only been gradual because the government has needed time to adjust and to experiment in small steps. Since January 2009, contributions to the unemployment fund have been compulsory for all businesses. Employees, employers and government have to pay 1 per cent of workers’ monthly salaries for this fund. The fund is aimed at helping the unemployed, who will each receive 60 per cent of the last drawn monthly salary. They will be entitled to the payment for a maximum period of 12 months (Vietnam Business Finance 2008).

The government made another amendment to its social insurance policy in 2009. The state has doubled the health insurance premium to six per cent of monthly salary from July 2009, in which the employees will pay two per cent of their salaries and the employers four per cent. Furthermore, from January 2009, the government has required employees and employers to pay 25 per cent of the monthly salary toward total insurance premiums, comprising 20 per cent for social insurance, three per cent for health insurance and two per cent for unemployment insurance. As a result of the doubling of the health insurance premium, the proportion for total insurance premiums will be raised to 28 per cent from July 2009 (Vietnam Business Finance 2008). To assist the employees who become jobless due to economic recession and to solve some difficulties for enterprises laying off large numbers of employees, the Prime Minister promulgated Decision No. 30/2009/QĐ-TTg on 23 February 2009 allowing enterprises to borrow loans with the preferential interest rate of 0 per cent after these enterprises had used their own sources of funds, but could not fully pay the salary, social insurance premiums and job loss allowance or job severance allowance to the unemployed.

Conclusion

This paper has outlined the problems of mismatch between labour policy and trade union practices, on the one hand, and the reality of rapid changes to the business environment on the other hand. As a result, workers’ experience, wages as being too low and the weakness of unions protecting their members’ interests has led to many labour disputes. The question arises: what model of labour management relations is suitable for Vietnam in a time of transition from a planned to market economy?

During the period of economic reform and pressure from the GFC, the interests of the state and workers have begun to differ and sometimes conflict. These conflicts have been revealed in the labour policy anomalies. The fundamental problem is that the state has transformed a centralised system for regulation of labour management relations of a state socialist system (based on the Party’s principles) into the multi sectors or market capitalist economy in which employers are not part of the state apparatus as they were in the past. This inadequate control mechanism of labour from the state has led to unsuitable labour policies, which do not adequately address reality. The substantially increase in labour strikes during the GFC have demonstrated the failure of the state in terms of policy making in terms of labour policies that have been found to be inadequate to deal with the reality of labour activities. Furthermore, the state still has yet to focus on developing a mechanism to reinforce the law. Currently, there are insufficient numbers of inspectors to monitor legal violations and reinforce respect for the law.

The unions have neither addressed the fundamental causes of labour unrest at the national level during the policy marking process nor have they developed proper tools to negotiate with employers at the firm’s level to protect its member’s interests. The fact that a majority of labour strikes are unofficial or wildcat has shown the failure of workers to trust their unions’ leaders. Trade unions have not only failed to protect their members, and to take up the grievance through the collective bargaining process, but they have also failed to monitor employers’ violations of the rights and interests of the employees. Labour unrest is often closely linked to economic conditions and labour market problems which have been market during the GFC. The key issues for firms such as working conditions or, inadequate of wages and compensation have yet to be addressed in the negotiation process that unions have with employers. Instead they only focus on the surface of problems which has made the negotiation process to be more like a mediation process than the protection of workers’ rights.

Speculating on the future trajectory of labour relations in Vietnam presents at least three options. One option might be towards further liberalisation following the path of the major Western nations in reducing the role of the state, limiting the effectiveness of trade unions and encouraging an individualisation of labour management relationships. This option would appear to be inconsistent with many of the elements of Vietnamese social and political life. Moreover, at this time there is little evidence that organised interests are in favour of such reforms. A second option, which is more consistent with the approach taken by some of its geographic neighbours, could be to develop a more ‘corporatist’ approach with coordination of labour management policy being undertaken by leaders in government, unions and employers working together. However, there is little evidence of any institutional mechanisms for this to take place as political and economic reform remains essentially a process developed within the party and the government bureaucracy. Finally, Vietnam might not make any radical change in its current approach but adopt a pragmatic and incremental approach as the economy itself changes. This appears to be consistent with the way the Doi moi reforms were managed. In general, the GFC had little influence on these longer term choices as they relate to the fundamental structure of power and societal values in Vietnam. While the GFC has had an evident impact on the economy and the welfare of its workers, there are underlying tensions in institutional arrangements of a more enduring nature which will share future Vietnamese labour management relations.

Author

Ngan Collins is a Senior Lecturer and Coordinator of Management Research Cluster in Business College, RMIT University. Her research interests include impact of economic reform and social changes on employment relations in transitional economies, comparative Asian HRM, Vietnam’s HRM, transformation of trade union and labour market during its economic reform. Her most recent publication is Economic reform and employment relations in Vietnam, 2009. Routledge, London, New York.

Email: ngan.collins@rmit.edu.au

Acknowledgements

The author is grateful to Prof. Russell Lansbury for his comments on an earlier version of the paper.

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