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STRIKES AND LIVING STANDARDS IN VIETNAM: THE IMPACT OF GLOBAL SUPPLY CHAIN AND MACROECONOMIC POLICY Anita Chan University of Technology, Sydney Kaxton.

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Presentation on theme: "STRIKES AND LIVING STANDARDS IN VIETNAM: THE IMPACT OF GLOBAL SUPPLY CHAIN AND MACROECONOMIC POLICY Anita Chan University of Technology, Sydney Kaxton."— Presentation transcript:

1 STRIKES AND LIVING STANDARDS IN VIETNAM: THE IMPACT OF GLOBAL SUPPLY CHAIN AND MACROECONOMIC POLICY Anita Chan University of Technology, Sydney Kaxton Siu Australian National University 1

2 The Vietnam Strike Wave 2

3 Some New Observations about the Strikes in Vietnam Comparative perspective: Vietnam and China. Characteristics of Vietnamese workers more defiant than Chinese workers from Taiwanese investors’ observations. Periodization—changing factors driving the strikes Government’ macroeconomic policy as an important factor. Perspective of Taiwanese investors. 3

4 Methodology 2 factory-gate surveys – 2007 China and Vietnam footwear industry ; sample size = 2000 – 2010 China and Vietnam garment and Vietnam) industry ; sample size = 600 Documentation (VN and TW newspapers & blogs) Interviews with VN workers, TW managers and VN officials Official Statistics: – VN Statistical Yearbooks, – Vietnamese Household Living Standard Survey (VHLSS) , – Urban Poverty Assessment (UPA)

5 Definition of Strike The ILO's definition for strikes: A strike is a temporary work stoppage effected by one or more groups of workers with a view to enforcing or resisting demands or expressing grievances, or supporting other workers in their demands or grievances. Data collection varies from country to country Vietnam strike figures released without definition When workers withdraw their labor at one workplace that is counted as one strike 5

6 From Relative Labour Peace to a Strike Wave Pre-2006: Period of Relative Labour Peace 2006: The Year the Strike Wave Sets in Post-2006: Period of Labour Unrest 6

7 7 Pre-2006: Period of Relative Labour Peace

8 8 Fig. 1: Relationship between Number of Strikes and Official Minimum Wage (adjusted by CPI), Industrial Zones outside Ho Chi Minh City, 2000-Aug 2011

9 Number of Foreign Enterprises and Number of Strikes,

10 Cumulative FDI of the Top 9 Investors 10

11 Enterprise Ownership Types N%N%N%N%N% Number of Foreign Funded Enterprises (FFEs) Number of Non-State Enterprises Number of State Enterprises Total Number of Enterprises Source: Based on census and survey data from the GSOV website: (downloaded 1 May 2012).

12 Why Disproportionate Number of Strikes in Taiwanese (39%) and Korean (29%) Owned Factories? 1.These two nationals have become the biggest investors in Vietnam, which means their factories are likely to have a proportionally larger number of strikes. 2.Taiwanese and Korean managers are notorious for their harsh and disciplinarian labor regimes in their offshore factories. The same when they go to China. 3.The defiant character of the Vietnamese workers and their higher awareness against foreigners’ mistreatment. 4.Lack of grievance procedure. 5.Absence of or weakness of the Vietnamese workplace trade unions in FDI factories to act as a moderating player to assuage workers’ grievance mechanism. 12

13 Vietnamese Workers Rights Awareness from the Perspective of Taiwanese Investors The human rights awareness of Vietnamese workers is very high. In Taiwan when we served as army conscripts we had to obey blindly as if this was natural. But not here at all. That is why I think Taiwanese who are into shoemaking here have to face a lot of labor disturbances and strikes. Vietnamese workers readily stage mass protests. This is not just a problem at my factory; it is a problem for the entire society. 13

14 Vietnamese and Chinese Workers’ Attitudes towards Factory Trade Unions 14 Do you think the trade union in your workplace represents workers’ interests? VietnamChina Yes894(85%)100(10%) No58(6%)203(20%) Don’t know100(9%)672(67%) Missing2(<1%)33(3%) Total1054(100%)1008(100%)

15 Characteristics of Strikes in Vietnam Peaceful No open organizer Sympathetic press coverage Union and government officials negotiate on behalf of workers Repeated strikes in the same factory (e.g. Hue Phong) All players getting used to the strikes—routinized strike pattern 15

16 Workers’ Repeated Strike Experience in Five Footwear FDI Factories, Number of strikes experienced by a worker in the same factory Number of workers (N = 686) Percentage of workers 40%46%10%2%1%0.5% Table 2. Repeated strike experience of workers in five sampled Vietnamese footwear factories (N = 686)

17 Routinized Strike Pattern As strikes became common occurrences and widely reported in the press, all “stake holders” have gotten used to it. Workers have become accustomed to using strike as an effective bargaining tool to get what they want. Taiwanese investors have come to consider strikes as normal like having “a meal at home.” As one of them said, they have even developed an “immune capacity” against strikes. When calculating production cost, they have already factored in strike contingency cost. 17

18 Post-2006: Period of Labour Unrest 18

19 19 Fig. 1: Relationship between Number of Strikes and Official Minimum Wage (adjusted by CPI), Industrial Zones outside Ho Chi Minh City, 2000-Aug 2011

20 State Policies & Macroeconomic Factors Legal minimum wage: – Legal minimum wages set by the government to sell workers’ labor in the competitive global labour market – Tension between lowest possible selling price as against lowest possible compensation to reproduce labour (physical survival). – But the government couldn’t strike the balance between the former and the latter. Thus, the legal minimum wage was set too low in favour of capital. – Government cannot control inflation 20

21 The Two Standard of Living Surveys Garment Industry Survey For migrant workersVND 2,413, VHLSS For nation as a whole 3 rd quintileVND 2,018,000 4 th quintileVND 2,727, UPAFor migrant workersVND 2,162,000 Table 3. Comparison of average monthly income of migrant workers in the three surveys

22 Deterioration in living standard 22 Consumption Amounts of Some Main Food Per Capita Per Month (3rd Income Quintile, Whole Country)

23 Deterioration in living standard Decrease in rice consumption not compensated for by other food items. Rice in Vietnam contributes 59% of the diet’s calories (70% for Bangladesh, 65% for Cambodia, 50% for Indonesia). Before 1989 under the ration system, each person was entitled to 15 Kg of rice per month. In 2008 workers consumed 12.8 Kg per month. Economic boom has little trickle down effect on food consumption in the last decade. 23

24 Reports on Some Workers’ Going Hungry In 2011 a VGCL report said that 30% of workers were malnourished. Wages can only satisfy 60-70% of workers’ basic needs. Some workers try to remain physically inactive to conserve energy in the hope of staving off hunger. Eating rice brought from home in the countryside. Rural sector subsidizing urban industrial sector. Quite a lot of media report on factory lunches serving too small a quantity of food and workers going hungry. Never such reports in China. 24

25 The Government Rice Export Policy Government controls all rice exports in Vietnam (possibly much corruption in this area) Government continues to increase rice export even when price of domestic rice increases Government reneged its promise to lower rice export in 2008 Current flooding in Southeast Asia is likely to adversely affect rice prices and consumption severely 25

26 2011: Runaway double-digit inflation continues 26 Fig. 7: Consumer Price Index, Whole Country, December July 2011

27 Conclusion and Prognosis (1) Taiwanese and Korean & other investors urging the VN government to suppress strikes and to enforce its own law on strikes, threatening capital flight Taiwanese investors trying to befriend the Vietnamese police. Vietnamese government continues to resist pressure to suppress strikes, instead it puts the blame back onto factory owners for violating the law and paying low wage. Vietnamese government provides lower standard and lax labour regulations but demands investors to comply. It seems the VN government has recently finally realized that basic wage has to be raised. Plan 25% to 35% increase since

28 Conclusion and Prognosis (2) Corporate Social Responsibility (CSR) and Global Production Chain – Multinationals should also be held responsible. – Production imperative overrides human right imperative – Big brand companies do not ask suppliers to increase workers’ wage – When wages have to go up with minimum wage increase big brand companies do not put in their fair share. – CSR cannot solve the problem 28

29 Conclusion and Prognosis (3) Prognosis – Can the Vietnamese government control inflation? – If strikes turn violent, will the Vietnamese government suppress the strikes? – Economic strike  Political strike? – Possible split within the trade union? 29


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