POST-SOCIALIST TRADE UNIONS, LOW PAY AND DECENT WORK
VIETNAM RESEARCH TEAM
CASE STUDY
A WILD-CAT STRIKE
AT TOP ROYAL FLASH COMPANY
Hanoi, July-August 2007
Introduction to Top Royal Flash Co. ltd.
Top Royal Flash (TRF) is a Taiwanese apparel company situated in District 8 of Ho
Chi Minh city. TRF was set up in 2004 by Hsu Chi Cheng, a Taiwanese businessman, who
owns and has worked as the director general of the company at the same time ever since. The
so-called Top Royal Flash Corporation bases in Taiwan but according to our investigation,
TRF Corporation has no other factory than the one in Vietnam. According to informants from
DOLISA and the local neighborhood, TRF is one of the smaller foreign companies which does
not have a long-term investment intention in Vietnam. The informants from DOLISA of Ho
Chi Minh city subjectively classified foreign-invested companies into two groups: bigger
enterprises which are serious about investing in Vietnam with a long-term strategy and
provision of better working conditions for workers and smaller ones which only make most
use of the cheap labour here and make profit for a short run then go away. The first group
often includes famous brand names and large MNCs; the second one includes smaller
investors, like TRF, that base outside of IPZs and have little connection with any corporation
in their home countries.
TRF produces jackets, shirts, pullovers to supply to low and middle-end brand names
including Shopko, VF, Hemricks, Pearl Northwest, Target, Primark, Heaton and Swanson. It
exports primarily to EU, Canada, and the US. TRF has to apply the code of conduct of Target;
but according to workers, whenever there are visitors (auditors), they were taught the answers.
An auditor told us that workers are scared of being asked by auditors and no matter how many
questions she asked, she received the same answers from all of them.
Organisation Chart of TRF Vietnam1
1
Source: www.toproyal.com
2
The Taiwanese Director is the only foreigner in the company. The human resource
manager is Vietnamese but he speaks fluent Cantonese and is well-known as one of the closest
protégés of the Director. He speaks on behalf of the Director in almost all dialogues with
workers and outsiders.
Where TRF factory is based, District 8, used to be in an agricultural area in the suburb
of Ho Chi Minh city. As the city expanded quickly a decade ago, it became the 8 th District of
the city; however, the neighborhood remains less industrialized than other districts. There is
no industrial-processing zone in the district and most companies based here are of smaller size
compared to those in Cu Chi or Thu Duc. As a result, labour shortage has not become a
serious problem for companies in District 8, including TRF, because the local labour is already
more than sufficient to supply to these factories, not to say migrants residing in the
neighborhood.
TRF employs 1,200 workers, most of whom either live within the district or in rented
accommodation close to the company. Over eighty percent of the workforce are women – a
common situation of apparel industry.
Working Conditions and Labour-Management Relations
Rank and file workers are paid at three levels: A – Minimum Wage level
(VND780,000 or around $49); B – Task fulfilled level (VND 880,000 or $55); C –
Exceptional performance (VND 1,100,000 or $69). Most workers receive salary at B level, the
new entrants or disciplined workers receive salary at A level and only very few are paid at C
level.
With such low salaries, the workers have to rely on overtime work to increase their
income. While the maximum legal overtime standard is 300 hours/year, a worker in TRF
works over 100 overtime hours/month. A worker gave us her pay slip for May 2007 and her
recorded overtime hours was 118.5 hours. We normally have to work overtime five or six days
a week and during high season, we have to work overtime everyday in a month and will not
return home before midnight, a worker told us. Finally, every month an average worker will
earn around VND 2 million ($130).
But the company does not pay premium rate (150 percent of normal rate) for all
overtime hours of workers. The HR manager explained that each worker and his/her
production line have to finish a daily work norm. If they can not finish within the official 8
hours, they have to continue working until the task is fulfilled. Overtime payment will only be
paid for the time they spend on doing additional tasks required by the management. The
remuneration system of TRF seems to be a misleading combination of monthly salary and
piece work payment, which, on one hand, maintains a low official wage bill when it comes to
social insurance obligations and on the other hand, exploits workers by forcing them to work
more and receive less.
As shown on the pay slips of workers and as explained by the HR manager, TRF has
deducted 5 percent of workers’ salaries to pay social insurance. Yet, as confirmed by the
3
Social Insurance Authority of Ho Chi Minh city, TRF has stopped paying social insurance for
its workers since the forth quarter of 2006 and the debt is now VND 1.2 billion or $75,000.
The management rarely let workers to take annual leave. As a worker told us, most of
us dare not ask for annual leave in fear of retaliation. For some who did, they only got the
answer that the company is having a big order and can not allow them to take leave. A vast
majority of workers, therefore, have taken very few days off but they are not compensated for
the unused annual leave.
Interviews with workers show that the management style of TRF is extremely
authoritarian and discriminative between managers and workers. Workers dare not talk to or
make any complaint to their supervisors as whenever a worker speaks up, we know
immediately that she will be dismissed the next day. Once, a whole production line with over
20 workers made a complaint about too high work norm, the next day, the whole line was laid
off.
The management style of TRF, however, significantly differs from that of other textile
and garment companies in the way they treat production line leaders. In other companies, line
leaders are considered workers and treated the same as rank and file work force. In TRF,
though line leaders started as workers, once promoted, they will be treated as managers,
meaning that they receive much higher salaries, special benefits and allowances, and other
preferential treatment. During our interviews with workers, they showed their fear of line
leaders who also live in the neighborhood and may report to the management about their
communicating with outsiders.
TRF union was set up in 2006 with the Warehouse manager as union chairman and HR
manager as vice chair. But most workers we talked to have never attended any union meetings
and have no idea how the union committee was elected. One worker told us: I heard that one
day all managers, including line leaders, were invited to a lunch. After the lunch, a union
committee was elected and their names were placed on the company bulletin board the next
day. When asked whether any worker has approached the union leaders to express their
demands yet, our informants burst into laughter: are you kidding? He [union chair] is a
manager. If I open my mouth, the next day I am gone. And you know who would sign my
dismissal decision? The union vice chair – the HR manager. When we interviewed the labour
press and municipal union officials about the reason why a manager became a union chair,
some of them could not find the answer while others said: If not the manager then who, who
wants to become a union chairman?
Though TRF union is affiliated to the District 8 Federation of Labour, it seems workers
here have no trust in the higher-level union: I saw them [district union officials] visiting the
company several times. But they never talked to us. They went straight into the managers’
office then left. I guess they left with an envelope2. You say, should we trust them?
2
a metaphor in Vietnamese meaning a bribe
4
Strike on 13 June 2007
After Tet of 2007, labour relations in TRF exacerbated quickly. Workers were forced
to work over 40 hours of overtime a week. There have been reported cases of young girls
fainted while working. Workers also discovered that the management did not pay social
insurance for them. Therefore, on 12 June, when a leafet calling for strike was passed around,
800 workers decided to join the strike even though there has been no strike in TRF before and
there was no strike going on in neighboring companies.
In the early morning of 13 June, 800 workers stood outside of the company, blocking
the gate and the road to the factory. The District 8 People’s committee representatives, District
8 union chairman, and two policemen were called up to the factory soon after the strike
started. The two policemen together with security guards of TRF remained silent. They just
hang around to ensure that strikers do not sabotage the company’s assets. The District 8 PC’s
official and union chair asked workers to get inside the company to talk to the management
but none replied and they all remained outside the gate. A piece of paper containing five
demands was given to the management. The demands included:
i)
ii)
iii)
iv)
v)
Negotiation will only start when HCMC DoLISA comes;
Higher salary
Less overtime work
Compensation for annual leave and the right to take annual leave for workers
Pay social insurance for workers
As a result, the HR manager called the hotline of DOLISA and asked them to get to the
scene immediately. Head of DOLISA’s labour-salary section together with a representative of
HCMC VGCL and HCMC VCCI arrived at the company 45 minutes later. Even before the
DOLISA car stopped, it received cheers and applause of strikers as the latter saw the blue
license plate3 of the car and they knew that their first demand was satisfied. The strike
taskforce got into the meeting room where the Taiwanese director, HR manager, District 8
PC’s official, and District 8 union chairman were waiting. The HR manager read out loud the
demands of workers but he mentioned nothing about whether the management would accept
the demands or not. He said firmly that all workers who went on strike but refused to get back
to work would be dismissed immediately.
The HCMC VGCL representative suggested inviting workers to get inside the factory
before starting any talk or negotiation because it was exhaustively hot and sunny outside with
the outdoor temperature of 39 – 40°C. And if workers refused to get in, some workers’
representatives should be invited into the meeting room to negotiate with the managers. This
suggestion, however, was turned down immediately by the DOLISA representative. She said:
I agree that we should not continue talking while workers are standing in the sun; also it is not
a good public image. But I do not believe that workers will not get in. Let me try! She later
explained her refusal of VGCL’s suggestion: this is the most sensitive aspect of wild-cat
3
In Vietnam, only government’s cars have blue license plates
5
strikes. The strike was not organised by the union so if we invite workers’ representatives into
the room and let them negotiate with the employer, it means we acknowledge their role as
representatives of workers while denying the role of municipal VGCL, District 8 Union, and
the company union.
She walked out of the gate and talked to workers: Hello sons and daughters4, why are
you all standing here in the hot sun? Come inside and we will talk. I am from DOLISA, I am
here to help you. A worker later told us that they would only listen to DOLISA officials and
they wanted to see the DOLISA badge to make sure that the person was a real one. But most
workers knew D, the DOLISA representative, by face as she appeared on TV and newspaper
quite often. Therefore, even though she was not wearing her badge, all workers listened to her
and walked into the factory yard.
The DOLISA official then introduced District 8 union chair and said from now on, Mr.
N will talk on your behalf. Don’t be scared. Tell him all your demands. I will stand here to
observe. N started his talk to the workers, encouraging them to spell out the demands but no
one said anything. They sat still and kept silent. The DOLISA official said: as this is just a
meeting of workers and the union, I think Mr. S [HR manager] should leave us. All workers
applauded when S. went away and only then, they started talking.
After more than one hour, N had been able to collect all workers’ demands which
ranged from overtime hours, overtime payment, social insurance, to salary and treatment by
managers. N and members of the strike taskforce returned to the meeting room. N and the HR
manager negotiated over all workers’ demands, both right-based and interest-based ones.
Again, the DOLISA official remained an observer, only adding to the negotiation by
reminding the two parties of specific legal provisions. A minute of the negotiation was made
and the two parties and other observers signed in the minute. According to their agreement,
the company had to recorrect their violations of the law within 20 days and report to DOLISA
about the outcome. The company also agreed to all other interest-based demands of workers
including higher salary and less overtime work (workers did not ask for no overtime work at
all but only a reduction of overtime from 7 days/week to 4-5 days/week and 4 hours/day only;
they also wanted to have two Sundays off/month). In the minute, the management promised to
respect what had been agreed but the personal phone numbers of the DoLISA official and
District 8 union chair were provided to workers. Workers could call them if the employer
failed to keep their promises. The district 8 union chair called the strike “temporary work
stoppage5” and required that workers on strike would not be dismissed or retaliated. At this
request, the HR manager replied: We will comply with the legal provisions on this matter.
What he meant was the new regulations in Chapter 14 of the Labour Code (2006) in pursuant
to which employers do not have to pay workers taking part in wild-cat strikes and there is no
prohibition against employers’ dismissing workers participating in illegal strikes. D. quickly
responded: Yes, but not counting this time.
This is a common way for the older Southerners to address the younger, a
way to show their affectionate.
5 This is a term coined by VGCL to refer to wild-cat strikes that are not
organised by the union. They refuse to recognise them as ‘strikes’ to avoid
the obligations and sanctions against illegal strikers.
4
6
N, the District 8 union chair announced the agreement between the union and the
management of TRF to all workers and asked them to get back to work the next day. He also
mentioned that the employer had promised to pay them for the day they went on strike and no
one would be dismissed. Workers applauded and dispersed.
During the whole negotiation and settlement process, the VCCI representative played
the role of an observer. She rarely added to the negotiation or talked to the employer. The
employer did not seem to know her and did not request for her support either. In the end,
however, she also signed into the minute of the negotiation like other members of the strike
taskforce.
The black leader?
No one knew who wrote the leaflet calling for strike but when one of our researchers
came to the strike scene with the strike taskforce, he was approached by a 25 something years
old woman. After a short talk, she gave him her mobile phone number and agreed to an
interview that evening. As a result, the researcher visited her in her rented flat that night and
had an interesting interview with this worker.
She is a migrant worker from a Southern agricultural province. She has been working
in Ho Chi Minh city for 6 years: 3 years with another company and 3 years with TRF. She
lived in a tiny flat of around 15m2 with three other workers. The only furniture in the room
were two single beds for the four girls. The toilet was separated from the rest of the room by a
carton board.
She said that as soon as the strike happened, she called the provincial union, district
union, DOLISA, and the press informing them about the strike. It seems that DOLISA has a
good reputation among workers as they only trust this agency. I have seen people from the
district union, the people’s committee, the police visiting the company. They talked to the
managers in the office then left. There is no doubt that the management has given them good
bribes otherwise all their violations have been discovered long time ago. Only DoLISA people
have never been here so we only trust them. When asked why they did not negotiate with the
management before going on strike. All four girls in the room laughed: you want us to be
sacked? Whenever someone open her mouth, I know immediately that I will not see her the
next day cause she will be dismissed right away.
If none of you trust the union, do you want to be union leaders? The workers appeared
scared: no, not me. I dare not talk to the managers, I can not speak Chinese, I am just a small,
young worker with no power. But the worker who approached the researcher in the beginning
said: if workers vote for me to become union chairwoman, I will take up the position. I know
others are scared but I am not. I have 6 years’ experience, I have good skills so I can find job
anywhere. The company also needs workers like me. And when asked what she would do first
if she became union leader, she said: the first thing I want to do is to buy a book on labour
law, read it and tell other workers about things in it.
7
Findings
1. Protection of workers: in companies like TRF, it seems the only way for workers to
protect themselves is going on strike because the enterprise union is a management
union, the local authority seems more on the side of employers than workers or gain no
trust from the workers, and workers are always at the risk of losing their jobs if they
complain. Again, this leads to the long-standing question of union organisation at
workplace level. As long as union is organised in the current way, which is via a
decision of a higher-level union who consult the employer rather than workers on
membership of the union committee, there will be no real union and union leaders.
How potential leaders like the female worker mentioned in the case study can become
an official union chair remains a unsolved question for VGCL.
2. DOLISA’s role: the labour authority remains the only source of help in settling wildcat
strikes. The case study shows that even though the DOLISA official rarely participate
in the dialogue between workers and the union, between the union and the employer,
but by being there, she did have great influence over the parties and the negotiation
process. And the workers understand that influence very well. It means that despite the
new legislation on dispute settlement, the ad hoc intervention of strike taskforces will
continue to be the best available settlement force at least for the medium term.
3. The higher-level union: during the strike, the workplace union was replaced by the
district union leader who collected workers’ demands and negotiated with the
management on their behalf. This appears to be the measure adopted by VGCL to
uphold their roles in these difficult situations: when the workplace union is too weak,
the higher-level union will replace them in negotiations with employers.
4. Employers’ representative organisation: VCCI has long been fighting to be an official
member of the strike taskforce. However, they do not seem to make any proactive
action to support the employer in this case; neither did the employer seek for their
protection or representation. The unanswered question here is: whether the VCCI is not
capable enough to represent employers or the employers do not need to have a
representative organisation in cases like this? Or both?
5. The company has been established for 3 years and workers have been working in
exploitative working conditions for a long time but this has been the first strike. One of
the reason may be the availability of labour in the neighborhood which lowers the
bargaining power of workers and makes it easier for the employer to replace workers.
Another important reason is the treatment of line leaders. In the case of Carimax,
which is quite typical of apparel and footwear companies, line leaders are treated them
same as rank and file workers. In TRF, however, they are regarded as managers. As a
result, while in other companies, line leaders may become natural leaders of workers
and earn recognition and trust from them, in TRF, the rank and file female worker
8
whom we suspect to be the secret organiser of the strike remains unknown to and thus,
unrecognized by most other strikers.
9