STRIKES AND LIVING STANDARDS IN VIETNAM: THE
IMPACT OF GLOBAL SUPPLY CHAIN AND
MACROECONOMIC POLICY
Anita Chan
University of
Technology, Sydney
Kaxton Siu
Australian National
University
1
The Vietnam Strike Wave
Number of Strikes
900
799
762
800
700
600
541
500
424
387
400
310
89
100
2002
139
125
2004
71
2001
100
2000
200
2003
300
147
Jan-Aug 2011
2010
2009
2008
2007
2006
2005
0
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
Pre-2006: Period of Relative Labour Peace
7
Fig. 1: Relationship between Number of Strikes and Official Minimum Wage (adjusted by CPI),
900
140
800
799
762
120
700
100
600
541
80
500
424
387
400
60
310
300
40
200
100
71
89
100
139
125
147
20
Jan-Aug 2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
0
2000
0
Number of Strikes in VN
Minimum Wage
Minimum wage adjusted by CPI food
Minimum Wage adjusted by CPI
Minimum Wage, Adjusted Minimum Wage by CPI & CPI Food (Unit:
10,000 VND)
Number of Strikes
Industrial Zones outside Ho Chi Minh City, 2000-Aug 2011
8
Number of Foreign Enterprises and Number of
Strikes, 2001-2010
Number of FEEs 8000
900
7000
800
6000
700
Number of Strikes
600
5000
500
4000
400
3000
300
2000
200
1000
100
0
Number of Strikes
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
0
Number of Foreign
Funded Enterprises
(FEEs)
9
Cumulative FDI 1988-210 of the Top 9 Investors
Cumulative FDI since 35000
1988 (Unit: Million
USD)
30000
Korea
Taiwan
25000
Singapore
20000
Japan
Malaysia
15000
United States
10000
British Virgin
Islands
Hong Kong
5000
Netherland
0
2005
2006
2007
2008
2009
2010
France
10
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).
N
2010
2009
2008
2007
2006
Enterprise Ownership Types
%
N
%
N
%
N
%
N
%
Number of Foreign
Funded Enterprises 4220
(FFEs)
3.2
4961
3.2
5626
2.7
6546
2.6
7200
2.5
Number of Non-State
123392
Enterprises
94.0
147316
94.6
196776
95.7
238932
96.0
280762
96.4
Number of
Enterprises
3706
2.8
3494
2.2
3287
1.6
3364
1.4
3283
1.1
131318
100
155771
100
205689
100
248842
100
291299
100
Total Number
Enterprises
State
of
11
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
Do you think the trade union in your workplace represents
workers’ interests?
Yes
No
Don’t know
Missing
Total
Vietnam
China
894
58
100
2
1054
100
203
672
33
1008
(85%)
(6%)
(9%)
(<1%)
(100%)
(10%)
(20%)
(67%)
(3%)
(100%)
14
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 Experience
in Five Footwear FDI Factories, 2007
Number of
strikes
experienced
1
by a worker
in the same
factory
Number of
workers (N = 274
686)
Percentage
of workers
40%
2
3
4
5
6
7
315
72
15
6
3
1
46%
10%
2%
1%
0.5%
0.5%
Table 2. Repeated strike experience of workers in
five sampled Vietnamese footwear factories (N =
686)
16
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
Fig. 1: Relationship between Number of Strikes and Official Minimum Wage (adjusted by CPI),
900
140
800
799
762
120
700
100
600
541
80
500
424
387
400
60
310
300
40
200
100
71
89
100
139
125
147
20
Jan-Aug 2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
0
2000
0
Number of Strikes in VN
Minimum Wage
Minimum wage adjusted by CPI food
Minimum Wage adjusted by CPI
Minimum Wage, Adjusted Minimum Wage by CPI & CPI Food (Unit:
10,000 VND)
Number of Strikes
Industrial Zones outside Ho Chi Minh City, 2000-Aug 2011
19
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
2010 Garment
For migrant workers
VND 2,413,765
For nation 3rd quintile
VND 2,018,000
Industry Survey
2010 VHLSS
as a
whole
2010 UPA
4th quintile
For migrant workers
VND 2,727,300
VND 2,162,000
Table 3. Comparison of average monthly income of migrant workers in the three surveys
21
Deterioration in living standard
16
14
12
10
8
6
4
2
0
Rice and
Rice
Meat
equivale (kg)
nce (kg)
2002
2004
2006
2008
13.8
13.6
13
12.2
1.2
1.3
1.4
1.3
Grease, Shrimp, Egg
Oil (kg) fish (kg) (piece)
0.2
0.3
0.3
0.3
1.2
1.5
1.6
1.4
2
2.4
2.4
2.7
Sugar,
Molasse
s, Milk,
Wine,
Toufu Cake,
Vegetab
Beer
(kg)
Candy,
le (kg)
(Litre)
Candied
fruits
(kg)
0.4
0.4
0.4
0.4
0.4
0.5
0.5
0.5
0.5
0.7
0.7
0.6
2.5
2.5
2.4
2.3
Fruit
(kg)
0.8
0.9
0.8
0.8
Consumption Amounts of Some Main Food Per Capita Per Month (3rd Income Quintile, Whole
Country)
22
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.
24
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
Unit: % (Dec-10 as
100%)
130
125
120
115
110
105
CPI
Fig. 7: Consumer Price Index, Whole Country,
December 2010- July 2011
Jul-11
Jun-11
May-11
Apr-11
Mar-11
Feb-11
Jan-11
CPI Foodstuff
100
Dec-10
CPI Grain Food
26
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 problem
28
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