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Labour Market and Employment Conditions in Vietnam

Labour Market and Employment Conditions in Vietnam

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Labour Market and Employment Conditions in Vietnam
Labour Market and Employment Conditions in Vietnam

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Labour market and Employment conditions in Vietnam

By Dr. Dao Quang Vinh Institute of Labour Sciences and Social Affairs, Viet Nam

I. Introduction: Vietnam has embarked on reform process since 1986 with the emphasized efforts to shift the centralized planning economy to market oriented economy. Since then, Vietnam has achieved the development and advancement with more openness and further integration into the world economy. With the sound guideline on reform and policies on openness, Vietnam has been more and more initiative and dynamic in integrating to the global economy. The dynamic exchanges of goods, services, capital, technologies and labour, globalization has increasingly and strongly impacted to all dimensions of socioeconomic life of Vietnam. After more than 11 years of negotiation, Vietnam has officially become the 150th member of the WTO in November 7th, 2006. The integration of Vietnam into WTO has created more new opportunities which may result to promotion of the growth of export industries and intensive absorption of foreign direct investment (FDI). However, this event brings Vietnam to the exposure of global severe competition. With the further integration into the world economy, Vietnam has more chances to strongly involve in the international labor division process. The sectors with more competitive advantages shall have more opportunities for development as the result of the expanded market, thus, more job opportunities are created. There are more opportunities to turn the competitive advantages of Vietnamese labour such as high proportion of literacy and cheap labour cost into better economic effectiveness. Foreign investment in Vietnam is expected to increase, and in parallel, Vietnamese enterprises have chances to access to advanced technologies and modern management techniques which are resulted to more new jobs generated and increased labour productivity and higher wages. In addition to opportunities, there are also many challenges exposed for Vietnamese enterprises. With expanded trading linkage with foreign partners, Vietnamese enterprises are facing with the pressure posed by strictly compliance of labour standards, code of conducts, regulation on moral practices, and performance of social corporate responsibilities, and other environment related qualities and standards as well. With regard to labour force, the most challenge for Vietnam is low skill qualification of labour, in the mean while, there are still many problems and constraints in term of education and training, delivery of high quality training services is not capable and sufficient to respond the demands of employers. It is expected that the competitiveness in employment and labour cost shall be more severe in a more open and broader labour market. In the meantime, the legislation for operation of labour market has not yet well- refined in Vietnam that causes to higher labour cost, higher transaction cost and employment fees. In responding the new requirements in the new context, it is the need to strongly and consistently change the legal system and management mechanism with the aim to rapidly and consistently formulate relevant factors of market economy, creating legal basis for

performance of market economy principles, eliminating all discrimination, creating equal playing field and building a healthy competitive environment. With regard to labour and employment, it is necessary to accelerate the changes in labour and employment policies, labour market regulations and employment conditions

II. Globalization and its impacts on labour market. 2.1. Globalization and integration of Vietnam 2.1.1. Opportunities and challenges in international economic integration. One of the critical characteristics in economic reform process embarked by Vietnam during the last years is more and further integration into the world economy with the most tangible mark is the inclusion of Vietnam as the official member of WTO at the end of 2006. Import – export activities have been more dynamic with relative high growth rate. There have been more positive signs in term of foreign direct investment. Vietnamese workers have more opportunities to find jobs in many other countries. a) Opportunities Globalization has brought unheard of opportunities for many countries in the world, including Vietnam. With the advancement of information and telecommunication technology, transaction cost has more and more decreased, partial and temporal distances between the nations have been narrowed down; the conditions for knowledge accessibility are improved and increased. Globalization has increased and promoted the ownership of actors involved in this process as it increases the options for choices for them1. Globalization brought advantages for promotion of economic factors such as capital, techniques, knowledge, adequate allocation of resources, expanding trading activities, improving economic effectiveness, intensifying the economic and technical linkages between the nations and regions. World market becomes an extremely huge capital and technology resources that all countries could be able to find opportunities to exploit. Human being knowledge and global information are widely disseminated that all people can have opportunities for access For Vietnam, globalization create an greate opportunity to absorb direct foreign investment and receive new technology to promote economic development. For the period of 2001 - 2005, flow of direct foreign investment has increased by 35% with total volum of US $ 3.3 billions by 2005. Foreign investment constitutes to 16.% of total national investment in 2005, FDI sector contributes a share of 37% of total industrial production value, and accounting for nearly 56% of export turnover, contributes to 15.9% of Vietnam’s GDP in 2005 (table 1)

1

Stiglitz J. E. vµ Yusuf S. (2002), The World Bank, Publishing House, Ha Noi.

Rethink about East Asian Mirecles, Political

Table 1. Direct foreign investment in Viet nam 2001-2005 2001 Total (Mill. USD) Share of total investment (%) national 2,450 17.6 2002 2,591 17.5 2003 2,650 16.3 2004 2,853 15.5 2005 3,309 16.3

Source: Statistical year book 2005, Statistics publishing house, Hanoi 2006, p. 93

Foreign investment has been strongly absorbed by industries, of which processing industry alone attracted 50% of the total FDI2. Thank to a strong flow of FDI, Vietnam has created conditions to increase capital, receiving advanced production technology and modern management techniques, promoting economic restructuring, creating more jobs and transferring labour structure towards industrialization and modernization, ensuring the high growth rate and narrowing down the gap in development with other countries. GDP growth rate for period of 2001-2005 gains 7.5% at average. In this period, proportion of agriculture production in GDP reduces from 23.24% to 20.9%3. FDI sector with superior advantages on capital absorption and equipment of technology, has obtained a twice higher productivity compared to domestic enterprises. Although during the period of 2001-2004, there was a boost of private enterprises with double increase of productivity, the disparity in term of productivity remains high in compare with FDI enterprises. State – owned enterprises have not gained any increase of productivity, thus, by 2004, these enterprises were lagging behind private sector (Figure 1)
Figure 1. Labour productivity by enterprises ownership for period of 2000-2004 (millions VND/employee/year)
450.000 400.000 350.000 300.000 250.000 200.000 150.000 100.000 50.000 0.000 2000 2001 2002 2003 2004

FDI

Private

SOE

Source: computation on the basic of enterprises survey undertaken by GSO in 2000, 2001, 2002, 2003 and 2004.

Globalization has promoted trade development and created more enabling environment for Vietnam to more widely and deeply integrate into the international labour division to better use of the national comparative advantages. Import- export activities
2 3

The 2005 statistical yearbook, statistic publishing house, Hanoi, 2006 The 2005 statistical yearbook, statistic publishing house, Hanoi, 2006

strongly developed with growth rate of about 20% during the period of 2001 – 2005 (see table 2)
Table 2. Import – export activities value and growth rate by period 2001-2005 2001 Export (Mill. USD) Growth rate (%) Import (Mill. USD) Growth rate (%) 15,029 3.8 16,218 3.7 2002 16,706 11.2 19,746 21.8 2003 20,149 20.6 25,256 27.9 2004 26,485 31.4 31,969 26.6 2005 32,442 22.4 36,978 15.7

Source : The 2005 statistical yearbook, statistic publishing house, Hanoi, 2006, page. 423

International trade has become an important factor to safeguard the economic growth. By 2006, export turnover constitutes a share of 60% of total GDP4. Thank to the boost in FDI sector and increase of export, the economy has created much more new jobs. It is stated that integration and globalization have made considerable contribution to economic growth, jobs generation, poverty reduction and opening the way for long term and sustainable development, enabling Vietnam to advance toward with the same speed of other countries5 b) Difficulties and Challenges It is the must to emphasize that, opportunity, in the practical meaning, conceives to be potential. Opportunities themselves do not conceive practical specific value. Opportunities can only be turned into reality only when there are enough conditions to uptake them. Involvement in globalization process means Vietnam has to commit for compliance a series of requirements for integrations such as the regulation on copyright or banking standards…In the meanwhile, there are many international standards, regulations which have been formulated in the context where developed countries take the driving force role. Thus, the countries with low level of development such as Vietnam are prone to be more vulnerable to the risks. Economic globalization shall bring more opportunities in business making, more jobs generated but these opportunities are accompanied with challenges of more rapid change of technology, shorter revolving circle of production, more flexible circulation capital, more severe human comparativeness and more risks in employment. The most severe challenges for Vietnam in current time and in future are how to overcome the weakness of the economy and to cope with the lagging behind of the human resource The competitiveness of the whole economy in general and each commodity, service in particular is much lower in compare to other countries in the region and the world in

4 5

According to the report of GSO Vietnam Human development 2001, National political publishing house, 2002 c

electronically goods and others There is a trend of increase of number of workers working in FDI sector.2%. Human resource reveals many inadequacies in term of qualifications.6 Physical infrastructure for training and vocational training system in Vietnam is too out-dated compare to the general level of many other countries in the regions and the world. a) Impacts of international economic integration to employment In general. 6 - - Statistics on labour and employment. 1/2007 8 Status of Vietnam enterprises – GSO website . Thus. foreign direct investment mainly concentrated on the processing industries and some services. water supply…) is less developed and can not respond the requirements of economic development. textile. 2006. sense of professional moral. So far. leather.7% of labour force who remained unskilled. textile. international economic integration has positively impacted to employment of Vietnam during the last years in term of number of jobs created. leather. ports. price.7 millions of workers from 15 years of age and above8 . transportation.Employment under the impacts of international trade. quality of jobs and income generation.Employment in FDI enterprises. 2005. power. and the other side is high protective industries with less labour intensive and less employment generation such as cements. seafood process. Labour-social publishing house.term of quality. woodwork. the rate was 79. . In the processing industries of Vietnam. and model. besides the petroleum exploitation sector. The impacts of integration on labour policies in Vietnam. One side is the export led industries with labour intensive consuming such as garment. seafood processing. and chemical industries.16.6% in 2005. Technology level of the economy is very out-dated (about 3 -5 generations lagging behind the countries in region). there was 74. telecommunication. technology rules compliance. where enterprises could take usage of cheap labour cost. the sectors with high share of foreign investment are the labour intensive industries such as garment. Vietnam stands as the position of 98 in the rank of 175 countries on national competitiveness. or increased by 0. In 2006. for women labour. there is contrast differentiation into 2 extremes.2. There are worrying signals in term of skills. By 2005. heath and ability of foreign languages. p.6% of total workforce in 2000 to 1. sense of labour discipline obey. Hanoi. It rises from 0. Infrastructure (road. steel producing. The investment capacity on education and vocational training stands at very low level7 2. . 7 Report by General Department of Vocational training in the 2006 Annual review meeting of MOLISA.1. The application of informatics technology in management and trading is still limited.

Applying the results from research undertaken in 115 countries of Wood and Mayer in Vietnam context. is because. the number of jobs in these sectors is also expected to be reduced. 2000.However. After the computation of gains and losses. It is tangibly that Vietnam has great comparative advantages that have not been fully exploited in export industries. Belser (2000) indicated that if Vietnam increases the ratio of export processing industries to 63% instead of 37% at current time. out of the total workforce of the processing industries9. In the past.245 0. 2007 and in this context.000 USD of output value 0. the negative effects of integration to the economic development as well as the protected industries are not tangibly obvious.2 to 1. Hanoi. and 6. expanding export industries based on the labour comparative advantages shall generate more jobs than development of import replaced industries. electronically products are not the essential Status of Vietnam enterprises. the labour of leather industry constitutes to 18%. especially for light industries (labour intensively consuming industries) Unlikely to other Asian countries. This means. GSO Website Attracting poverty. the economic integration of Vietnam has undergone mainly in expanding export market. Viet Nam attacking the poor. Vietnam has enough preconditions to learn and repeat the successes of Asian countries in export led production and job generation10. world bank. 16. it could create more 1. since Vietnam became the full member of WTO in 11th January. for Vietnam. labour force in compare to land). Hanoi 10 9 . industries which have been strongly protected by tax and non – tax barriers shall be negatively affected by the integration process. However.3 millions jobs. In principle. if Viet Nam doesn’t carry out a prompt modification and adaptation for the economy. Belser 11 has estimated the labour coefficients in export and import replaced industries in Vietnam as follows: Manufacturing sectors Export industries (SOEs) Export industries (FDI) Export industries (Trung binhf ) Import replaced industries Number of workers per 1. it is stated that export industries has double higher level of labour usage compare to the import substituted industries. thus.108 According to the result of this estimate. as the Vietnam economy has not fully integrated into the world economy.259 0. In 2004. figure on export has been continuously positively changed. with the available resources (human resource. 2000 11 The World Bank. negative impacts from integration process to the employment will become more inevitable.5% from wood processing industries. The highly export – led industries have brought more jobs for labour. it was 17% from garment and textile industries.232 0.4% from seafood processing. According to the assessment of The World Bank.

In early 1980s. the number of Vietnamese laborers working in Asia countries rapidly increased due to the shortage of labour in these countries and their policies on importing unskilled and semiskilled labour.249 23 7.567 37. Malaysia and Singapore. instead. Taipei.122 2003 75. . In late of 90s.574 4.981 1.900 36. In 2001.traditional market as (Libyan. Vietnam labour export entered into a new process which targeted to non.226 2. Viet Nam attacking the poor. There are also positive changes in term of career modality of export labour. such markets are replaced by Taiwan and Malaysia.International labour migration Vietnam began to export labour in early 1980s. but in 2005. In early of 1990s.000 of new jobs. but at current time. the policies on employment haven been resulted to accelerate the scale and diversify the market for Vietnam labour.910 3. almost of export labour worked as manual workers in factories.33% according to GDP.779 2. 12 The World Bank.000 to 150. By considering the activity of sending labour to work abroad in definite term to be an important solutions for job placement. the Vietnam – US trade agreement shall create 130.500 20. (Table 3) Table 3. the Vietnam – US trade agreement. 4 mentioned above nations are the main market for Vietnamese labour. accounting for 82% of total Vietnamese workers working abroad in labour contract with definite term.752 14. the key products are agriculture-based products. According to the assessment of the World Bank12. With the employment elasticity coefficient is estimated to 0.500 19. The destinations for the first flow of labour export were former Soviet Union and East of European countries.144 8. seafood.191 9.205 3.168 2002 46. shall bring one more 1% of economic growth for Vietnam. Number of Vietnamese workers working abroad in labour contracts with definite term Unit: Person 2001 Total Of which : South Korea Japan Malaysia Taipei Others 3.190 2.264 39.202 19.700 2004 67.750 10.624 27. 2000. South Korea. But the number of export labour was rapidly reduced as the consequence of the political chaos in this part of the world. when comes into performance.590 Source: Ministry of Labour Invalids and Social affairs (MOLISA).965 13.605 4.204 1.782 21.850 2. So far. Arab countries) and newly developed Asia countries such as Japan. garments and leather goods.products of Vietnam.447 2005 70. South Korea and Japan markets constituted the largest proportion of export labour. Hanoi .

and “An employer shall have the rights to recruit employees directly or through Job introducing angencies. the ratio of highly skilled workers and professional specialists remains low. labour disciplines. but with the promulgation of the labour code. The Article 13 of the Labour Code stated that “ all labour activities generating a sources of income and not prohibited by law shall be deemed to be employment” This change creates a new concept on employment and gradually replaced the former perception of people on job. collective labour agreement. perception. Decrees of the Government. Circulars issued by Ministry of Labour and Social Affairs and other joint – circulars. time of work and time of rest. business and services for job generation.the percentage of semi. relation on vocational training. The labour code stipulates other provisions regulating the relations of labour market such as. The Labour code was ratified by the National Assembly in 1994 and took effect in 1/1/1995 and was amended and supplemented twice in 2001 and 2004.skilled and skilled labour has increased to about 55% in 200513. purchase and sell labour services. wage. employment. 48/QD-TTg ratifying the planning and projection of vocational training network. The labour code provides an official protection of the rights to freely exchange. policies formulated by localities. social insurance. and are initiative to find a job instead of waiting and being independent to the job placement by the state. incorporating the component of vational training into the national targeted program for poverty reduction and employment for period of 2001-2005 which contains a number of support policies and projects for the poor. Worker owns his or her labour and has full right to determine the usage of labour. promoting the ownership and initiativeness of employers and employees. all guidline and orientation of the State on reform has been institutionlized into legal documents. It is estimated that during the next years. labour safety and health. Employers shall have all rights to recruite workers. the Government has issued a number of Decree on labour contract. laborers in 13 Study on sustainable development of labour and social issues. Workers are placed in the central position. and to increase or reduce the number of employees to suit production and business requirements and in compliance wit the provision of the law”. social insurance. the view point of the employment was changed dramatically. Molisa. concept on employment and the guideline for job placement have been basically changed. only job in the state sector and collective sector were considered as a job. shaping a relative complete legislation framework for the formulation and development of labour market. In the past. The Prime Minister has issued Decision N. labour export will be more increasing. The promulgation of labour code has put the ground for the formulation and development of labour market. The legislative protection is stipulated in the Article 16 as “An employee shall have the rights to be employed by any employer in any location not prohibited by law”. Employers are stimulated to invest on development of production. trade union and state management on labour issues. increase or reduce the number of employees according to their production or business requirements. b) Impacts of international economic integration to employment policies During the last 20 years. and the share of semi skilled and skilled labour will also be raised when Vietnam further integrates more deeply into the regional and world economy. By promulgating the labour code. These legal documents include Labour Code. 2005 . labour safety and health. wage. However. labour contract. In order to provide guidance for implementation of labour code.

land law. fields. the outreach of labour code is still limited in formal sector. and even in formal sector.). etc.improving their knowledge. realization of labour potentials. it is necessary to state that the regulating coverage of labour code is still limited. the adjustment of . requirement for professional education and skills for higher productivity. . In addition to the labour code. educations. The policy on diversifying the employment and capital source and subjects for job creation: These are incentive and supporting policies for investment and job creation influencing all the subjects in the society who create jobs for the employees. infrastructure building. projects edited and implemented in each certain period of time. there are also other important policies relating to that of the process of job generation. there are still many constraints in fully implementing the provisions of labour code. They are involved in particular action programs. These policies express the great and fundamental guidelines of the State. Decision No. For example.. information supply. 120/Q§-TTg of the Prime Minister about National program on employment settlement for the period of 19962000. It has a decisive meaning and interdisciplinary and interregional impacts on creating an advanced employment transformation with 3 main forms of structure as employment structure according to industry (transferred from agricultural jobs to non-agricultural jobs). Specific policies on employment These are specific policies and solutions on directly creating jobs and supporting on job creation. and these both directly or indirectly impact to the development of labour market. . loans for job generation. The investment policy on encouraging and supporting the job creation: The State plays an active role in job creation in all national economic industries and gives the priority to industries which have the incentive and spreading effects on other economic parts. labour restructuring. the State directly invests and gives measures to encourage or limit the investment in some industries. . The objectives of these policies are to create more jobs for the employees and enhance the employment structure transformation in a modern and advanced way in order to increase labor productivity and improve the workers’ living standard. Policy on employment structure: Through investment policy. . However. there are great approaches of the period of mid-term and long-term plans to develop the socioeconomy and labor-employment of the country (5 year Plan. National target program on employment and HEPR for 2001-2005. the law on investment. civil law. regions. employment structure according to technical qualification (transferred from low-skilled handicraft labor to mechanized labor and heading to automated labor) and employment structure according to regions (mainly transferred from rural labor to urban labor with industrial working behavior. Long-term vision. making a great contribution to liberalization of production forces. Besides. and so on). other laws such as the Law on enterprises. labor policies in the process of equitization State-owned enterprises. The key macro policies on employment include: . quality and efficiency). to create jobs.Macro policies on job creation This group consists of policies on job creation and employment adjustment in a macro aspect (nationwide). etc. etc. The content of the policy is not only to set up a comfortable legal corridor but also a financial support (preferential credit. and other policies of the State have created a fundamental legislation framework. plans. including promotion of foreign investment. development of new trades. skills. Development strategy and plan for the coming 10-15 years.

Red river Delta 4. i. of which the self-employed in agriculture-forestry-fishery hold 53 percent. Northern Central 5.2 percent (table 4).18 15. The development level of the labor market.68 53. Northwest 3. the number of wage workers was 3.e. In 2005.80 18.41 9.90 35.74 10.6 Urban 49.6 per cent out of the total employed labor. the rate of wage workers in urban area was 49. the situation of self-employment in agricultural-forestryfishery is very popular. or the average growth rate is 8. hence there are many shortcomings (e. In the total number of employed labor in rural area. The employment policy evokes the extension of the number of wage workers in nonagricultural sector (industry-construction and services) but in the agricultural-forestryfishery sector.75 26.12 43.10 millions.23 28.24 percent per year.07 49. is different among regions and localities.67 9. Percentage of wage workers 15 years old and above in 2005 (%) Of which Region Nationwide Of which: 1. This number was 3. 2) Labour market reform and its impacts on employment conditions in Vietnam It is said that the labor market in Vietnam is nowadays in the process of establishment. undeveloped.93 20.91 7.1 times bigger than that of 2000 (on 1 July 2000.21 Source: Labor – Employment Survey con ducted by MOLISA in 2005 .industrial relations as minimum wage policy and wage management policy.01 27.37 Rural 18. the rate of wage workers in agriculture-forestry-fishery only accounts for approximately 6 percent. etc. the impacts remains limited. annually the number of wage workers increased by 726. Southeast 8. Mekong Delta 14.62 25.74 3. The number of people directly participated in the labor market (wage workers) by 1 July 2005 was 11.1 thousands of people on average.). broken down by the rate of wage workers. social insurance policy.84 40. etc.99 52. occupied 25. regulation on labor protection. Northeast 2.46 34. the last 72 percent is the self-employed.36 44.96 46. While the model of small-scale household economy still rules in rural areas. lack of legal framework.53 16.4 percent while that in rural area was only 18.63 millions). partitioned by regions and territories. Coastlines of Southern Central 6.g. Table 4. labor safety and hygiene. Highlands 7.15 Total 25. that of non-agriculture is 22 percent.34 58.

Invalids and Social Affairs quarterly releases the information on the recruitment demand of enterprises operating in the province. there is no big gap among the regions in terms of the rate of labor market participation in urban areas while there is one in rural areas. centers. Properly managing the labor market plays an important role in arranging the employment.Job fairs Together with the activities of Employment introduction centers and enterprises of employment services. the Government has recently carried out a great deal of measures to enhance the institutions. Southeast and Mekong Delta have the rate of labor market participation higher than the medium rate of other regions and in the nationwide. is Job fairs. Invalids and Social affairs. In the nationwide. . and labor administration agencies. ten thousands of people have been offered advice and jobs. 14 MOLISA .Employment services: By 2005. hence the workers are able to find jobs14. . Therefore.Establishing employment information center The employment information centers. which is effectively organized and run. the design of dataset and information on employment has been carried out as a pilot and run effectively at several localities. and lack of tight combination with enterprises and training units. In such affairs. there have been over 100 Job fairs organized in many localities in the nationwide. The number and types of such services run by Centers and enterprises are diversified. the input information is still restricted. Nevertheless. In the years to come. a kind of tool of the labor market. including 64 centers under the provincial Departments of Labor. Since 2000. the workers. and other 117 centers under the mass organizations and ministries and industries. Beside the general Job fairs. The Department of Labor. websites for worker and work seeking. employment introduction enterprises. Among that. the number of wage workers will keep raising and the labor market will be more and more diversified. Moreover. In general. Coastline of Southern Central. the noticeable outcome is in Dong Nai province. the quality of employment services is still low and inefficient due to the lack of information on labor market. over 3000 enterprises performing in the field of employment consultancy and introduction. promulgate tools and strengthen the activities of the labor market: . the participants of such job fairs are also training/educational organizations. vacancy articles are now more and more making a great contribution to the development of the labor market. In order to speed up the development of the labor market. it is only possible to collect and release the information on labor demand (employment) but not the information in labor supply. A typical example is that within the project of enhancing the development of the labor market. Beside the enterprises. it is essential to have specific regulations to instruct and manage the activities of the labor market to upgrade the efficiency of the labor supply-demand as well as to protect the benefits and determine the responsibility of the participants of the labor market.Red river Delta. there were 177 public employment introduction centers. a number of professional Job fairs and the ones for particular groups of people have also been organized. However. reducing the unemployment and enhancing the flexibility of the labor force as well as preventing and mitigating many other socio-economic consequences.

creating training opportunities for workers. or applying too strict disciplines to workers. General Director of Coast Phong Phu. These enterprises have adopted the adequate and fair salary mechanism. In the context of economic openness to the world integration and for development. thank to the implementation of CSR. According to the survey undertaken by the Institute of Labour Science and Social affairs ( ILSSA) recently in 24 enterprises in garments and textile. but also raise their competitions in terms of commitment to take care of life and working conditions for their workers. Mr. paying more attentions on their workers and environment protection. expansion of market. Have sent their representatives to our company to check and propose their specific requirements in relation of social corporate responsibilities. but also on compliance of labour legislation and labour standards. competition and development. fully implemented commitment on health insurance for workers.8 millions VND/year. enterprises have to commit to perform the Social Corporate Responsibilities (CSR). using child labour. or commit to any bad behavior of disrespecting labour Box 1 In engaging in the business with us. those enterprises have gained 25% of revenue. enterprises have been more and more concerned not only on advancement of technology. enterprises also gained benefits from better trade prestige. using child labour. keeping safe and clean working environment. Besides the economic profits. which is a quite new issue for Vietnamese enterprises but it become an actual requirement for international economic integration. proportion of export products increases from 94% to 97%.2. report on CSR in enterprises of leather & footwear and textile and garment sectors. reform of production management. 2003. the commitment and satisfaction of workers and being able to employ high qualified skilled workers. 15 Dao Quang Vinh. better trade . or not arrange safety labour conditions for workers.2. . The current surveys conducted by Institute of Labour Science and Social Affairs indicated that leaders and managers of enterprises in export manufacturing and processing industries are aware that their clients will not accept the products if enterprises violates labour legislation. leather industries15. Hochiminh city. these all help enterprises in keeping good workers to stay to work for enterprise. such companies as Nike. This means. Those enterprises that well perform CSR have gained remarkable benefits including cost reduction. Employment conditions of workers in circumstances of integration. They will not accept our products if we commit in any violation of labour code. ILSSA. and Adidas. labour productivity increase and more opportunities in accessing to new markets. or enterprises do not comply to safeguard necessary working condition and labour safety. Nguyen Thien Thuat.mark prestige. Currently. forced labour. labour productivity increased from 34. worker dismissal reduction.2. revenue increase. Reebok.2 millions VND per year to 45. enterprises have to compete not only in term of product’s quality and price.

the right to freely chose career and job. and in the meanwhile.. this enables Vietnamese enterprises to cooperate with regional firms and forums in implementing CSR for sustainable integration. . the Labour code had undergone two round of revision and supplement with the aim to promptly modify the policies and regulations pertainning labour and labour relations emerged in the market economy. salary: The Labour Code stipulates that the State shall decide and promulgate for each period and revise the minimum wage according to the changes of costs of living to ensure the living standard for workers and their household. and in other hand.Regulations on time of work and time of rest: normal working hours for workers shall not exceed 8 hours per day and workers are entitled to have at least one day off of a week. . honour and praise the enterprises which have been implementing well CSR. Enterprises shall determine the working hours on week with 48 hours for 6 days or 40 hours for 5 days or 44 hours for 5. Ministry of Labour and social affairs (MOLISA). the . Vietnam Action Aid. Labour code also promulgates the regulation of payment for overtime works in case of performing normal overtime hours. have organized honour recemony to offer rewards for garment and textile enterprises which have well implemented CSR. In order to promote CSR. In addition. For the period of 1994 to 2006. Vietnam Government stimulates and creates enabling environment for enterpirses to engage themselves to perform Social Corporate Responsibility in the enterpirse’s operations. . Such enterprises have been honoured widely in mass media. there are 2 minimum age thresholts for labour as: mimumum age for a person to engaged in normal work in normal working conditions is fully 15 years old. The main contents include: .Regulation on child labour: According to the Vietnam legislation. to vocational training and improving career qualification without disrimination of sex. ethnicity.. It is regulated in the Article 5. . mimumum age for a person to engaged in hazadous and hard work is 18 years old. and religious practices”. Vietnam Association of Garment and Textile.Regulations on discrimination. Vietnam Chamber of Commercial and Industries (VCCI) in collaboration with concerning agencies as Ministry of Industries. For adolescent workers. Ministry of labour. In the national policy framework. 200% and 300% of basic salary correspondingly. harassment and abuse: Labour Code states that disrimination in all cases is forbidden. This improvement created enabling conditions for enterprises to well perform CSR and Code of Conducts (CoC) required by client partners. it’s important to state that not many enterprises in Vietnam engaged in practice of CSR. it is because enterprises are not aware about the benefits gained.5 days. overtime in night work and in public holiday time with the different rates of 150%. social classes. point 1 of the Labour Code states that “ all people have the right to work.Regulation on wage. Vietnam Association of leather’s production. to adapt them to be more compatible with international practices.Regulation on forced labour: The Labour code has stipulation that any ill – treatment with labour or forced labour in any forms are forbidden. bedises the policies on economic development. The honour rewards have made contribution to improve the pretige and image of Vietnamese enterprises in integration process in one hand. social and environment protection goals have aslo been mainstreamed into the Government’s legislations.However. for 2 years of 2005 and 2006. Vietnam General Federation of labour (VGFL). invalids and social affairs (MOLISA) in collaboration with Ministry of Industries (MoI) offers annual rewards for those enterprises that have best practice of social corporate responsibility. there is no requirement from their clients.

sea food processing industries). employees and representatives of trade union. Employers shall not discrimiate against employees on the ground of their forming or joining trade unions. . Trade union and 16 17 The 2006’s enterprises survey of ILSSA Dao Quang Vinh . Such enterprises have also setup a system of labour regulations and other internal rules with specific stipulations on clarification of responsibilities and obligations of each parties. The main contents of the labour contract should be the task shall be performed. These regulations are disseminated to all employees by various chanels such as widely posting or meeting at workplace. wages and salary basing on the prevalent wage level in the market. and shall not by economic measures or other manoeuvres. In all enterprises which are implementing CSR have setup a section or assigned personnel to oversee the implementation of CoC.. Enterprise and employees are free to enter into negotiation on working conditions.working hours shall not exceed 7 hours per day or 42 hours per week. All reform activities have been warmly welcome and actively involved by empployer. labour safety conditions. With the possitive changes with implementing CSR.Regulation on freedom of association and collective labour agreement: The labour code promulgates that all acts to impede the estbalishment and the activities of trade union in enterprises are strictly prohibited. The results from current garment and textile enterprises survey reveals that many enterprises have undertaken a series of reforms in the opration of internal supervision and management system. Especially. the number of overtime working hours shall not exceed 300 hours per year (for export production and proceesing enterprises in garments. workplace. The important reform relating to working conditions is the establishment of mechanism for negotiation and settlement of labour dispute at enterprise. developing clearer functions and tasks in the management system. the performace of enterprise’s policy and status of labour relation. labour protection. or setup labour protection council. Reporting system have been improved with intensified frequacy with the aim to have better and prompt understandings on business and production operation. term of contract. wage. textile. record of time of working and time of rest. the role of workers and trade union are better appreciated in enterprises. Policies and benefits for employees are widely posted at workplace or at the public places of enterprise’s areas. fire prevention. improvement of equipment and human resource and developing specific operatinal plan for each management section16. social insurance for employees. or participating in trade union activities. Quality of report has also been improved. The labour code promulgates specific regulations on engagement of labour contract between anemployer and an employee. or 200 hours a year. with the exception of some special cases. health care for employees. Labour market information has been more and more important for workers and employers to negotiate wages. or supervision team at production unit and workshop17 The important reforms in monitoring and manangement system include: (i) improvement of transparency on and implementation of policies of enterprises towards employees and (ii) promoting the participation of emplloyees and trade unions.. especially the bookeeping and record system relating to personnel. leathers. wages and other benefits for employees. time of rest. time of work. seek to interfere in the organization and activities of trade unions. time of work and working condition. the role of trade union has been more and more increased in the internal supervision system. rights and benefits of workers. Employers and employees may agree on overtime working hours but the number of additional hours shall not exceed four hours a day.

This regulation has created an equal access to social insurance between workers of different economic sectors. a) With regard to social insurance (including health insurance) Coverage of social insurance has been remarkably expanded during the last years. wages) or due to the impedance of employer19 . Hungyen. Benefit of workers in labour market reform One of important contents of labour market reform is to formulate policies and solution to protect workers against market risks and changes. semi-state entities and private entities. The 2005’s annual review report. HochiMinh city and Dong nai. Vietnam general confederation of labour unions Enterprises survey in 5 provinces of Hatay. Khanh Hoa. bodies and organizations under the labour contract with definite term of over 3 months and labour contract with indefinite term without discrimination of labour scale or ownership of employers. and lack of awareness on the way to protect their legitimate rights and benefits.employees have been more and more interested and actively participated into the negotiation process and settling the labour dispute. workers. The main policies pertaining protection of workers include: regulations on social insurance. trade union hase not been formulated in many enterprises. Khanh Hoa. in the implementation of the mechanism for negotiation.Secondly.93 millions by June of 200522 The Law on social insurance stipulates the contribution obligation of employers and employees to the social insurance fund. young workers are lack of understandings on labour legislation. 9/2006 21 According to a new regulation of the Government on social insurance.2 millions from 1996 to 5. compensation for labour contract termination. the employees shall contribute 5 % of their actual wage to social insurance fund and 1% of wage to health insurance fund. HochiMinh city and Dong nai. cooperatives.8 millions in 2004 and 5. Hungyen. 9/2006 20 Enterprises survey in 5 provinces of Hatay.3. According to report of Vietnam General Confederation of labour union. Since January of 200321. The number of people covered by social insurance sytem has increased from 3. 2005 19 18 .Thirdly. while only 50% of FDI and 20% of private enterprises have trade union18 . even in many enterprises where trade union has been established. especially migrant workers. protecting the benefits of employees and building a harmonized labour relation in enterpises. 22 Report of Vietnam Social Insurance. 2. or the dependance of trade union staff to employer (work assignment. However. some of constraints appear as follows: . they are not concerned on trade union activities20. and mechanism for settlement of labour disputes. operation of trade union is not effective due to the limited capacity of trade union staff. work severance allowance and other allowances. Social insurance schemes have been promptly promulgated and revised in accordance with the Labour code and the law on social insurance. including all types of bodies and enterprises. health insurance.2. The employers shall contribute 15% of total wages fund of the enterpirses to the social insurance fund and 2% of total wage fund to the health insurance fund. coverage of social insurance has been expanded to all workers employed by enterprises. 100% of state owned enterprises have trade union.Firstly.

responsibilities. The Article 23 of Labour code regulates “An enterprise is responsible for carrying out programs to improve the occupational skills for its employees and for re-training employees before transferring them to other jobs” 23 24 Report of Vietnam Social Insurance.go system. while the rest are not25. b) Other fringe benefits In the Labour code (amended and supplemented in 2004) it is promulgated in article 17 that an employee who has been regularly employed in the business for fore than 12 months becomes unemployed.as -you . but in 2000. Social insurance has made possitive contribution to stabilization of worker’s life in working process and in retirement age. rights and benefits of all partners in engaging social insurance and relation between the contribiution and compensation are clarified. 25 ILSSA. . the egad and subside practice have been gradually eliminated but the sociality in distribution of benefits in the community has been safeguarded. According to the Labour code and the Law on social insurance. it reduces to 23/1 in 2002 and dropped at 19/1 in 200424 . Due to the lack of understandings or misunderstanding. workers who engaged in temporary works. voluntary social insurance is on process of pilot implementation.With the formulation of social insurance fund. However. Social insurance fund has ensured to timely pay benefits to insured people. and unemployment insurance is not put on place until 2009 . especially those working in health care and education sectors. Thus. only compulsory social insurance system have been working currently. especially for workers of private sector. that means 217 insured persons contributed social insurance for 1 pensioner. private trading households have not participated in social insurance system23. the employer shall have responsibility to re-trained him for continued employment in new jobs. or to pay an allowance for loss of work equivalent to the aggregate amount of one month’s salary for each year of employment.The social insurance schemes have not been fully operated. traditional handicraft trades. In this line. in 1996 the ratio of contributors to pension earner is 217/1. only 65% of workers of such enterprises are covered by social insurance. mainly migrant workers. obligations. seperately from the state budget and operating independently. In 2005. wages and social insurance in SMEs 2006 . with the pay. 2005 Report of Vietnam Social Insurance. survey on employment. of the small and medium enterprises which contribute social insurance for their workers. According to statistics of Vietnam social insurance. thus growth of fund via investment activities is very low. Many private enterprises. where only 20% of employees engaged in social insurance. a large part of laborers. the un-used part of social insurance fund is lent to the State budget. there are 3 categories of social insurances as compulsory Social insurance.The share of employees who are actually covered by social insurance still remains small.Currently. the fund has performed initiate income generating activities for growth. this ratio is 31/1.There is a large number of enterprises which committed evasion or delay of social insurance contribution. However. the factual implementation of regulations on social insurance reveals a number of contraints as follows: . has colluded with employers to evade social insurance contribution as stipulated by law. voluntary social insurance and unemployment insurance.

offering free of charge transportation for employees to workplace. holiday and bonus on Tet occasion…In FDI enterprises. For the most of young employees. The most common fringe benefit is annual bonus (a number of enterprises offers monthly or quarterly bonus). to increase income and considerably improving a part of rural population. there are new questions and new requirements emerged as the result of reforms. 2005 ILSSA. The massive implementation of a series of labour market programs such as providing allowance for losing job. and working in better and safety conditions. 2. dynamically and more effectively.09% of total income of an employee at average.7% and 69. 2005 .The Government shall readjust the minimum wage relates accordingly to safeguard the workers’ real wage (Article 56. employees have better capacity and can be able to cooperate with their trade union at higher level to carry out 26 27 ILSSA. a) With regard to employees Regulations on residence managements have been loosened and gradually eliminated.92%26. Employees are better paid. job fair. The Article 16 of the labour code stipulates that “An employee shall have the right to be employed by any employer in any location not prohibited by law”.8% and from other sources is 1. labour code) In the fact. the main reason for prevalence of bonus and fringe benefit is because the State controls the wage mechanism by imposing a formal wage frame stipulated by the State. the locations for job seeking have been expanded. These figures indicate that fringe benefits a bonus schemes are more prevalently applied in SOEs and private enterprises compare to FDI. Trade union has better and firm legislative tools to protect benefits for workers. the working and life experiences gained from the enterprise’s environment have helped them on how to claim for their benefits and how to get support from their social network. FDI enterprises survey. However. bonus shares 8. FDI enterprises survey.4. and have more opportunities in training and social welfare. wage constitutes 83. The migration flows from rural areas to urban and industrial. These reforms brought practical benefits to both employers and employees. In many industrial zones. providing credit for job generation. organizing tourist activities. in engaging labour contract. the labour market reforms undergone recently have contributed to make labour market to work more flexibly. Points of view from parties (workers and employers) on labour market reforms In general. For SOEs. In state owned enterprises and private enterprises. allowance is 6.19%. the corresponding rates are 64. Labour legislation has been more and more refined and become important legislative tools to protect employees in labour relation. processing areas for permanent or seasonal jobs have been increasingly year to year.2. providing cheap shelter.6%27. the offer of fringe benefit for employee depends to the ability and conditions of each enterprise. The implementation of CSR in enterprises has brought practical benefits to employees. labour market information. as the results. these help to reduce the employment pressure in rural areas. employment consultation and job matching services. wage negotiation and settlement of labour disputes. vocational training and others have outreached to tens of thousands of workers and helped them to get new jobs with better income. are more respected.

Hanoi. at 26% of total working people in 2005 30 . or making choice of “quit job” and seeking for better job with better conditions. the rules of “equal pay for equal work” have been implemented. employment competition get more severe and this presents as one of the most challenge and constraint for a large part of workers. The company has to train for 100% of newly employed workers. Other cases are reported as the scarcity of labour leads to the scramble of workers between enterprises29 Many enterprises face with difficulties in employing technical workers. enterprises have more choices to select better workers. The prevailing wage rates on the market are used as the basis for wage negotiation. They can “struggle” with their employer to claim their benefits such as pay increase. especially to the policies towards employees. there are more opportunities accompanied with higher risks of losing job. 2006 Change – hee lee. a number of enterprises have recorded the labour changes of 20% per year. However. their sense of labour discipline compliance is poor and they not very cooperative with the company. 2006 29 28 . Local applicants are mainly manual workers. 100 workers of total estimated 260 workers quitted the job. they could not respond the requirement of work. Although education and vocational training system has been invested and developed rapidly during the recent years. However. Vinh Phuc Province. There are 2 main reasons for the jobs quit are: firstly. In 2005. b) With regards to employer The labour market reforms undergone recently have greatly impacted to the employers in formulating their business policies and orientation. and secondly. but they also face with constraints relating to labour changes and competition. Labour market operation have been more dynamic. Box 2 It is difficult to employ skilled workers. In some cases. In the new context. especially middle – aged workers. Change Hee Lee. labour committement and industrial working style are also the concerns that frequently raised by employers. The labour scarcity in some locations and some sectors has helped workers to have better position for negotiation. Social equality in employment and wages present also as concerns of many employees. ILO Hanoi. reduction of working hours. most complaints are on workers who come from rural areas. techniques. Working skills. Many garments. the rate of skilled workers remains low. Employees have more choices in protecting their legitimate benefits. Labour relation and settlement of labour disputes in Vietnam. improving working condition.their collective activities28. 2006 30 The 2005’s statistics book on employment – labour. textile and leather enterprises in Hochiminh City and Dong nai province have experienced high labour turnover. There have been new standards set up relating to labour assessment and pay. Industrial relation and settlement of labour disputes in Vietnam. Labour – employment publishing house. who have experienced the former mechanism of centralized planning who are not dynamic and dependant to the placement of state. ILO Hanoi. training quality is assessed as not good enough to respond the requirements of employers. Especially. the vulnerable groups of worker are suffering the disadvantages due to lack of supportive policies. Fit Active company (Taiwan).

In the relation with employees. a number of enterprises. Mr. Many enterprises recognize that human resource is the decisive factor determining productivity and quality of products. equipment…but also improving working condition and living standards for workers. promoting transparency of information on working condition. Columbia Sport. for only January and February of 2006.000 dong / month) In order to achieve the goal of US $ 20 million of net revenue from contracted garment production this year. the first is to install cooling system for all workshops and secondly is applying the minimum wage rate of 550. The compliance of labour legislation. Leaders of company stand in front of many concerns as not only preparing inputs. determining the competitiveness of the enterprise. offering social insurance and health insurance for them.vov.056 labour strikes in Vietnam. so that they can consider company to be their large family and have better commitment for development of company. keeping a safe and healthy working environment are capable to absorb and keep good employees. Deputy general director. Direct dialogue between employer and workers. there have been more labour strikes. Le Viet Toa. and JC Penny… This year. therefore employers have embarked in a sound policy to absorb and keep high skilled and qualified employees. developing harmonized labour relation in the enterprises. For the period of 1995 to 2005. working environment improvement are also the requirements from clients and labour management agencies. these dynamics enable them to be easier to carry out collective activities31. providing training opportunities for employees. we set 2 big targets for our workers.In addition.000 dong per month for worker (while the minimum wage rate stipulated by the State is 350. there have been 1. with current status of economic development and labour market operation. Enterprises which apply an equal and adequate wage mechanism. collective activities. specialists have pointed out one reason as labour market has been more dynamic and favoring employees. there were 150 “spontaneous” labour strikes.vn/?page=109&nid=15174 . In analyzing the reasons for that. http://www. wages and other fringe benefits to all workers have been undertaken and help to improve labour relation between employer and employees.org. have paid efforts to setup direct communication routines with employees to timely settle conflict and disputes. by recognizing that trade union is not the effective communication channel with workers. market arrangement. Adidas. Box 3 Viettien Company has been applying SA 8000. WRAP and CoC of big clients such as Nike. commitment to observe labor standards and performing to apply sound policies for workers such as wage increase. Viettien Export garment company 31 Labour strike from the perspectives of National Assembly representative.

figures of employed people and unemployment rate 2001-2005.2 5 4. average annual increase is 1.8 (1000 people) (%) Population in working age (1000 people) Urban unemployment rate Source: the 2001-2005 statistics on labour and employment.3% in 2001 to 5. During the last years. That is the main factor for reduction of urban unemployment rate. Evaluation of employment conditions in Vietnam 3. For the same period. Employment status By 2005. and this circumtance is quite prevalent for developing contries which are on begining process of industrialization. Although a more rapid speed of labour restructuring has been observed compared to the During this period.III.2 6 5.43 millions.6 5. It is notably that during period of 2001 – 2005. an increase of 5.7 millions compared to 2001. number of newly created jobs rapidly increases every year. during this period the status of underemployment and labour time using in rural areas have been remarkably improved. number of people working in agriculture – forestry – fishery sectors absolutarily reduced (not only reduction in relative term). Since 2001.4 5. mainly due to the high growth of schooling people and housewife 32 . from 3. The annual statistics on labour and employment also indicates that. Unemployment rate continuously reduced from 6. MOLISA.9 millions.8 5. Newly generated jobs mainly were in service sector. population of working age is 51.active economically population increases.34 millions in 2005.85 millions in 2001 to 4. non . 60000 50000 40000 30000 20000 10000 0 2001 2002 Number of employees 2003 2004 2005 6.1. employed labour increased to 4.8 millions. employment growth rate keeps higher than the labour force growth rate. number of new jobs generated annually has exceeded the increase of labour force32.2 millions (Figure 2) Figure 2. Trend of population changes by working age.4 6. thank to the rapid and stable economic growth rate. at times.3% in 2005 (figure 3). average annual increase of new jobs was 1.

it can be seen that labour still is being repressed in agriculture sector (Figure 3) Figure 3. Of which.5 millions in late of 2000 to 5.88 56. annual increase are 410.34 17. about 87% of workers of enterprises all over the country has engaged in labour contract.18 million people by late of 2004. industries Source : the 2001-2005 labour and employment statistics . agriculture sector remains the main sector of job generation with 57% of total employed people.35 25. about 90% of laborers work in small and medium size enterprises and individual business and trading households.000 people (35%) work in small and medium size enterprises.78 Trade and services Construction. traditional handicraft and traditional trade villages.05 24. The share of working people in industries sector slowly increased.35 57.4% in 2001 to 17. 2002 2003 2004 2005 Forestry. fishery 62. In general. Specifically.82 14. the increased employment was in handicraft industries. A number of case studies at enterprises provides other dimensions of the whole picture on the status of labour contract engagement. 143. business households.previous years. private firms with 80% and FDI with 88%33. For the service sector. 33 The 2006 review report of MOLISA . Employment structure in the period 2001-2005 (%) 110 100 90 80 70 60 50 40 30 20 10 0 2001 Agri. in non – farm sectors. number of workers employed by registered enterprises (excluding agriculture and forestry cooperatives and trading individual households) has increased from 3. On average. Number of new jobs in formal sector is not considerable. The increase of labour in non-farm activities is resulted mainly from the rapid rise of newly registered SMEs in accordance to the Law on enterprises.42 23.81 15. Invalids and social affairs. for 2006. from 14. SOEs with 96%.69 16. according to the report of Ministry of Labour.000 people.76 61. Thus. With regard to the status of compliance of labour code.91 22.74 17. MOLISA. The annual firms survey carried out by General Statistics ffice (GSO) indicates that. By ownership of enterprises.88% in 2005.96 24. the increase of employment is mainly by self-employed workers and the laborers who are engaged in irregular jobs as they move out from agriculture sector but can not find a job in formal sector.14 58.

One of the important labour market reforms is to gradually reduce the intervention of state to the wage payment mechanism of enterprises. Informality and the playing field in Viet Nam’s Business sector. in the whole private manufacturing sector. and Quynh Trang Nguyen. Frriedrich Ebert Stiftung. Nguyen Huu Dzung. The share of workers with formal contracts increases with firm size.000 dong per month for a certain period of time.000 dong / month for region 3. seasonal and part-time workers represent about 30% of the total labour force. 556.000 VND / month for region 1.5% for the Stoyan Tenev.000 VND /month36 applicable for domestic enterprises and . part-time and seasonal workers represent 41% of the total labour force.000 VND as of December 2006 34 . 23 35 Dao Quang Vinh. J. Another one important characteristic of employment in Vietnam is a high proportion of labour work in the informal economic sector. For SOEs in their sample. when enterprises face with extreme business difficulties. The study of Stoyan Tenev.000dong / month for region 2 and 487. 3. In 2001. These findings are quite consistent with the information on limited quantity and low coverage of social insurance because part – time and seasonal workers are not targeted to participate compulsory social insurance. Omar Chaudry. and Quynh Trang Nguyen (2003) indicates that scale of firm has direct proportion with the share of employees engaged in labour contract. The common trend in current years appears that nominal wage rapidly increases and the disparity of wages between SoEs and FDI enterprises is narrowed down. while another 23% sign only daily or monthly contracts. Social protection in Southeast and East Asia. Amanda Carlier. Further more. with 11 percent points lower than SOEs. Wage/income.Studies conducted by MPDF (Webster 1999. more dynamic and wage rates are gradually determined by supply – demand relation.2. for private firms. Wbbster and Raugssig 1999) show that 6% of the larger private firms generally signed no contracts at all with their workers. The formalization process took place in very slow progress and the proportion of workers in informal sector still remains high. In special cases.Minimum wage rate applicable for enterprises with foreign direct investment (FDI) which includes 3 different rates for 3 geographical region as: 656. or 79% of labour force work in the informal economic sector35. Currently.000 dong per month to 487. Omar Chaudry. Social Protection in Viet Nam. Vietnam Government stipulates 2 minimum wage rates applicable for different types of enterprises . A bout 4 % of private firms report having no formal contracts with their workers. part-time and seasonal workers represent 34% of the total labour force. p. 2002 36 1 USD = 16. Gallup (2004)37 estimated that the average actual wage increases by 10. they are allowed to apply the minimum rate ranged from 417.Minimum wage rate of 350. Another study conducted by Stoyan Tenev and others34 shows that SOEs have higher percentages of workers with formal contracts than do private enterprises. Labour market become more flexible. Amanda Carlier. it was estimated that about 32 million laborers (including those work in agriculture production households). The findings of this study also confirm that private firms have less proportion of workers engaged in labour contract compared with SOEs. The WB 2003.

security. the average growth rate of wages in SOEs is very high. in addition to wage.110 9. In addition. WB 38 However.150 9.774 . By sectors.995 12. 10% in 2004 and 12% in 2005 and as the result. 2004 “waged jobs market and inequality in Vietnam” in “growth. Current statistics shows that 100% of FDI enterprises has the highest hour wage rate and the lowest rate is observed in collective economic sector. Average monthly wage and wage growth rate for period of 2003-2005 2003 Average Per cent of Wage increase (000’VND) 1.1 1. specialists also found out that wage inequality increases between the educational level groups. One of interesting point relating to wage issue in Vietnam is the existence of two contrast trends. employment and wage surveys undertaken by ILSSA and Minisrtry of labour . 39 Date given by MOLILSA 40 Survey on Employment and wage in all types of enterprises in 2005 and 2006 by ILSSA and MOLISA 41 Gallup (2204) estimated that Gini coefficient for waged workers in Hanoi for 1993-1998 has increased from 0. The first trend observed is the drop of Gini coefficient by wage from 0. Cï ChÝ Lîi. similarly correspondingly coefficients are 0. Cu chi loi. the gap of wages between SoE and FDI enterpirses has remarkably reduced (to only 6% in 2005). 2004)41. Accroding to the results of labour. the agriculture – forestry and fishery sectors have the lowest average monthly wage rate.617 23. at the same time.377 in 1998. Domestic private firms remain to be the worst pay sector with average wage rate equivalent to 63% of wage that paid in SOEs and to 60% of average wage that paid in FDI firms40 Table 5. Agrawal. public management sector.312 and 0. mass organization.3 folds in 1998.780 10. Gallup JL. Nguyen Thi Kim Dung. According to Le xuan Ba and his associates (2001)43.265 11 2.2 1. According to Le xuan Ba and collaborates (2001)42 .0 1. with 23. poverty reduction and households welfare in Vietnam” by Glewwe.3 folds higher wage compared the latter group in 1993 and the disparity increased to 2. One of explaination for the reduced inequality of wage on nation wide is the narrowed disparity of wage between male and female workers. The first group has 1. military sectors was at mean points of 2 above mentioned rates38.6. equivalent to 63% of average monthly wage in industrial sector and 60% of wages in service enterprises39.5 1.046 14. is the increase of inequality of wage in the large scale cities (such as Hanoi or Hochiminh city) and medium scale cities (Gallup. in 2003. poverty reduction and adaptation after crisis” in “labour markets in transition economies in Southeast Asia and Thai Lan” Development research network. this exclude the factors that. Phnom Penh 43 37 Lª Xu©n B¸.period between the 2 living standard surveys carried out in 1993 and 1998. Nguyen Van Tien (2001) “Vietnam labour market: growth. NguyÔn V¨n TiÒn (2001) .378 in Hochiminh city 42 Le Xuan Ba. government official could gain much higher income and fringe benefits compared to wage.355.5 2004 Per cent Average of Wage increase (000’VND) 1. NguyÔn ThÞ Kim Dung.9 1. Wage level paid in Party’s organizations.403 from mid of 1993 to 0. invalids and social affairs in 2005 and 2006.0 SOEs Private firms FDI firms Source: Surveys on Employment and wage in enterprises in 2005 and 2006 by ILSSA and MOLISA. This explains why many Vietnamese prefer to work in Government sector. at 940. Dollar.332 to 0.1 2005 Per cent of Average increase Wage (000’VND) 1.5% in 2003.000 VND.935 9. the disparity between college graduates and primary school drop-outs almost doubled between 1993 and 1998. The second trend.

male workers has 24% higher wage compared to that of female workers in 1993 and 15% in 1998. University. and the rest is for others 46 .35 millions to 0. The rate of returns to higher eduction seem to increase more rapidly. business are paid at rate of 45 to 70 USD per month45. in 2006. “A Quintile Regression Decomposition of Urban-Rural Inequality in Vietnam.off groups is resulted from the rate of returns to market capital. professional staff are paid at 0. private enterprises pay their members of management board with rate of 2. therefore the flow of migration from rural areas to urban areas is continuously increased and become the largest domestic migration flow. and 45% move between provinces. Vroman vµ M. Wage trends reflect the more dynamic operation of labor market and the State interventions in determining wage rates on the market. According to report of MOLISA. the trend of rapid increase of wage may reduce the competitiveness of Vietnamese labour and discourage the flow of foreign direct investment into the labour intensive industries in medium term.” research N 03-31. Of the total migrants. Albrecht. by using quantile regression decomposition. S. while inequality in poor groups is caused by factors of individual characteristics. and that constitutes 67% of total migrants (Figure 5) Nguyen Thanh Binh.5% of the population of 5 years old and upwards.5 millions dong to 1. The increased inequality of wages in large cities and between education groups may be resulted by the increased job opportunities in those areas.8 million dong per month. 55% migrated within their original provinces. In FDI enterprises. J.3. 3. Westbrook (2003). head of functional sections get pay of 1. on which Vietnam has comparative advantages currently. laborers have continuosly to share jobs due to the pressure of employment and low income. UGeorgetown 45 Date from MOLISA report 46 Migration survey of GSO 2005 44 .7 millions dong per month. 14% is for family related reasons. In rural areas.5 millions dong per month. direct workers get pay of 0.5 millions people has ever changed their living place during the period of 1994 to 1999. D. technical. For instance. professional and technical staff: 100 USD to 200 USD per month.5 millions dong to 3. Workers involved in direct production. the average wage (by USD) is 80 to 100 USD per month. Migration Migration has become a very prevailing currently and number of migrants is increasing. These people constitute to 6. Nguyen and his associates (2003)44 explained that inequality in well . income of workers is more competative and more adaquately reflect the skill levels of worker. According to the results of migartion survey undertaken by GSO in 2005. Most of migrants are aged from 20 to 34.8 to 1. 69% of migrants moving arround for economic reasons. However. Dang Nguyen Anh and associates (2003) estimated that about 4. Directors and the same level positions are paid with 500 USD to 2500 USD per month.2 millions dong per month. With more job opportunites in the labour market. head of section and similar positions: 250 to 400 USD per month. Faculty of Economics.

Fifure 5. 2003)47. Asia – Specific. The second large migration flow is the migration from Northen provinces to the Southern provinces where business environment is more open with more dynamic economic development and more abundant resources Migration actually has brought great economic changes for workers. Migrants and non – migrants by age groups 35. Especially. 80% of informants reports their better income compared to that of before migration. (Figure 6) 47 Dang Nguyen anh.0 25. where 1/5 of population is surplus labour (Dang nguyen Anh and associates . higher income levels and development dynamics.0 30.0 15. 10% of interviewees indicates that their income get much higher than that when they were in original areas. 2003 “policies on internal migration in ESCAP” review on population. September . The regions which suffer from high pressure of pupulation to resources and low incomes have the highest rates of net out – migration. 2003). central provinces and almost all of East Northen provinces (Dang nguyen Anh and associates. According to the results of migration survey undertaken by GSO in 2005. Other studies indicates that rural to urban migration in Vietnam is mainly associated with the increase of underemployment and unemployment in rural areas.0 5.0 0. These regions include Red river delta region. Most prevailing destinations for migrants are Hanoi. Hochiminh city and SouthEast provinces.0 20.0 10.0 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 Migrants Non-migrants Source : Migration survey of GSO 2005 These migration flows relates to the distribution of economic opportunities.

Institute of Sociology. 3. and therefore. prevalence of labour market information. migration is mainly in spontaneous manner. 49 48 .4. A study of Vietnam Women union said that. religious model in Hai van commune. men have responsibility to earn living for their families. Gender analysis from VLSS 1992-193 Gender equality in socio – economic development policies.0 70. Hanoi.0 10.0 40.0 60. 2001. Sociology publishing house. The specific questions are how the husband and the wife in household use their time for housework and their free time. working time of women is 11 to 12 hours per day. they do not distingush the occupational working time and “free time”. they involve in more economic activities. 7/2000 50 Francois Houtart and Genevieve Lemercinier. including how use of “free time”. cultural. Comparison of income prior and after migration 80. Sociology in a commune in Vietnam. Labour division in household is related to the participation of women and men in economic activities. UNDP 1996. workshop handouts. In the household work. Women workers in the informal sector spend 10 hours per week for housework. 2001. Studies on using free time in households usually apply the approach of analyzing reproductive activities. but nowadays. Labour market reforms.0 20.0 Much higher Higher No change Lower Much lower Don't know Source : Migration survey of GSO 2005 Migration has made contribution to balance labour supply and demand relations nationwide.0 50. in combination with loosen management of residence. For many Vietnameses. family. Work-family balance and gender equality. even during “free time” they also conduct many reproductive activities. at average spend 3 hours per day for housework while men only 12 minutes for it48.Fifure 6. social participation. the dynamics of labour force are the main factors promoting the mobility. while it is only 7-8 hours per day for men. Normally. Women have longer working hours than men because they have to spend lots of time for taking care of family and children49 Francois Houtart and Genevieve Lemercinier (2001)50 indicated that rural Vietnamese has no notion of “free time”. In the past with centralized planed economy.0 0. women. Hanoi. migration flow was under the organization and coordination of the State.0 30.

Working conditions and environment are among the most important contents of the employment and labor policy.25 folds.5. working environment and conditions has been expressed in policy documents and regulations of the State about safety. P.6 Male 88. Gender and family studies review.1 - 42. which requires no expenses.238 52 Committee on Population. 2004.2 Source: Ha Thi Khuong. Sociological Science publishing houses. Compare with 1996.7 32. and enjoyment with friends is much higher than that of women. except the activity of going to pagodas. Family and Children (2004) 52 have indicated that women are put under higher time pressure compared to men to accomplish their role in family. Health and safety.288 .1 79 Female 62.8 36. Table 6: Activities in free time by women and men (share of total informants) General Male Reading books. number of death and injured people increase by twice and 4 folds correspondingly (see table 7) 51 Do thi Binh and Associates. newspapers Sport Enjoying time by drinking with friends Going to pagodas Going to cinemas 72 35. P. 2002 Vietnamese Family and women in period of industrialization and modernization. Hanoi.1 83 Urban Female 85 36.4 39. page 20-34 The table 6 indicates that. Hanoi.9 24. In general. number of labour accidents and injured persons due to labour accidents has increasingly occurred during the last years.6 62. 3. Internal review. Gender differentiation in recreation activities is much larger between rural and urban areas. sport.5 44. according to the report of MOLISA. or in the close living community.3 Male 61. However.4 37.9 Rural Female 49 17 76. In fact. 1/2007. while men have more recreation activities outside the households. Vol.4 38.4 29. by 2004 number of labour accidents increased by 2.7 41. Family and Children. Current status and issues raised for Vietnamese family. labor protection and labor hygiene. women have recreation and enjoyment time mainly at home. percentages of men participating in other recreation activities such as reading books.Do Thi Binh and associates (2002) 51 and the Committee of Population. using free time of men and women.5 47.

The working environment and condition issues was even not mentioned reasonably at the beginning of the technological designing process or it was but truncated in the process of implementing. Labour safety regulations and norms are not complete. The work of supervising and monitoring is weak and not conducted regularly. .Lack of investment: due to the limitation of investment sources.748 4. equipment which required strict compliance of labour safety regulations. especially for machins.521 4. The regulations on bonus and penalties are not strong enough.552 2.611 1. . Number of labour accidents and injured people Labor accidents Year N.020 3. The amount of labor accidents and injuries getting larger and larger is the manifest evidence of the insufficient and irregular interest in the working environment and condition issue. The main reasons are: .Subjected to the urgency and essentiality of job generation for the employees. the concern and investment to improve the working environment and conditions are now irrelevant to the requirements and cannot catch up with the advances of production science and technology and of labor hygiene and safety. There has been no specific and completed regulations on making the working environment and conditions safe in investment projects as well as in operating production and service units.The legal framework is inadequate and loose. new material.530 1. . of dead victims 285 402 362 399 403 395 514 513 575 N. MOLISA Nevertheless. which focuses in job creation for a number of people but not in working conditions. of cases with death 1996 1997 1998 1999 2000 2002 2002 2003 2004 249 320 312 335 368 362 449 469 561 N. That means that it is only concerned about the quantity but not the quality of the jobs (to the extent of working environment. the projects of investment on building of production units often concentrate on assembly lines but not sufficiently invest or invest at a minimum level in the solutions for working environment. safety and health. out dated and many standards norms are not compatible and therefore should not be capably applicable for new technology.870 2. of seriously injured people 1. safety and health). The system of organization and human resources in the field of labor hygiene and safety remains weak and insufficient.Table 7.186 Source: the 2005’s report. The staff working in the field of labor hygiene and safety is insufficient and unable to catch up with the reality.089 6.

“unemployment” in Vietnam typically means urban unemployment. employers shall have to pay compensation and allowance directly for injured employee (according to Article 107 of Labour Code. the unemployment rate of females has an upward trend (from 5. as they have just joined the labor market. especially in the age group from 15 to 24 years. underemployment is more prevailing and serious. 54 Annual Survey on Labour and Employment conducted by MOLISA . While the unemployment becomes an imperative problem in urban areas. All these problems in rural areas are related to the fact that workers in agriculture are mainly self-employed and Unskilled. having compensation on reinvestment on production conditions and facilities for safe work. meaning that working time is not completely exploited (a form of hidden unemployment). it is significant at 5-6 percent and in rural areas it is very low at 1-2 percent54. underemployment may be characterized by employment with low productivity and low income. A more serious problem in rural areas is underemployment.4 percent in 2000.7 percent in 2001 (ILO. However. it was 3. The formulation of Fund for compensation of labour accidents shall address this problem and shall also help to share economic burdens with employers in cases of labour accidents. IV. In rural areas. underemployment and support programs The annual unemployment rate of Vietnam as a whole is low. Unemployment rates are highest among young workers. Decree N. which constitutes of 6.8% of total population of full 15 53 Employer contribute to the social insurance fund and Social insurance agency shall pay benefit for injured person in case of accidents or occupational diseases occurs (according to the Regulations of social insurance which are stipulated on the Decree 12/CP dated 26/11995 of the Government). it is still at a high level compared with that of other countries in the region. in line with the underdevelopment of the rural labor market. In 2005. This is characteristics of an economy at low level of development and labour surplus. Productivity and labor income in rural areas are also very low. For example. The 2005’s labour and employment survey indicates that there are 3.1% in 1996 to 6. Bulletin of Labour Statistics 2002-4. The share of rural labor-force working as wage workers is very small. for rural areas. there has not been a mechanism on place for consistently proceeding a labour accident53 (there has no Fund for labour accident compensation exist). about 2-3 percent of the labor force.4%. that create more burdensomes for enterprises. The unemployment rate is slightly higher for females than males. underemployment is the most urgent question. However.5 percent in 1998 and 3.The procedure for benefit shemes for compenstation of labour injuries and occupational disseases are too complicated. but at the same time.42% in 2000 to 5. . in South Korea. Emerging Social issues and ways to solve and revise policies 4. Given this situation. 2005. Unemployment. the unemployment rate of 15-24 age population group reached to 13. 110/2002/ Decree – CP dated 27/12/2002 of the Government on amendment and supplement of a number of articles of labour code on Labour health and safety. in recent years.1 millions of people of 15 year – old age reported their underemployment in rural areas.1. In urban areas. Statistical data show that the urban unemployment rate has fallen in recent years from 6.The functionining of state management over labour safety and heath are ovelapping between state agencies at localities. the unemployment situation in urban and rural areas is very different: in urban areas.9% in 2003). Geneva)..31% in 2005. However. the unemployment rate in Thailand was 4.

The Government may give some support to enterprises in a difficult situation. on qualifying conditions and payable unemployment benefits. if these officials have still not found a new job. This Decision stipulated that. including a chapter on unemployment insurance is still under discussion at the National Assembly. and this support must be defined/specified in particular cases.year old and above or 9. The minimum to be paid by enterprises is three months’ salary. they will receive a lump sum. On October 9. 227/HDBT dated December 29. on rates of contribution to unemployment insurance. age group of 15-24 constitutes the largest share at 30. Under this program. For each year of service. and on the establishment. during which time these officials will receive 75 percent of their salary. This decision stipulated that if State workers or civil servants voluntarily leave their job. will be paid from the State budget. including allowances (if any). unemployment and underemployment are closely linked with limited quality of human resources. Formal and informal support programs for the unemployed (a) Formal support programs The current Labour Code that was amended and supplemented in 2002 and 2004 stated in Article 140 that policies on social security also include the policy on unemployment insurance.4% with primary level. for each uninterrupted year of service. 1989 the President of the Council of Ministers (Prime Minister) promulgated Decision No. After 12 months. other policies and programs support the unemployed and these have been implemented for a number of years. It stated that the government shall promulgate specific regulations on retraining for unemployed workers.7% of underemployed people are un-skilled. administration and operation of the unemployment fund. Decision No. 1987 on reorganizing and restructuring State-owned enterprises and streamlining regular staff in State administrative agencies was promulgated by the President of the Council of Ministers (now the Prime Minister). 176/HDBT to restructure and streamline the labor force in State-owned enterprises. Those about to be made involuntarily redundant are allowed time off from work in order to look for a new job. and other allowances. the State budget has paid VND Allowance for those who lost their jobs Free employment services: job consultancy and employment information Training and re-training for those who lost their jobs Loans to enterprises for employment creation .4%.2% of total rural workforce. 91. Thus. but not exceeding half the enterprise’s obligations under the program. calculated and paid according to their duration of service. the largest share is 34. one month’s salary. The maximum time for being off work is 12 months. in order to provide a lump sum for people who lost their job. enterprises must pay employees made redundant one month’s basic salary plus subsidies (if any). Of the underemployed people. such as the following: Allowance for those who lost their job This policy has been in force since the end of the 1980s. Since the draft law on social insurance. they will be dismissed and receive the same subsidies accorded to all laid-off workers. By educational levels.

19/2004/TT. if any. 41/2002/ND-CP on the policy for redundancy from reconstruction of State-owned enterprises.019 trillion has been paid from the fund for supporting redundant workers.” . Article 41 of the Labour Code states: “When unilaterally terminating a labor contract in infringement of the Law. the Government promulgated Decree No. 2004 by the Government. 2002 also stipulates that. The total paid. 155/2004/ND. A total of VND 1. corresponding to the period the worker was not allowed to work. in the amount of about VND 6 trillion (US$ 400 million). the employer must pay such employee a severance allowance at the rate of half a month’s salary plus a salary allowance. Under this program.To deal with unemployment problems. for each year of service. including the funds paid by local budgets and enterprises themselves to implement Decision No. all redundant employees are paid subsidies based on the duration of their working time and their monthly salary. According to this Decree. a fund for redundant employees.56 55 56 Department of Labour Employment. The Labour Code promulgated in 1994 (amended in 2002) and other legal documents provide regulations on financial support for employees who lose or quit their job.449 received allowances for losing their jobs. 176/HDBT is about VND 600 billion. The number of workers that received subsidies was 35. Decree No. and the addition of at least two months’ wages plus allowances.CP dated August 10.BLDTBXH dated November 22. and pay compensation equal to the amount of the wages and additional payments. if any.662 were retired early and 31. . these people also have the right to participate in training programs free of charge for a maximum duration of six months at vocational training centers under MOLISA. 789 enterprises had received support from this program. in addition to the above-mentioned subsidies for people who were laid off or retired before the compulsory retirement age. 41/2002/ND-CP dated April 11. the employer must re-employ the employee to the work as agreed upon in the contract. if any. as follows: . 41/2002/ND-CP dated April 11. Source: Circular No. Moreover.282. MOLISA. office or organization for a full year or more than 12 months.Article 42 of the Labour Code states: "When terminating the labor contract of an employee who has been regularly employed in an enterprise. 2004 on Guideline of implementation of some Articles of Decree No.” In order to implement support policies for those who lost their job due to the restructuring of State-owned enterprises. By May 2004. their social insurance fees are also paid out of the fund.000 redundant employees. 2002.300 billion to support about 800.55 Vocational training and retraining for people who lost their job The Labour Code stipulates that all enterprises need to take responsibility for providing vocational training and retraining for people who lost their job in order to help them to find a new job. has been set up by the Government. of whom 3. these were amended by Decree No.

Currently. (b) Other informal supporting programs Unemployed persons can receive assistance from credit programs for employment promotion provided by the Government. support for those who have lost their job is implemented mainly in State-sector and foreignowned enterprises. including jobs for unemployed and laid-off workers. State support will be given only in some specific cases. However. it supplement labour resource for industrial and processing zones. this fund lends about VND 900 billion (approximately US$600 million).000 to 30. 120/HDBT of the Council of Ministers (now the Government). The following is a summary: . However. some policies on unemployment have been implemented and laid-off and unemployed people are supported by some formal and informal programs. migration for works have two dimensions. . funds for employment promotion. Reforestation is put in the hands of farmers to promote sustainable development by providing them with income. However. The Government is also trying to mitigate the unemployment problem by encouraging those with rural roots to go back to them. which helps create about 25.Despite the lack of unemployment insurance. Every year. “Leaving farming without leaving the village” has become the motto to develop rural industry. enterprises are responsible for paying subsidies to those who have lost their job. Since many enterprises are facing financial problems. . in order to create opportunities for their employment. including centers for employment services.Providing soft loans for employment creation A national fund for employment promotion has been set up according to Decision No. and the national employment target program.A number of organizations have been set up for supporting unemployed people. Social security and housing issues for migrant’s workers As analyzed in the above sessions. some workers may be unable to receive the subsidies to which they are entitled. and these mostly consist of unemployed workers (laid-off workers) from the State sector. number of migrants is in trend of increase in recent years. and promote traditional craft villages. but in other hand. . NGOs or other socio-political organizations.2. Employment opportunities can be also found in some public employment-creation programs or in the informal sector. 4. the number of beneficiaries is limited. the massive migration flow from rural areas to cities and industrial zones have brought more severe social pressure for the destinations. close links do not exist between these organizations. and their impact has been very limited. provide local services. the results of these programs are still limited in terms of both the number of beneficiaries and the wages earned. developed locations. in one hand. education.According to the Labour Code. The institution of land-use rights provides incentives for farmers to invest in their land. The State budget has been put under pressure owing to implementation of these support policies. The rise of population shall lead to the overuse of infrastructure in near future and social services supplying system seem to be incapable to deliver health.000 jobs. shelter services for migrants. recent support programs are mostly ad hoc. However. The objective of this fund is to provide loans with a low interest rate and to support vocational training for workers.

wage negotiation. b) Family relations: Migrants have to live far away from their family. living costs increase as the result of living separately from family. this prevent employees to access recreation activities. The informal institutions such as associations of fellow-countrymen/women. and other social services. many enterprises engage in labour contract with migrant workers only after the probationary working period or after 12 months of work and labour contracts with term of only 3. most of migrant employees are not covered by social insurance and health insurance system. Most of working migrants come from rural areas with low educational attainment. a number of local people rely on migrant workers for living earning such as lending house or supplying goods. limited understandings and limited access to information on legislation and this hinders their participation and social ability. especially when they face with hardship such as sickness. their spiritual and culture activities are very limited. social insurance. while the average income of migrant workers is equal to 79% of income of local workers58 The survey carried out by Action Aid Vietnam in Danang City in 2005 reports that migrant employees face with many constraints and suffer lots of hardship. 57 58 Labour union of Danang. have increased working time with more overtime work. A research carried out by Action Aid in a number of localities indicates that. They are not supported by family. They have very limited access to information and have very few opportunities for social events. informal institutions. firstly employees do not intend to work for firm for long time and they do not want to contribute social insurance as they thought that the contribution shall reduce their net income. husband and children. Especially. services for migrants. culture. In fact. enterprises. friend relations are very weak to present as the spiritual reliance for migrants. and moreover.Migrant workers suffer from labour pressures and vulnerabilities in term of labour contract engagement.6 months 57 . participation Migrants are very hard to build confidence at the immigrated community due to the bias. 2004 . attitudes. In the meanwhile. 2005 Migration survey of GSO. Haiphong and Action Aid Vietnam. deprivation. Especially many women workers are very society – blind and lagging very far behind to the dynamic social changes. This practice has negatively effected to engagement in social insurance and health insurance of employees. In the result. There are two reasons for this problem. The study undertaken in Haphong city indicated a number of social problems which are faced by women labour. c) Value. This explains why the percentage of employees covered by social insurance in private sector is very low. in many cases. Local community perceives that working migrants have no awareness of environment protection. often cause public troubles. In the context of poor access to cultural and social events. including: a) Social value and preconception: Community at the destination has bias against working migrants. migrants always feel a complex about their situation and not confident.

and this makes more hardship for workers as the minimum living conditions are not responded to safeguard physical and spiritual life59. in industrial and processing zones in Danang. sea ports. and hundreds thousands of farmers has no land for cropping. traveling and others of workers are totally arranged by individual workers according their status. specialized use land area has increased to 104.d) Legislation. small and medium industrial clusters. processing zones. hospital. Rapid industrialization and urbanization progress undergone during the current years and in the incoming times has led to downscale of cropping land. It is very often that migrant workers rent house and live together with local population. new urban areas. Working life of people in urbanized and industrialized areas. There have been legislative regulations on protection of employee’s benefits. However. As the result. Employers do not know and employers are not responsible for any thing at all for their workers outside the fence of factory. processing zone. other living conditions. and security bodies is not pro-migrants. For period of 2000 – 2003. 90% of labour force is women. new road routines. security for women workers. but the implementation of such regulations depends to the attitudes of enterprises. a part of farmers no longer holding land for production.442 ha. most of them found it very hard in seeking for a new job due to low education attainment. justice bodies. responding living conditions. culture houses. high age and no skill (50% of them is older than 35 years old – difficult to be retrained). However. Tran Van Dong. 2005 . 59 Labour union of Danang.3. no adequate concerns has been paid on development of social infrastructure such as shelter. The monitoring and supervising system of legal compliance of enterprises is still weak also. building shelters for workers is very hard work because of limited land availability. a large areas of agriculture land has been recovered for other purpose uses. and as the result. lack of investment and there is no mechanism on mobilization of investment and management of shelter for workers put on place 4. Danang. In process of projection and planning industrial zones. For instance. Haiphong and Action Aid Vietnam. As a result. Women workers constitute very high percentages in those areas. of which mainly used for establishment of industrial. Box 4 Besides working in offices. and they need to be trained to transfer to a new job. deputy of executive standing committee – management board of industrial – processing zone. institutional and policy framework The operation of formal institutions such as banks. Mr. school. there are not enough necessary social and living physical facilities for migrant workers. factories or workshops in industrial. No adequate concerns have been paid on social management.

During the last years. Danang in 2005 Survey in 5 provinces conducted by ILSSA in 2006 62 Survey in Haiphong. The reasons explained by employers include higher pressure on product delivery and more severe competition to get orders for production or reduction of production cost. By setting up too high labour norms.8 millions dong. Since 1995.4. evasion of contribute social insurance. 2 members of household shall be supported and all member of workers in the household shall be supported in case more 70% of their land is recovered. In Hanoi. bodies which use the recovered land “if have demands on employment. The Decree 22/1998/ND-CP dated 24/4/1998 of the Government has stipulated “workers whose land are recovered shall be provided a supportive fund for training for a new occupation” and the agencies. 4. there are still many constraints and obstacles in implementing those policies as training plans are not specific. 179/2004/ND-CP dated 3/12/2004 of the Government on compensation. a 50 to 100 hours exceed according to the labour legislation. However. These are the reasons leading to labour conflicts and strikes in recent years. the Government (including central and local government) has issued a number of policies for segment of workers whose agriculture land have been converted to other purpose use. support and resettlement for the land owners whose land plot are recovered has promulgated specific provisions on supporting land lost people to transfer occupation. shall give priority to recruit the owners of recovered land plot”. Localities have provided specific supports. a number of firms (mainly FDI) even put the strict regulations on working time and frequency of toilet using by workers62. To tighten management over labour. Another survey reported that 77% to 87% of workers in garment – textile and leather’s production have to work at least 4 overtime hours per day61. In Haiduong. all workers of households whose land is recovered are given free of charge vocational training. For instance. Danang city’s authority gives allowance of 4 millions VND for those whose land has been recovered. Danang in 2005 . Each worker receives support which is equivalent to 3. The average overtime working hours of an employee ranges from 350 to 400 hours per year. in which there are provisions settlement of labour 60 61 Survey in Hai phong. a member of household shall be supported for career transfer. if the lost land area is from 50% to 70%. Management issues in implementing Labour Law and policies relative to workers in enterprises. Working hours in enterprises often prolong from 8 to 10 hours per day60. And there have been no solutions to settle the social problems emerged in industrialization and urbanization areas. if a household whose land plot has been recovered with 30% to 50% of areas of plot. job generation and vocational training. working environment is slowly improved. it has been amended and supplemented twice in 2002 and 2004. there are not comprehensive and adequate solutions put on place to address the questions of employment for labour in the areas where agriculture land had been converted in urbanization areas. The emerged problems in export led processing industries are that workers have to work on longer working hours than that of stipulated by law. when the Labour code was promulgated. delay of wage payment and wage increase. Vietnam Government has been deploying great efforts to refine the legal system and promote propaganda activities. The Decree N. providing guidance and supervision with the aim to facilitate the process of implementation of legal regulations pertaining employees in enterprises.

As Vietnam is advancing at low development level. the National Assembly adopted the Ordinance on labour strike. Key findings The recent forecasts on economic development prospects and job generation when Vietnam become a member of WTO are quite promising.2006 economic review.disputes and labour strikes. Labour market in Vietnam reveals the lack of high-skilled workers and qualified engineers who are proficient in foreign language (English). Vietnam has attracted USD 9. telecommunication. In recent years. but Vietnam is seriously lack of well – skilled labour.6 millions new jobs shall be generated every year64. an increase of 21% compared to 200563. Even many investors stated that cheap labour is no longer as advantage to attract investment. The question raised is to the need to improve the position of trade union and make this organization to be strong enough to get confidence from workers. It is found that every 100 Japanese companies. leather. it is estimated that economic growth could get to 8. V. sea food processing. labour productivity has increased. GDP growth rate of 2006 achieves 8. Many studies indicate that. 11/ 2006 p. there are 14 companies which report their difficulty to recruit skilled workers65 In order to respond the demands of rapidly changed technology. In the context of openness and integration. The export led industries includes garment. textile. food processing. improving competitiveness 63 Hong Ha.5% per year in the next few years and about 1. the supply demand relations shall evolve to an equilibrium point where Vietnam has no longer comparable advantage of cheap labour. hotel. an increase of 71% compared to 2005. transportation have rapidly developed and generated more jobs. Vietnam is seriously lack of managerial staff and high skilled labour. Conclusions. However.1. This reflects the rapidly improved awareness on labour relations by concerning parties and the grown up labour relation system. Asia – Pacific economic review. other service sectors such as tourism. In addition. wage and income of employees have been considerably improved.9 billions of FDI. no long advantages of cheap labour. restaurant. the wave of practice of CRS by enterprises has positively impacted to labour management in enterprises and building up harmonized labour relation. effective economic restructuring. in 2006. even cheap labour. In many sectors and fields. Vietnam has comparative advantages as according to international commercial theory. 5. The weakness of Vietnamese labour is low productivity and poor sense of labour disciplines.17%. working condition. and about 30 thousands of workers and specialists have been sent abroad for work. Total export revenue reached 39. Vietnam . development of spearhead economic sector. the weakness reveal recently in the organization and role functioning of trade union in bilateral relationship at enterprise level. In 2004. Jan 2007 page 2 The 2006 review report and tasks for 2007 – MOLISA 65 Nguen Hao. instead good quality of labour.11 64 . Asia – Pacific economic review. Vol.6 billions dong in 2006. Have provided jobs for millions of people. 1. There has been a new wave of foreign investment in Vietnam. Vol. The law on enterprises which was issued in 2000 has created an enabling business and open environment for development of private sector. FDI sector has generated about 300 thousands of new jobs annually. However. 47. labour cost is cheap as the result of low income of population.

more severe labour competition. the marketing approaches to different markets (Europe. Legislation system. amended and refined to be more compatible to the international legislation and practices. our human resource has continuously developed. Experiences indicate that this task is very challenging. Besides the positive impacts. using different standards. employment and development of human resources. It is necessary to design relevant intervention programs so that to harmonize the targets of equality and effectiveness in state competency. 5. creating more dynamic and flexible adaptation to market and integration mechanism. employment and human resource development for each sector. A sound institutional arrangement for a well – functioning labour market shall have to ensure the steady growth but also go in hand with generating more jobs. The question is to harmonize between protection and flexibility of the labour market. larger differentiation of the rich and the poor. Recommendations Integration is a quite sophisticated process. Thus. deficiency of information or discrimination. requiring a sound responsiveness by combining internal factors (such as institutional. it is the must to carry out in-depth study on impacts of economic globalization toward labour. Japan. Training activities have been boost with expanded scale and more diversified forms. there are also inverse effects caused by globalization as the bankruptcy. The solutions for up taking opportunities and coping with challenges include: a) Refining legislation for labour market (legal framework. regulations.2.of economy. number of trained labour has increased at all professional and skill levels. institution. globalization shall bring more massive. These impacts shall be resulted from realizing multilateral and bilateral commitment and application of international legislation and standards during the integration process. jobs losing. The interventions of the Government can be functioned by a refined legislation system including law. resources…) and other outside factors (such as rules of game. Labour market has been continuously matured and developed and social security schemes are safeguarded. p. the Government has to give interventions to address the market failures in order to protect employees by giving them rights and “voice’ in labour relation66. For these reasons. even for each type of commitment and agreement. policies) Due to the low competitiveness of labour market as the result of imbalance supply demand relations (between employers and employees). migration and other social problems In near future. 282 (Vietnamese version) . complicated and unpredictable impacts to labour. including labour legislation has continuously revised. US. technology…). development strategies. World Development report 2006. massive labour changes due to instable status of employment. and therefore training quality has been improved. as well as to address labour export requirements. Globalization could bring positive impacts to a certain sectors but may negatively effects to others. capital. employment and employment generation. there will be more and great challenges for labour. policies and mechanism. imperfect mobility of labour. China…) require different policies for each specific market. Even within a sector. 66 The World Bank.

In other words. In the context of globalization with more and intensive advanced technologies. in which focus was given to aquiring and performance capability of a specific occupation. providing social protection for vulnerable social groups who are prone to loss in market economy.b) Improving labour quality The rapid changes of techonology put more requirements from labour in term of their readiness and good adaptibility. c) Development and improving operational quality of job services centers This target requires a sound planning and projection of job services centers network all over the country. It is the need to establish training system for practical technical skill workers with different levels (semi. employees are expected to acquire recreative sense. d) Refining policies and social security system It is imperative to expand the coverage of social insurance (including unemployment insurance) and other insurance schemes. shifting from occupational training to skills and multi – skills training. skilled and high skilled level ) and training must be demand driven. There is also the need for planning and projection of network of practical technical training institutions. It requires also a legal framework and mechanism to facilitate the cooperation and support from trade union officials from the higher levels to trade union official of enterprise level in negotiation and management participation skills. especially in the private sector to provide better protection of workers’ benefit . formulation of safety net to cope with cases of sudden changes resulted from natural disasters. education and vocational training should concentrate on skills and competency. institutional reforms or economic crisis… e) Improving the role of trade union In order to improve the role of trade union. especially in urban areas and gateway to big cities. human resource development programs were implemented with traditional training methodology. firstly in a number of critical economic zones and large urban areas. it is necessary to develop mechanism to better protect trade union’s leaders against the unfair treatment imposed by employers. One of other important work is establishing a labour market information system which is interconected nationally. In the past. analytical skills and must be continuously trained to have better adaptability to a new technology and new accupation. investing in a number of technical and high tech schools in some critical economic locations. Efforts are required also to develop trade union network.skilled. widening subjects of training to attain high compatability. strictly comply all regulations on safety and health labour conditions. Trade union of enterprises should be more independent in term of financial and have more ownership on financial manaegement.

Institute of Sociology. 2001. these were amended by Decree No. Sociology publishing house. unpublished ILSSA. Committee on Population. Labour relation and settlement of labour disputes in Vietnam. Sociology in a commune in Vietnam. 2004 “waged jobs market and inequality in Vietnam” in “growth. Frriedrich Ebert Stiftung. 2006 Circular No.CP dated August 10. MOLISA. 2005. 2006. the 2001-2005 statistics on labour and employment.org. Sociological Science publishing houses. family. Hanoi MOLISA. Labour-social publishing house. 2006. Social Protection in Viet Nam.16.BLDTBXH dated November 22. Nguyen Huu Dzung. Hanoi. cultural. 2005. poverty reduction and household’s welfare in Vietnam” by Glewwe. unpublished ILSSA. P. Enterprises survey in 5 provinces of Hatay. wages and social insurance in SMEs 2006 ILSSA. 2003 “policies on internal migration in ESCAP” review on population. 2006. 2004 on Guideline of implementation of some Articles of Decree No. Dollar. ILSSA. Agrawal.238 Francois Houtart and Genevieve Lemercinier. Khanh Hoa. 2003. Hanoi. 19/2004/TT. FDI enterprises survey Labour strike from the perspectives of National Assembly representative. Dao Quang Vinh. religious model in Hai van commune. WB ILSSA. Annual Review report of MOLISA MOLISA. 41/2002/ND-CP on the policy for redundancy from reconstruction of State-owned enterprises. enterprises survey. Status and issues rose for Vietnamese family. 2004 by the Government. 2002 Vietnamese Family and women in period of industrialization and modernization. . Dao Quang Vinh. Gallup JL. ILO Hanoi. http://www. social participation. 2006. the 2005’s statistics book on employment – labour. 2002 Dang Nguyen Anh. Social protection in Southeast and East Asia. Internal review. September Do thi Binh and Associates. HochiMinh city and Dong nai. Family and Children.288 Change Hee Lee. 2006. report on CSR in enterprises of leather & footwear and textile and garment sectors. Labour – employment publishing house. 2006. Statistics on labour and employment. P. Survey on enterprises in Hai phong and Danang. Hungyen.vn/?page=109&nid=15174 MOLISA.References Action Aid Viet Nam. 2006. survey on employment. Hanoi. 155/2004/ND.vov. Asia – Specific. p. Hanoi. 2005. 2001. 2004.

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