industrial disputes in vietnam

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Industrial disputes in Vietnam: the tale ofthe wildcat

Bernadine Van Gramberg Swinburne University of Technology, AustraliaJulian Teicher Monash University, AustraliaTien Nguyen RMIT University, Vietnam

Vietnam has experienced a combination of sustained high economic growth and high ination overthe last ten years. This has been a double-edged sword for the country as rapid price rises have alsofuelled the growth in labour conicts and strikes, which have the potential to negatively affect Viet-nams continuing economic growth. Added to this potent mix is the increasing evidence that someemployers strict use of managerial prerogative combined with poor working conditions and harshtreatment of employees have precipitated the growth of wildcat strikes particularly in the countrysgrowing export-oriented private sector. In the absence of publicly available statistics on industrialaction in Vietnam, this paper draws on an analysis of strikes reported in the nations key newspapersand three elite interviews to explore the types of disputes and their causes as well as the industriesmost affected. We nd that in order to improve the management of workplace conict, reform to the

Labour Code alone is insufcient. There is also a need to train all parties in dispute resolution and toensure that unions are independent of management.

Keywords: labour rights , unions , Vietnam Labour Code , Vietnam labour relations , wildcat strikes, working conditions

Correspondence: Professor Julian Teicher, Monash University, Melbourne, PO Box 197, Cauleld

East, Vic. 3145, Australia; e-mail: [email protected] for publication 28 August 2012.

Key points1 Wildcat strikes dominate in foreign-invested enterprises where unions are usually

headed by the HR manager.2 Lack of training of managers and a culture condoning violence toward workers pre-

cipitate industrial action.3 The Labour Code provides an avenue to pursue worker interests but this is largely

unworkable.4 Our study demonstrates the inadequacy of the existing mechanisms for dispute

resolution.

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Asia Pacic Journal of Human Resources (2013) 51, 248268 doi:10.1111/j.1744-7941.2012.00062.x

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Strikes, and particularly wildcat strikes where industrial action is led by workers ratherthan their unions, have become the norm in Vietnam. These are not simply walkouts ledby a few angry workers but well-orchestrated, complex and large-scale actions involving

thousands of employees. Labour disputes are recorded but statistics are not publicly avail-able; however, various studies have commented on the growing incidence of strikes. Forinstance, Clarke, Lee and Chi (2007, 546) reported that between 1995 and 2005 there were978 recorded strikes. Nguye n, Nguyen and Tra n (2007) noted that from 1995 to 2006,there were 1250 strikes. More recently the number of strikes has escalated from thesegures. Ha and Pham (2011) cite evidence from the Vietnam General Confederation of Labour (VGCL) that there were 762 strikes in 2008. In their report on the camera industry in Vietnam, Kakuli and Schipper (2011, 4) noted that in 2010, there were 423 registeredwildcat strikes in the private sector alone. Ha and Pham (2011) added there were 336

strikes in the rst four months of 2011 and predicted that the year would create a recordin industrial disputes. Another report conrms the prediction, listing 720 wildcat strikesacross the country by August 2011 (Better Work Vietnam 2011, 3). Further, this growthhas been largely in the form of wildcat strikes characterised by the lack of union involve-ment or even knowledge by unions that action is occurring (ILO 2011). But while there isincreasing evidence of rising strike activity in Vietnam, the extent of industrial action andits costs are unclear.

Strikes now dominate labour relations in the developing private sector and threaten todestabilise key export industries such as textiles, footwear and computer manufacturing.While this disturbing trend has attracted its share of negative publicity and news coverage,there has been only modest academic interest in the matter, perhaps because of the dif-culty in obtaining data on the incidence, the numbers of workers involved, methods of resolution and so forth. This paper is an exploratory study into the state of industrialunrest in Vietnam and makes three contributions to the literature. First, it reviews thesparse international and domestic academic literature on industrial disputation inVietnam. Second, it reports on the analysis of 30 strikes described in 61 newspaper reportscollected between January 2010 and December 2011 and on interviews with one seniornewspaper manager, a senior ofcial of a major national labour organisation and a humanresource consultant. Third, it critically appraises the dispute resolution system in the

country through identifying the types of disputes, industries affected, and the utility of the Labour Code in its ability to guide resolution of these conicts. Our comments on theLabour Code are particularly pertinent as the Code is now under review.

The paper commences with a discussion of the legal framework which regulateslabour relations in Vietnam and considers the role of unions in the dispute resolutionprocess. The paper then canvasses the international literature on industrial action inVietnam before turning to our analysis of newspaper accounts and the interviews. Thepaper concludes that, while the government has implemented a procedure for disputeresolution through the Labour Code, the lack of rigour in enforcing the Code, the absence

of independent unions and the need to train all parties in the dispute resolution process,together with the limitations on dealing with certain types of disputes, have meant that

Bernadine Van Gramberg, Julian Teicher and Tien Nguyen

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wildcat strikes are now the dominant form of overt workplace conict at a time when thegovernment remains reliant on attracting foreign investment.

The labour relations context

The Labour CodeIn its Preamble, the Vietnam Labour Code of the Socialist Republic of Vietnam (the Code)1994 (amended 2007) (The Socialist Republic of Vietnam 1994) is presented as an instru-ment to protect the rights and interests of workers and employers alike with a view toestablishing conditions conducive to:

harmonious and stable labour relations, contributing to the development of the creativity andtalents of intellectual and manual workers and of labour managers in order to achieve produc-tivity, quality and social advancement in labour, production, and services, effective utilizationand management of labour, and contributing to industrialization and modernization of thecountry, for a wealthy and strong country, and a fair and civilized society.

The Code applies to foreign and Vietnamese employers and employees together with tradeapprentices and domestic servants and, along with a number of decrees and circulars, andthe Law on Social Insurance, establishes the legal regulatory framework in the country (Hull and Trinh 2011). By denition, the Code does not apply to the informal sector,which is large in Vietnam. Cling, Razandrakoto and Roubaud (2010, 6) note that in 2007,the informal sector accounted for almost a quarter of all main jobs (24%) and most of these were in manufacturing and construction (43% of all informal sector jobs).

The Code was established in 1994 and amended in 2002 as the government imple-mented a market-driven economy; reected in the diminution of the role of the state, par-ticularly in terms of regulating employment relationships (Li, Taylor and Frost 2003). TheCode was next amended in 2006 and 2007 and it is currently under review once again.Chapter VII of the Code provides a detailed set of conditions of employment, even speci-fying the length of rest and meal breaks, maximum hours of the working week and placinglimitations on overtime.

The minimum wage in Vietnam is set for workers in four regional centres and for the

public services with the highest minimum wages payable in the key production hubs of the country in Hanoi and Ho Chi Minh City (Kakuli and Schipper 2011). Initially,minimum wages were also specied differently for each sector of the economy; forinstance the minimum wage expected of a foreign investment enterprise (FIE) was tradi-tionally more than double that paid by a domestic private enterprise (DPE) (Clarke, Leeand Chi 2007). The minimum wage is adjusted yearly but, as the ILO (2010) noted in itsGlobal wages report , adjustments have not kept up with the impact of ination and realwage growth has not been achieved since 2007. In October 2011 the government increasedminimum wages in response to rising ination and the increasing strikes, bringing

forward its quarterly wage adjustment and for the rst time equalising wage levels in FIEsand DPEs (Duc 2011).

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The body responsible for monitoring enforcement of the Labour Code is the Minis-try of Labour, Invalids and Social Affairs (MOLISA) as stipulated by chapter XVI of theCode. However, in practice, the VGCL also undertakes monitoring which we discuss in

the next section. The Code lists a range of sanctions for those violating it including a:warning, ne, suspension or withdrawal of licences, compulsory payment of compensa-tion, or compulsory cessation of business operations, or criminal prosecution in accor-dance with the provisions of the law (The Socialist Republic of Vietnam 1994, Article192). Clarke, Lee and Chi (2007) also note that MOLISA can refer employers whobreach the Code to the city or province Peoples Committee or the Ministry. Theauthors note that, while these bodies take action by counselling employers on their obli-gations under the law in the rst instance, the ministry is considered a more fearsomethreat to employers as it can revoke an employers investment licence. These sanctions,

however, are reported as being relatively low-level threats to employer behaviours(Meissner and Hung 2008).Theoretically, the Code offers workers high levels of protection. For instance, it

restricts employers ability to impose nes on employees or dismiss them. The process fordismissal is staged, with three breaches within three months required to terminate aworker for misconduct or poor performance. The disciplinary process requires properly constituted hearings and workers may have representation (Article 87). Chapter XIII of the Code gives the union rights to consultation as well as rights to collectively bargain, andit requires employers to provide facilities and time for union representatives to conducttheir duties. In addition, the 2002 amendments required all employers to establish a unionwithin six months of commencing operations (Article 153). Nevertheless, these restric-tions on employers and the range of benets mandated for workers have done little to stopthe rising tide of industrial unrest in Vietnam, which appears to be largely in reaction toemployer breaches of the Code and increasingly in support of wage demands. There isthen a paradox which we explain in that while employers appear highly constrained intheir actions, the Code fails to provide workable mechanisms for managing industrial con-ict, at least among the FIE companies.

Unions

The Law on Trade Unions was enacted in 1990 (The Socialist Republic of Vietnam 1990)and grants unions some independence from the Communist Party of Vietnam. It stipu-lates that the union represents and protects the legal and legitimate rights and interestsof the workers; shall bear the responsibility to join with the Government to grow pro-duction, create jobs, improve material and spiritual life of employees (The SocialistRepublic of Vietnam 1990, Article 2). The national union centre, the Vietnam GeneralConfederation of Labour, is protected by the Law on Trade Unions which encouragesunion organisation and the negotiation of legally binding collective agreements. Ineffect, the VGCL is the only ofcial union in the country and the Code requires employ-

ers to form an enterprise branch. Workers cannot legally form a union independently of the VGCL.




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As in many other countries, union membership has fallen over time from a high of 100% when Vietnam operated as a state socialist system to about 40% of the totalemployed labour force in 2003 (Clarke, Lee and Chi 2007). According to Torm (2011),

union membership rose from 45% at the end of 2007 to 50% in mid-2010. The authorsattribute the increase to rising unionisation in private rms, limited liability companies, joint-stock rms and cooperatives. There are considerable variations between sectorstoo, with state-owned enterprises (SOEs) recording around 90% unionisation rates,while FIEs record 50% and DPEs 30% (Clarke, Lee and Chi 2007). Torm (2011)suggested a more recent trend of declining unionisation among SOEs as a result of the equitisation or privatisation process. What is most surprising in these gures isthe relatively large proportion of non-unionised rms despite the Code mandatingthat:

The employer shall be responsible for facilitating the early establishment of trade unionorganizations. Pending establishment, the local trade union or industry trade union shallappoint a provisional executive committee of the trade union to represent and protect thelawful rights and interests of the employees and the labour collective. (The Socialist Republicof Vietnam 1994, Article 153(1))

These provisional unions are then converted to enterprise-level unions once elections areheld for positions. Firms operating in the country without a union are in fact in breach of the Code. This issue is taken up in the discussion section below.

A recent union role evolved as a consequence of MOLISAs yearly inspections of workplaces. It does not have enough inspectors to conduct regular inspections of all theworkplaces in Vietnam so in practice monitoring is also undertaken by the VGCL. In2008 Meissner and Hung reported that MOLISA had 350 inspectors and the VGCL had100 inspectors. In Hanoi it was reported that there are 11 MOLISA inspectors for 700SOEs, 600 FIEs, and over 20 000 private enterprises and, at the same time the Ho ChiMinh City Labour Department had 5 inspectors for more than 30 000 enterprises.

Both the monitoring and the employee representation roles are problematic forunions. It is common for human resource managers to be the union president in FIEsand this is a contentious issue within the VGCL (Clarke, Lee and Chi 2007). Given that

the VGCL is charged with monitoring breaches of the Code, arguably this represents aconict with union leaders managerial interest in the success of the company and theircapacity to engage in critical scrutiny of enterprise operations and, further, it makesmanagement union ofcials tacitly complicit in breaches of the Code (Clarke, Lee andChi 2007). A recent compliance report in the garment industry by Better Work Vietnam(2011) found other managerial practices used to control the union. For example, indirect breach of the Code, in the 78 garment factories investigated, union meetingscould not take place without a management representative being present in 75% of rms. An ILO report (2011) on labour relations reform in Vietnam noted that the trend

of increasing wildcat strikes is related to the absence of an effective voice for rank-and-le workers who have little choice but to take matters into their own hands in order




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to bring attention to their grievances. The next section turns to the vexed issue of strikesand their resolution in Vietnam.

Causes of strikesIn canvassing the causes of strikes reported in the international literature, we categorisedisputes as those driven by structural factors arising from the countrys legal, economicand political framework as Vietnam moves towards a market-oriented economy; andthose driven by employer behaviour, including harsh treatment and even beatings. Weconsider the structural issues rst.

The passing of the Law on Enterprises 2001 (The Socialist Republic of Vietnam 2001)provided citizens with the right to establish and operate private businesses and the growthof private rms has been rapid. Between 2000 and 2008 new enterprise creation saw an

average of 610 new companies enter the market each month (Meissner and Hung 2008).The countrys Law on Investment 2006 (The Socialist Republic of Vietnam 2006) led to aninux of FIEs and the privatisation of some SOEs. While SOEs dominated the economy inthe 1990s, accounting for over 50% of rms in the manufacturing sector and contributing40% of GDP, the effect of the Doi moi (reform) policy was to drive a market-basedeconomy through the growth of DPEs and FIEs (Jenkins 2004). A 2009 Deloitte tax reportnoted that the fastest growing companies in Vietnam are the FIEs, comprising joint ven-tures and fully owned foreign enterprises. It is this growing sector which has contributedto the greatest number of strikes, and the underlying cause of industrial disputes is attrib-uted to the countrys rapid movement towards a market model without a commensuratemovement allowing stakeholder inuence, participation, and control (Meissner andHung 2008, 267). Similarly, Better Work Vietnam (2011) added that the dominance of management representatives in unions impedes consultation and bargaining at the work-place. In this scenario of a rapidly developing economy with resource bottlenecks, strikesover (above minimum) wages have begun to emerge relatively recently as ination erodesthe buying capacity of wages.

Employer behaviour is another key cause of strikes in Vietnam and includes the strictuse of managerial prerogative, the poor treatment of workers, poor conditions andbreaches of the Code. Clarke, Lee and Chi (2007) reported that an investigation of strikes

revealed serious breaches of the law by employers including delays and non-payment of wages, illegal layoffs, failure to pay health insurance contributions, wages below the legalminimum, and withholding agreed bonuses. Meisner and Hung (2008) conrmed thesendings, adding the non-payment of overtime, the imposition of excessive overtime andthe low quality of accommodation and food as strike issues. More recently, complaints of excessive working hours (often associated with claims of underpayment of wages), poortreatment, and poor conditions at work have become more common. Many of thesestrikes represent worker responses to frequent employer breaches of the Code whichaccumulate over time until workers walk off the job in order to force their employers to

agree to abide by the Code (Better Work Vietnam 2011). Meissner and Hung (2008)noted that these strikes are severely underreported because employer violations happen at




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an individual or small group level leaving little recourse for the individuals affected,except to take action without union involvement. In any case, enforcement of the Code isweak, as will be discussed below as we consider the dispute-resolution system in the

country.

The workplace dispute-resolution systemThe resolution of labour disputes is provided in chapter XIV of the Code (The SocialistRepublic of Vietnam 1994) which sets out separate processes (which include conciliationand non-binding arbitration) for resolving individual and collective disputes. Unlikeearlier versions of the Code, the 2007 amendments allow workers to raise both rights andinterest disputes. Article 157(2) denes a rights dispute as when there has been a breach of workers rights as set out in laws, collective agreements or internal labour rules which have

been registered with the government. Interest disputes are framed as disputes over benetsand Article 157(3) denes these as a request of the labour collective to establish new labour conditions. This clause in particular was inserted to deal with the growingnumbers of strikes in pursuit of pay increases above the minimum wage.

The Code also provides for the right to strike for collective disputes when dispute pro-cedures have been exhausted and a majority vote of employees is in favour of the strike(Article 172). This does not apply to those employees in enterprises which supply publicproducts and services and at enterprises essential for the national economy or for nationaldefence and security in accordance with the list stipulated by the Government (TheSocialist Republic of Vietnam, Article 175). Article 176 allows the prime minister to post-pone or suspend a strike if it threatens the national economy, which effectively extends therange of sectors where disputes are prohibited. Indeed, the International Trade UnionConfederation (ITUC 2011) notes that the government stipulates 54 sectors of theeconomy as being essential service areas. The clause also empowers the prime minister toassign an authorized State body or organization to resolve the dispute in these sectors.

A number of bodies are involved in the dispute-resolution process. In order to apply the Code (The Socialist Republic of Vietnam 1994), Article 162 dictates that rms mustappoint an enterprise-level Labour Conciliation Council comprised of equal numbers of employees and employer representatives (appointed for two years). Article 157 species

the range of disputes which can be heard by the enterprise Labour Conciliation Councilincluding individual and collective disputes over interests or rights. Another body described in the Code is the labour conciliator who can conciliate a wider range of dis-putes than the enterprise Labour Conciliation Council including disputes about perfor-mance of vocational training contracts and about fees for providing vocational training(Article 163). The chairman of the district-level Peoples Committee can be called toresolve collective rights disputes (Article 168(2)). Next, Article 164 establishes LabourArbitration Councils comprised of up to seven full-time and part-time members who arerepresentatives of the labour body, trade union, employers and bar association or people

with experience in the labour management sector within the locality. They are ableto resolve collective disputes over benets (interests) as outlined in Article 157 and in




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addition can be called to settle collective disputes arising in the essential service industries(Article 175). Labour Arbitration Councils provide the parties with a settlement proposalby majority vote (Article 164(5)). There are two Labour Arbitration Councils in Vietnam

one in Hanoi and the other in Ho Chi Minh City. Finally, the act provides for interven-tion by the Peoples Court as the last resort (Article 166).

The 2006 amendments to the Code provided (for the rst time) a dispute-resolutionpathway for individual (as opposed to collective) workplace disputes. Section II of thechapter XIV of the Code species that individual disputes may be handled either by theenterprise Labour Conciliation Council or the Peoples Court (Article 165). Labour Con-ciliation Councils must settle these matters within three working days from the time thedispute is lodged and disputants have the right to be represented (Article 165a). They provide disputants with a settlement proposal and if disputants agree with the proposal,

they must sign the minutes of settlement together with the chair of the Labour Concilia-tion Council or the Labour Conciliator (Article 165a(2)). If they disagree (or if the three-day limit has been exceeded) any disputant may petition the Peoples Court to resolve thedispute (165a (3)). But Article 166 restricts the matters which the Peoples Court can hearto ve comprising: the dismissal of an employee over a disciplinary matter (Article166(2)(a); compensation relating to a dismissal (Article 166(2)(b)); disputes betweenhousemaids and employers (Article 166(2c)); disputes over social insurance (Article166(2)(d)); and disputes over compensation between workers and employers who sendworkers to work abroad under contracts (Article 166(2e)). Clearly, the process for settle-ment of individual disputes leaves workers largely dependent on the Local ConciliationCouncils, in effect at enterprise level.

Collective dispute resolution is covered in section III of chapter XIV and the term col-lective is dened as employees working together within any one enterprise or any onesection of an enterprise (Article 157(4)). Article 170 provides that all collective disputesmust rst be heard by the enterprise Labour Conciliation Council. Thereafter, the Codeprovides different procedures for the resolution of rights and interest disputes. For rightsdisputes, if the parties cannot agree on the settlement proposal provided by the LabourConciliation Council, Article 170(2) allows disputants to request the chairman of thedistrict-level Peoples Committee to settle the matter. Rights disputes must be settled

within ve working days from the time of lodgement. Article 170a(b) stipulates that allparties must be represented and if necessary, the chairman will involve individuals fromhigher levels of the union and and representatives of other bodies and organizations con-cerned to attend the session. In resolving the dispute, the chairman shall rely on the law on labour, the collective labour agreement and internal labour rules which have been reg-istered and on other legal regulations and agreements in order to consider and deal withconduct in breach of the law by the parties. Failing settlement or in the event that thechairman exceeded the ve-day time limit, parties may lodge their dispute with the Peo-ples Court which will deal with the matter in accordance with the Civil Proceedings Code

(Article 170a(2) and Article 170(b) described above). Alternatively the labour collectiveshall have the right to conduct procedures in order to strike (Article 170(2)).




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In the case of collective interest disputes, disputants can request the Labour Arbitra-tion Council to settle the dispute. Arbitration Councils have a time limit of seven workingdays from receipt of the dispute (Article 171(1)). Parties are required to be represented

and the Arbitration Council may request the participation of higher levels of the union aswell as other organisations and bodies (Article 171(2)). The role of the Labour ArbitrationCouncil is to offer a settlement proposal which, if not accepted by the labour collective, orwhich exceeds the seven-day time limit, can lead to industrial action provided a number of steps (outlined in section IV of the Code) are taken by the labour collective (Article171(3)).

Section IV of chapter XIV describes the process for taking industrial action and Article172 denes a strike as a temporary and voluntary cessation of work organized by thelabour collective in order to resolve a collective labour dispute. Article 172a describes the

parties who may legally lead a strike including: the executive committee of the trade unionat the enterprise or where there is no enterprise union, the collective labour representa-tive appointed by the labour collective provided that representative has been announcedin advance to the labour union of the district, town or provincial city or its equivalent. Inother words, to comply with the Code, all strikes by must be conducted with the supportof either the enterprise or district-level union.

Moreover, in order to strike there are stringent requirements imposed on unions; they are required to conduct a ballot or collect signatures of employees prior to the strike(Article 174a). A range of other opinions must be sought including from the executivecommittee of the enterprise union, the leader of the union group, the leader of themanufacturing group where the rm has over 300 employees, or the leader and deputy leader of the manufacturing group in a case where there is no trade union. The votingprovisions are specied in Article 174b which prescribes that at least 50% of employees inworkplaces with fewer than 300 workers and 75% of employees in workplaces with over300 employees must be in favour of the strike. The ITUC has noted that the voting thresh-olds are unrealistically high, which is an impediment for workers to hold a legal strike(ITUC 2011). Unions must also provide detailed written notice to employers of the strikecontaining the ofcial trade union seal (Article 174b). In summary, legal strikes must be inrelation to collective disputes and must have union involvement. These requirements fail

to take into account that most strikes in Vietnam are wildcat strikes; thus the bulk of strikes in the country are illegal. We consider the legality of strikes next.

Article 173 of the Code provides seven circumstances in which a strike is illegal.First, Article 173(1) stipulates that strikes which do not arise from a collective labourdispute are illegal. Strikes are also illegal if they are organised by workers in more thanone enterprise which means that workers wishing to take sector-wide activity cannot doso legally (Article 173(2)). The Code states that no strike is legal while the dispute isbeing conciliated by the various Councils or Courts (Article 173(3)). Article 173(4)stipulates that strikes will be illegal if workers are not consulted or if there is a violation

of the strike voting provisions. Strikes are also illegal if they occur without the author-isation of the enterprise trade union executive or without notication of the strike




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leaders to the VGCL (Article 173(5)). Clearly, most wildcat strikes would fall into thiscategory. Contravention of Article 175(5) which pertains to industrial action in the largenumber of declared areas of essential services is illegal. Finally, continuing a strike

despite a prime ministerial intervention to suspend the strike will also render the strikeillegal (Article 175(6)).

Over time the Code has shifted in the way it denes and manages illegal strikes. Priorto 2006 only rights-related strikes were legal but, in response to the growing numbers of interest disputes, the Code was amended in 2006 specically to deal with interest disputes.The 2006 amendments declared that legal strikes must be those over workers interests,but in making this change the Code then rendered strikes over workers rights illegal. Theamendment received its share of criticisms. For instance, as noted by Human Rights Watch(2009): For disputes over rights, if conciliation fails either party can take the case to court,

thereby outlawing rights related strikes. The 2007 amendments provide distinct paths fordealing with rights and interest disputes and provide a mechanism (albeit complicatedand highly restrictive) for when rights and interest disputes can give rise to a legal strike.

While the Code species the course of action to be taken once a strike occurs, there arealso a number of avenues for the parties to take which are not specied by the Code. Forinstance Clarke, Lee and Chi (2007) note that local government can be notied and it willdespatch an ofcial from the provincial Labour Department who acts as a mediator.Nguyen, Nguyen and Tra n (2007) reported that these mediators are highly successful inresolving disputes. Another avenue for resolution is via a special task force established by the Peoples Committee comprising a local government representative, the union and amember from the Chamber of Commerce and Industry of Vietnam (VCCI). In these casesof intervention by MOLISA, the VGCL or local government, the actual process of resolu-tion is unclear.

As an avenue to bring a strike to a close, Article 176a of the Code provides that theparties shall have the right to petition a court to consider the legality of a strike andArticle 177 vests this jurisdiction in the Provincial Peoples Court in the relevant location.Article 179(1) prescribes that workers who refuse to call off the strike shall be subject to alabour disciplinary penalty and where the illegal stoppage causes loss or damage to theemployer, the organisation or individuals concerned shall be required to pay compensa-

tion. That this jurisdiction is exercisable by a court without any particular expertise inlabour relations matters is a matter of concern. A new clause (Article 174d inserted in the2006 amendments of the Code) provides a work stoppage wage to be paid to thoseemployees who do not participate in a strike and who cannot continue work as a result of the strike. The ITUC (2011) has criticised the clause as an opportunity for employers andthe government to inuence workers strike voting intentions.

Research into workplace dispute resolution in Vietnam

There has been little research into the practice of workplace dispute resolution in Vietnam.The Ho Chi Minh City Labour Arbitration Council conducted a survey of the conciliation




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process at enterprise and district level in 2003 and reported that some 84 collective dis-putes and 1118 individual cases had been sent to conciliation since 1995, and 823 of thesewere successfully resolved. However others have reported less success (e.g. Zhu and Fahey

2000). Nguyen, Nguyen and Tra n (2007) found that the Labour Arbitration Council inHanoi had settled only two cases since its establishment in 1997, while the Labour Arbitra-tion Council in Ho Chi Minh City had settled only one case since 1998. Nor is there any evidence as to the outcomes of industrial disputes following unsuccessful resolution at thislevel. Because so few collective disputes are heard by enterprise Labour ConciliationCouncils, virtually no collective disputes reach the Arbitration Councils.

In theory the workplace dispute-resolution system in Vietnam provides multipleavenues for redress and determination; however, the reality is that many of these proce-dures are overly complicated and time-consuming, and limited because they apply to situ-

ations where unions supervise the process (Nguyen, Nguye

n and Tra

`n 2007). Often theprocedures are not used at all (Human Rights Watch 2009). Nguye n, Nguyen and Tra n

(2007) observed that at the enterprise Labour Conciliation Council (then termed Grass-roots Local Labour Conciliation Council), negotiations rarely ended with a solution to thedispute; Labour Arbitration Councils do not have power to enforce their decisions; andthe head of the union is usually the enterprise human resources manager who sides withthe employer. Clarke, Lee and Chi (2007) add to this the lack of state supervision of employers to ensure they comply with the laws, and note the failure of the VGCL toadequately represent workers at the workplace. So while on the face of it Vietnam has ahighly regulated dispute-resolution system, this applies to only a small part of the work-force, but even here the efcacy of the system is limited and highly variable. By far thedominant approach taken to resolving workplace disputes is the wildcat strike, and thisreects the general failure of the existing formal dispute-resolution system despite the2006 and 2007 amendments to the Code which sought to cover both interest and rightsdisputes. In light of this background we now turn to our study.

The exploratory study

In view of the exploratory nature of this project, we report here on two sources of data: a

newspaper search, and three elite interviews, respectively with a senior ofcial from anational employer organisation, a prominent human resources consultant and a seniormanager of a newspaper. An elite interview is a form of non-probability sampling whereinformants are selected for their salience to the topic under investigation; for example,expertise (Hochschild 2009). To search for newspaper articles reporting the industrial dis-putes we used a range of online search engines through various browsers (InternetExplorer, Mozilla Firefox and Google Chrome). The terms we used to search comprised:strikes, workplace conicts, labour disputes, industrial disputes, wildcat strikes andwork stoppages. The equivalents of these terms in Vietnamese were also used to search for

Vietnamese language news articles. In many cases, the online articles suggested otherrelated articles; these related articles were also analysed. The search was conducted for




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articles published from January 2010 to December 2011, and was limited to those sourcesreporting industrial disputes in Vietnam. We also accessed the hard copy newspaper LaoDong which reported 20 strikes in 2011 (it was not available for 2010).

We consolidated the articles describing the same cases and, of the 61 articles collectedover the two-year period, we obtained 30 cases which allowed us to identify the region,industry and cause of the strike. As will be evident from the discussion above, this is notan iteration of all industrial disputes but reects those cases which newspapers chose toreport; however, in view of the absence of published data on the causes, nature and inci-dence of industrial disputes our cases provide insights which are otherwise unavailable.These ndings are contained in Table 1. We also conducted a thematic review of thearticles identifying two broad themes based on rights disputes and interest disputes whichare described in the next section.

In order to gain a deeper understanding of the issues behind labour disputes inVietnam, we conducted interviews with three experts. The interviews were around 90

minutes duration and consisted of open discussions based on four broad semi-structuredareas: causes of strikes, factors contributing to the rise in strikes, the industries and com-panies associated with the strikes, and the behaviour and roles of the parties (employers,unions and employees) in workplace disputes.

Reasons for strikesFrom our interview with the newspaper manager, we conrmed our expectation that thereporting of strikes is necessarily selective, partly due to editorial decisions about what isnewsworthy but also due to the nature of political processes in Vietnam. Reports of strikes

are generally conned to the rst quarter of the year, nishing before the national holiday celebrating the reunication of Vietnam on 30 April. The newspaper manager also stated

Table 1 Reasons and industry location for the reported disputes in 30 reported cases in 2011

Industry No. of disputesN = 30

No. of workersinvolved

Salary orallowances

Managersbehaviours,culturaldifferenceissues

Long hours,extra hourswithout pay

Poorworkplaceconditions

Contractissues

Otherrightsissues

Otherinterestissues

Apparel 5 4000 4 1Fisheries 2 1350 2 1 1 1Footwear 11 31650 10 3 5 1 1 2 2Motor production 2 3600 2 1 1Petroleum 1 18 1Rattan products 1 100 1 1Rubber plantation 1 67 1 1 1 1Taxi 1 20 1Wood products

for export1 3000 1 1 1 1

Other 5 5270 5 1Total 30 47725 27 5 9 3 4 4 4

Source: Authors newspaper analysis of strikes 201011.




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that reporting on strikes has the effect of stimulating even more strikes (because of thelevel of worker success) and this makes it a politically sensitive issue for newspapers,which also limits the number of public reports each year. The human resources consultant

went further, stating that the reporters sometimes see their role as reporting strikes in theheroic light of worker success. In 2008, however, the Party Congress apparently instructedreporters to be responsible and for some time after that reporting was subdued.

In the study period, the combined online and hardcopy search identied 30 separatestrike incidents, of which 16 were located in industrial parks (zoned areas of land for com-mercial purposes) while the other case locations were not reported. In this data, disputesover salary and allowance demands (27 reports) dominated the reasons for taking indus-trial action. Other reasons included long hours and unpaid hours (9 reports); negativemanagement behaviours and cultural insensitivity (5 reports); and poor workplace condi-

tions (3 reports). There were 4 rights-based issues including dismissal of workers withoutreasons, non-payment of maternity leave and denial of annual leave. Additionally, wenoted four employment contract issues including lower than agreed bonuses, disputesover the Tet bonus (normally an additionally months pay for the lunar New Year holiday),and lower than agreed piecework rates. The data reported here also reveal that in moststrikes, multiple causes were reported in Table 1 representing a combination of rights andinterest disputes.

The rise of the wildcat strikeThe newspaper reports conrmed the growing strike gures reported in the wider litera-ture. Ta Lam (2011) wrote that, of 175 strikes in Ho Chi Minh City reported in the rst six months of 2011, at least 70 occurred in industrial parks and export processing zones. Thisis described as a seven-fold increase compared to the same period in 2010.The increase isattributed to demands for salary and allowance increases; benets such as meal quality;and disputes over long working hours (Ta Lam 2011). In Binh Duong province, one of theprovinces with the highest economic growth in the south of the country, there were 150strikes reported in the rst six months of 2011 involving almost 80 000 workers, a 50%increase compared to the same time period in 2010 (Ngoc Quy 2011).

The main driver for the disputes reported in the newspapers and conrmed by our

informants is inationary pressures on both employees and employers. Rising inationreaching 19.8% in the year to May 2011 (Economist Intelligence Report 2011) hasplaced workers under increasing nancial pressures due to continuous increases in homerents, utilities and prices of goods without commensurate salary increases (Thuy Hiepand Trong Binh 2010). Importantly, this has given rise to a range of strikes over workersinterests rather than rights as in earlier times, and because the bulk of these disputes areconducted by unauthorised labour collectives (without union sanction or involvement asrequired by the Code) they are illegal (wildcat) strikes. Ination has also had its effectson the quality of meals which are provided by employers and form part of the working

conditions of most workers. Decreased meal quality is driven by employers not increas-ing their budgets for meal provision in the face of falling prot margins caused by ina-




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tion of input prices and the continuing devaluation of the currency. Additionally, two of our informants commented that most employers now contract out their meal services,adding to the difculty of ensuring good meal quality. According to Dang Ngoc Tung,

the chairman of VGCL (cited in Duong Minh Duc 2011a), workers rely on the mealsprovided by employers because, typically, low wages and long working hours limit theirability to prepare adequate meals at home. Consequently, the meal provided at work isthe workers main meal of the day and as meal quality drops workers complaints haveincreased. Technically, employers have fullled their legal obligation to provide the mealand so these strikes represent interest disputes which are considered legal under theCode but only if the labour collective is supported by the union as required underArticle 172a.

Strikes are also focused on wage and bonus demands. One example provided by Tam

Thien (2011) reported that many companies have set a combination of high productiontargets and low piecework rates which results in workers not being able to meet their pro-duction targets and being denied the expected bonuses which would apply at the end of the production cycle. Strikes in these companies occur when the workers complain to noavail about the unrealistic targets. This problem is interwoven with another issue identi-ed by some writers that the minimum wage is too low in Vietnam to adequately providefor adequate living conditions, leading to ongoing tensions in the employment relation-ship. In other words, as the level of the minimum wage does not enable an adequate livingstandard, workers are reliant on their bonuses for their survival. For instance, Tam Thien(2011) reported that in the manufacturing industry the minimum wage covers only 60%of average living costs.

While interest disputes are increasing, rights disputes continue as many employers,particularly in FIEs, breach the set of workers rights guaranteed by the Code or the collec-tive agreement. The newspaper articles canvassed here focused on issues of lower bonusesthan agreed, unpaid hours, unpaid maternity leave, denial of annual leave and excessiveovertime. For example, the Code provides a maximum of 200 overtime hours a year forworkers (Article 69) but many enterprises require their workers to work in excess of this(Ta Lam 2011). Nam Anh (2011) reports that some companies assign work to theiremployees not in accord with their labour contracts and there are many instances of

workers being dismissed without the employer following the procedure prescribed by theCode.

Foreign investment enterprisesThere were 424 reported strike cases in 2010 of which 80% occurred in FIEs, 20% indomestic private enterprises, and only 0.25% in government companies (Nam Anh 2011).FIEs incur massive economic losses from these disputes. For instance, in a strike at a foot-wear company in Hai Phong in April 2011 which lasted for 9 days, the company reported aloss of around US$40 million (Tam Thien 2011). Given the signicant economic costs for

FIEs it is surprising that they do not manage industrial relations more proactively andconsider the business case for adopting good dispute-resolution practices and trained




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human resources staff. This is particularly relevant when considering the low unionisationlevels in these rms and, consequentially, the greater potential for wildcat strikes to occur.

From our interviews several factors contribute to explaining the higher incidence of

strikes in FIEs. First, most of the strikes occur in the labour-intensive FIEs typically employing thousands of low-skilled and low-wage workers on assembly lines. Theseworkers are reportedly less likely to join a union as they resent paying the union fees(Employer association interview). As most of these mass production companies mostly operate on low prot margins, they rely on generating high volumes of production. Whenination is high, workers demand salary rises and these demands threaten prot marginswhich are continually being eroded by both domestic price ination and devaluation of the currency, particularly as most non-labour inputs are imported. Employers who aresubject to these pressures have an incentive to resist wage rises and to cut costs by denying

worker demands. The employer association ofcial we interviewed noted that it is quite adifferent scenario from those FIEs specialising in the high-tech sector which employ highly skilled staff, as disputes in those companies are more likely to be individualised andare likely to result in unhappy staff quitting for another better paying employer.

Cultural differences (and intolerance) between employers and their employees in FIEshave been important factors in wildcat strike activities. Many FIEs in the manufacturingsector are multinational enterprises which employ Korean or Taiwanese managers whoreportedly have little knowledge in managing human resources and a military dispositionthat sometimes manifests itself in physical violence toward workers (interview with News-paper manager). Meanwhile, due to tight labour market conditions, most of the availableworkers lack education (few have completed high school) nor have industrial training.Typically, these workers previous experience will have been in farming or small family businesses in the informal sector and consequently they are not well socialised for indus-trial work. In some cases harsh treatment by managers provides a trigger for a wildcatstrike where accumulated complaints about low wages and poor conditions surface as thepublic face of the strike, whereas its root cause is in the mistreatment, both physical andmental of the workers concerned (Employer association interview).

The inadequacies of government inspection bodies and apparent ineffectiveness of sanctions for breaching the Code have also been reported as reasons for increasing strikes

(Hai Van 2011; Le Thanh Ha 2011). For instance, Ta Lam (2011) notes that in the auditingof 968 enterprises in Ho Chi Minh City in the rst half of 2011, the Department of Labour, Invalids and Social Affairs (DOLISA) (the provincial and city ofces of MOLISA)issued nes totalling some VND 2.75 billion. This equates to each enterprise paying aboutUS$150 (some VND 3 million) for their violations. According to Ta Lam (2011), NguyenThi Dan, manager of the Salary Department of DOLISA (Ho Chi Minh City), stated thatthe penalty levied on companies that violate the Code is too low and is not effective inpreventing breaches of the Code. Chan (2010, 46) describes the situation differently,arguing that Vietnam has a system of harsh laws, soft implementation and that it is not

the lack of effective sanctions which is the issue but rather, that the role of the state indispute resolution is often to negotiate with employers to grant workers demands so they




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will return to work: in Vietnam, the workers go on strike in order to get the local state tonegotiate on their behalf (Chan 2010, 48). While there is merit in Chans point, it remainsthat the poorly crafted regime of sanctions and dispute settlement procedures does little to

encourage compliance with the Code.

Dispute resolution in the press

It is not possible to identify the outcome of the 30 strikes reported here, although we wereinformed that such disputes are generally resolved by payment to the workers, oftenincluding for the time taken on strike. Indeed, we were advised that if employers do notcompensate workers for time on strike, they may refuse to return to work and even take jobs with other employers (Employer association interview). It was further explained that

family and friendship networks based on place of origin operate to spread informationabout the most lucrative job opportunities. In this relation, we note that newspapers donot reveal the outcomes of strikes due to concerns that this might encourage workers inother companies to also go on strike for the sort of extra pay and conditions granted inother companies (Newspaper manager interview).

In all 30 cases, the newspapers reported the involvement of representatives from theVGCL, DOLISA and police. Their initial role was to attend the scene of the strike andthese ofcials were reported to calm the situation and prevent outbreaks of violence. Asthe strikes progressed, these parties commonly acted as mediators between company man-agers and striking workers. One commentator noted that unions in many enterprises areweak and play an insufcient role in conict management to prevent strike action, exacer-bated by the fact that most union leaders are managers employed by the company (NgocQuy 2011). As a result, when a dispute occurs, the union leader remains very close to themanagement point of view in the negotiation process. In some cases, workers undertakewildcat action in deance of their elected union representative because that person lacksthe training and independence to adequately represent their interests. Such a situation isin the interests of neither management nor labour (Employer association interview). Thelack of union leadership is a key reason why workers interests fail to be reconciled withthose of their management. It is also a key reason why there has been such a growth in

wildcat strikes, particularly in the more sparsely unionised FIEs.As noted earlier in this paper, the Code species a process for dispute resolution

which culminates in the right to strike, provided that all steps have been exhausted. In aworkshop on Promoting the improvement of the labour dispute resolution system out-of-court held in Hanoi in April 2011, Pham Minh Huan, deputy minister of MOLISA,stated that most labour disputes skipped the negotiation steps (conducted by enterpriseConciliation Councils) in the Code, with workers instead ling complaints to the relevantgovernment ofce (such as the District Peoples Committee). It has been argued thatwhen the enterprise Conciliation Councils are bypassed, subsequent dispute resolution is

more complicated (Kim Thanh 2011). In a similar vein, Mai Duc Thien, deputy head of the Legal Affairs Department, MOLISA (cited in P Thanh 2011), observed that the role of




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the enterprise Conciliation Councils is vague. In 2009, while 80% of Vietnamese enter-prises were unionised, only 67% had formed an enterprise Conciliation Council asrequired under the Code. The lack of training and skills for Conciliation Council

members has been argued to be another key reason for the councils being either unsuc-cessful in resolving disputes or bypassed entirely (Kim Thanh 2011). The gridlock in thesystem is seen as a weakness of the current Code and there have been discussions onrevising it to add several sections on dispute resolution (Duong Minh Duc 2011b). Thishas proven to be a major task. Several drafts of the new sections have been proposed anddiscussed by various interest groups and the National Assembly but plans to enact thechanges did not come to fruition in 2011.

Discussion

The rising tide of industrial conict in Vietnam is an important issue for policy-makersand businesses but our capacity to analyse this issue is hampered by a dearth of publicly available information. In undertaking a careful study of newspaper coverage over almosttwo years, we utilised the available information to shed light on this important issue andto highlight the problem posed by the governments failure to facilitate the provision of publicly available data related to industrial disputes. The major limitations that we discov-ered were that the nature, extent, and industry location of strikes are not well known norare the causes, methods of resolution or outcomes well understood. Clearly, greaterknowledge and public debate on these issues is important to policy-makers and industry participants in both improving the operation of the existing system of dispute resolutionand in creating a better system.

While the data are inadequate, an examination of existing publications and laws per-taining to labour relations demonstrates that the Code is both awed and incompletely specied. The emphasis in recent revisions of the Code has shifted from the protection of workers rights to providing workers with an avenue to pursue their interests is an attemptto put the reins on the increasing number of interest disputes in the country. However, onits own this is insufcient to deal with the growing number of FIEs with their low unioni-sation rates in which labour collectives are less likely to rely on their enterprise union,

often headed by their human resources manager, to voice their concerns. While workerslack condence in unions, dispute-resolution processes which ultimately require theinvolvement of unions will continue to be ignored and the wildcat strike is likely toremain commonplace in Vietnam. Recognising that the government is unlikely to legislateto provide workers with choice of union in the foreseeable future (as it has not ratiedILO Convention 98 on the Right to Organise), workers collectives need to be able to befull participants in the dispute-resolution processes of the Code.

Two other problems in managing strikes are also highlighted by this study. First,bodies such as DOLISA, the VGCL and VCCI are seen to play an important role in

dispute resolution, but the adequacy of these resources remains uncertain and the natureor efcacy of their interventions is not well understood. Second, the processes of dispute




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resolution under the Code have been criticised for reasons including that there are toomany steps, that the processes of resolution are not clearly specied and there is a dearthof appropriately trained ofcials. In practical terms our study has highlighted other

shortcomings in dispute resolution. A key problem is that the requirement to formenterprise unions as branches of the VGCL is frequently ignored. Even when it is notignored, union ofcials are typically ill-prepared for their tasks and there is a lack of clear delineation of management and unions, and this is something which is not just thesubject matter of ILO conventions, such as Article 2 of Convention 98 on the Right toOrganise and Collective Bargaining; rather it highlights the inadequate protection of workers rights and interests despite the expressed intent of the Code. This problem isexacerbated by a dearth of training of the participants in the system at all levels, butespecially at the workplace. Worker representatives are often hampered by a lack of basic

education and then by specic training in relation to dispute resolution. The lack of training of management representatives is perhaps more profound, particularly inlabour-intensive FIEs where managers lack training in both dispute resolution and thebroader human resources management function. An important and related issue is theproblem with management cultures which condone violence toward workers, eventhough such acts may precipitate industrial action.

Notwithstanding the limitations of this exploratory study, the discussion would not becomplete without a plea for research on the extent, causes and resolution of disputes butalso of the differences between state-owned enterprises, domestic enterprises and FIEs.The present dearth of information sometimes leads to an unsubstantiated belief that con-ict is conned to the FIE sector of the economy.

Conclusions

This paper critically examines and extends the existing research on strikes and the dispute-resolution system in Vietnam. In doing so it also utilises an analysis of almost two years of newspaper reporting of industrial disputes, a move which was necessary in light of theabsence of any publicly available data on industrial disputes or their resolution. This infor-mation was supplemented by three elite interviews. From this research it is clear that the

incidence of strikes is increasing and that, unlike in the past, disputes are increasingly interest based, particularly in FIEs and comprised almost entirely of illegal, wildcat strikes.This strike activity has been driven by a combination of structural changes to the economy and poor managerial behaviour. Thus, rising ination; a low minimum wage structure;the expansion of mass manufacturing with its tight prot margins; and shortcomingsin the system of industrial regulation have played their part in fuelling strikes. Particularconcerns are the lack of training of participants at all levels, lack of independent unionrepresentation at the workplace levels and insufcient articulation of all available dispute-resolution processes in the Code. In addition it is clear that in labour-intensive export-

oriented industries the lack of appropriately qualied human resources professionals is amajor drawback. While the Code is currently under review, we argue that although good




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dispute-resolution processes are important, they cannot succeed in the absence of identi-fying the structural and behavioural drivers of strike activity, particularly in understand-ing that employees need independent representation in order for them to effectively voice

their concerns and participate in the dispute-resolution process.

Bernadine Van Gramberg (PhD, Monash) is deputy dean, Faculty of Business and Enterprise atSwinburne University of Technology. Bernadines teaching, research and consulting are in the eldsof dispute resolution and public sector management.

Julian Teicher (PhD, Melb.) is professor of industrial relations in the Faculty of Business and Eco-nomics at Monash University. His research and publication spans workplace relations and publicmanagement and governance. He has a particular interest in developing countries.

Tien Nguyen (PhD, MIT) is a senior lecturer and head of Graduate Studies at RMIT University,Vietnam where he teaches MBA human resources and management decision making subjects. Hehas extensive experience working in corporate industrial relations in Vietnam.

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