Social Structure of Changing Labour Relations in Vietnam

Abstract

Industrial action in export processing zones challenges the conventions of labour protest. Labour relations in domestic and foreign direct investment enterprises in industrial parks and export processing zones in Ho Chi Minh City were researched in 2018, with findings that divide into two areas of interest: (a) the ways ‘innovation’ in the economy has affected changes for the subjects involved in labour relations; (b) with strikes being a manifestation of conflict in labour relations, after a period of sharp increase (2011), there has been a decreasing number in recent years, but with changing characteristics. In particular, when a strike occurs now, the trade union which used to be the unique legal representative of all Vietnamese employees is less often favoured, and others are chosen by the employees to negotiate with the business owner. This trend will perhaps be formalized as Vietnam implements international labour–trade union commitments recently adopted.

Keywords

Social structure changing labour relations enterprises industrial zones export processing zones

Introduction

The process of developing a socialist-oriented market economy in Vietnam is also a process of international economic integration through regional and international trade agreements. Globalization processes, regional economic integration, and industrialization have effects upon both the subjects and characteristics of the system of labour relations in Vietnam. The need to harmonize and reduce conflicts between parties in labour relations is becoming clear for all. Strikes – a manifestation of conflict in labour relations in Vietnam, including in enterprises operating in industrial parks and export processing zones (EPZs) in Ho Chi Minh City (HCMC) – show both a tendential decrease in number and the changing characteristics of strike action. The question to be researched here was what happens to labour relations at enterprises in the context of a socialist-oriented market economy in Vietnam, regional economic integration, and industrialization? To answer this, a study was conducted on foreign-invested enterprises (FDI) and private enterprises in industrial parks and EPZs in HCMC in 2018. Labour relations were reviewed accordingly in terms of: (a) institutional factors affecting labour relations at selected enterprises; (b) the subjects of labour relations at the enterprise and their position and role; (c) the forms of interaction between the labour relations subjects at the enterprises; and (d) the results of those interactions. The findings make a meaningful contribution to how labour relations in enterprises become harmonious and reduce conflicts between labour relations subjects, especially after the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) officially came into force for Vietnam from 14 January 2019. Accordingly, Vietnam must implement the labour–trade union commitments of the CPTPP, which will necessarily in turn have a further impact upon labour relations.

Literature review

It is well known that studies of labour relations are closely linked to other social sciences, humanities, behavioural sciences and law. Labour relations are a field of study that can have different meanings depending on the context in which the term is used.

Concepts

Social structure for labour studies

Talcott Parson’s viewpoint may be usefully applied to labour relations at the enterprise level by considering those relations as a social structure or social system at the micro level. The relevant social structures in this case would then be a set of status and roles for labour relations subjects. They interact with each other at the workplace in a model that aims to maximize satisfaction, driven by a combination of cultural and institutional norms. Status refers to the position of subjects within labour relations, and role is what the subjects do in such a position, seen in the context of its functional significance for the labour relations at both enterprise and nation levels (see Parsons, 1951: 5–6 quoted in Ritzer, 2011: 244). Accordingly, the subjects of labour relations include employers, employees and trade unions – representative organizations of workers at the enterprise level. These labour relations subjects interact through dialogue and negotiation to form the working mechanism of labour relations according to a two-party or sometimes tripartite arrangement. The two-part format would include workers or representatives of workers negotiating with employers, with the tripartite format including the same two prime groups and the state – so through meetings of government representatives with employers’ representatives and employees and/or their representatives (Ministry of Labour – Invalids and Social Affairs, 2018: 7).

Labour relations

In academia, labour relations are frequently a sub-area within industrial relations but are also known as industrial relations, referring to the system in which employers, employees and their representatives, and the government, interact directly or indirectly to set the ground rules for the governance of work relationships. In the view of the International Labour Organization (ILO), labour relations are a tripartite relationship between the state, employers and employees, each with a particular position and role, and each may be considered equal in this relationship. Labour relations outline

for or with whom one works and beneath what rules. These rules (implicit or express, written or unwritten) verify the sort of labor, kind and quantity of remuneration, operating hours, degrees of physical and psychological strain, as well as the degree of freedom and autonomy associated with the work. (Hofmeester et al., 2015)

For Vietnam, labour relations are social relations arising in hiring, employing and paying wages between employees, employers, representative organizations of the parties and representative state agencies. Labour relations include individual labour relations and collective labour relations (Article 3 of Vietnam’s Labour Code, amended in 2019). Labour relations between the employee or the labour collective and the employer are established through dialogue, negotiation and agreement on the principles of voluntariness, goodwill, equality, cooperation, respect for rights and legitimate interests of each other (Article 7, Vietnamese Labour Law amended and supplemented in 2012).

Dimensions of labour relations

In general, we can understand labour relations as industrial relations in an industrial society, and these relations include the ‘actors’, ‘contexts’ and ‘web of rules’ created to govern work (Dunlop, 1993). Therefore, research on labour relations needs to use knowledge from a number of different areas such as sociology, labour economy and law. Theoretical models of labour relations have been proposed such as the classic model of JT Dunlop, an American economist, and Thomas Kochan’s strategic selection model (Dunlop, 1993; Kochan et al., 1984). It is noted that ‘perhaps the most well-known heuristic framework in academic industrial relations is the systems approach’ (Anner, 2017; Kelly, 2004: 5). Dunlop favoured the systems approach, but an inherent static character of the system suggests the need to supplement this heuristic with a Marxist conflict approach. It would be plausible to see conflict and resolution as having systemic qualities and to build upon the classic and strategic selection models to understand labour relations as a system continually working itself out in process.

The economic, political and social environment directly affects the formation and characteristics of labour relations in any system. Where the subjects of labour relations include the three parties usually involved in labour relations – that is, employees (employees and trade unions), employers (employers and employers’ organization) and government – there must be interaction for the system to work at all. In theory, employees are the foundation, and members of trade unions and unions make up the representative organization of employees. But in fact, employees and unions have complex relationships, and in turn so do both in relation to the government as an indispensable subject in the labour relations system. The government used its legitimate power on the regulation of labour relations, inspection, damage control, mediation and arbitration (Anner, 2017; Taylor et al., 2003: 32–38).

Findings in existing studies

The changing nature of labour relations

Labour relations in emerging countries are a matter of interest to many scholars. The analysis reflects the fact that during their operation labour relations are influenced by political will. In emerging countries, including Vietnam, traditional unions are often controlled by the state. In Vietnam this means the Communist Party. Vietnamese trade unions are a broad socio-political organization of the working class and workers and an integral part of the political system of the Vietnamese society under the leadership of the Communist Party of Vietnam (Law on Trade Unions, Chapter 1, Article 1, 2012: 1). Employers in enterprises in the period of concentration and subsidized economic model are all members of the Communist Party, and led by the Communist Party. Therefore, there is almost no opposition of class interest between subjects of labour relations. As Vietnam moves to a market economy model, recognizing different ownership sectors, attracting foreign investment and private enterprise development, more and more employers will not be not in the same class as workers. Differences in interests between the subjects of labour relations are emerging alongside the arrival of multinational companies, foreign-invested companies and non-governmental organizations. The traditional top-down union systems (Katz et al., 2015) have been challenged and there is a tendency to promote firm- or workplace-level collective bargaining. Nevertheless, fewer workers are joining trade unions at all, with only 48% (equivalent to 6762 million) of workers in trade unions as of 1 January 2017 (Ministry of Labour – Invalids and Social Affairs, 2018: 15). This is a significantly reduced number compared to the 100% of labourers participating in trade unions in Vietnam under the centralized and subsidized economic model. The phenomenon of few workers joining trade unions is especially concentrated in private companies and foreign-invested companies.

There had been some research on labour relations in Vietnam in the 1990s (CIRD and Vietnam Labour Relations Project – ILO, 2011; Clarke, 2006; Nguyen, 2013). This was when Vietnam stepped up its policy of attracting foreign investment in an otherwise unchanged political environment. It was found that labour relations were facing a significant challenge due to slow adaptation to the situation in the early stages of reform. In the current context, strikes and interest-based labour disputes are ongoing, especially in private and foreign-invested companies and most are illegal strikes for reasons primarily to do with inadequacies of the legal framework (Clarke, 2006; Do and Van den Broek, 2016; Pham, 2017; Traub-Merz and Pringle, 2018). This has led the government to pay more attention to labour relations issues. However, at the level of formal action, union and government assertions are still limited within a legal framework. Consequently, as controlled by government regulators and mediators, unions show little ability to stand up for their members, in negotiation with employers and managers. From the results of the study, many authors proposed as a solution an effort to rebuild the necessary foundations of institutions (including representative institutions) in labour relations in Vietnam. (Clarke, 2006; Nguyen, 2013; Pham, 2017; Pringle, 2018 in Traub-Merz). On 20 November 2019, the Communist Party National Assembly revised Article 112 of the Labour Code to ensure, according to Assembly chair Nguyễn Thuý Anh, that ‘economic growth (was) not at the expense of workers’ legal rights and interests’ (Viet Nam News, 2019).

Additionally, for the first time, ‘(l)abourers in enterprises are allowed to set up a representative organization or join one of their own choosing that is independent from the State-run Viet Nam General Confederation of Labour (VGCL)’ (Viet Nam News, 2019). Current practice within industrial relations in Vietnam acknowledges that it is necessary to encourage a bottom-up approach instead of the traditional top-down approach in developing the legal framework. This is now reflected in the revised Labour Law of 2019, approved by the National Assembly of Vietnam – as such, Article 170 of the amended Labour Code No. 45/2019/QH 14 was passed on 20 November 2019 by the National Assembly of Vietnam, and takes effect from 1 January 2021.

Labour relations as a social structure

There is a consensus that at a national level labour relations operate as a system constituted by interaction among actors trying to balance benefits, to each, in an economic, social and legal environment. A labour relations system can be seen to entail five modes of interaction, including (a) dialogue (negotiation and collective labour agreements); (b) strikes; (c) tripartite consultation; (d) mediation; and (e) judgement (arbitration, court). This labour relations system is considered to be complete and efficient in a market economy. So, building a legal framework for actors and methods of interaction among them, at the national and enterprise level or industry group level, is the concern of all nations (CIRD and Vietnam Labour Relations Project – ILO, 2011).

An overview of the literature on labour relations in Vietnam and elsewhere indicates the need to clarify how labour relations in enterprises in Vietnam are taking place across different dimensions. In particular this means clarifying the status and role of subjects in labour relations and their behavioural patterns in the interaction process with each other under the influence of labour-related institutions. This is all the more so in the domestic and foreign direct investment (FDI) enterprises operating in the industrial parks and EPZs of HCMC, especially in the context of Vietnam’s deeper global integration with the participation in the multilateral and regional trade agreements such as the CPTPP from January 2019.

Research methodology

Quantitative and qualitative research methodologies were used in this research. The research was conducted in domestic enterprises and FDI enterprises in industrial parks and EPZs of HCMC, in June 2018. Stratification sampling techniques according to standard criteria were used to select the participants in the survey from among employees, managers of departments and production lines, and trade union staff. Based on a list of 241,572 employees working in the industrial parks and EPZs, 750 employees were selected into the survey in 2018. The selected employees were distributed in terms of gender, origin and age as follows: 62.2% female and 37.8% male; 77.3% were migrant employees to HCMC, and; average respondent age was 31 years old. Regarding the type of enterprises and industry, there were 80.7% of employees working in the FDI sector in the garment, mechanical, electronics, chemicals, food processing and foodstuffs industries. Regarding employment positions, 67.1% were direct production employees and 15.4% were office employees, with 17.5% as supervisors, managers and technicians. The average length of employment at the time was seven years five months.

Methods were qualitative research with in-depth interviews, group discussions on content, subject, role and status of respondents in labour relations at enterprises, forms of interaction engaged and results achieved. Forty-five in-depth interviews/group discussions were conducted for trade union staffs, managers, and employees. The difference in information obtained through interviews was not significantly impacted considering the sharp contrast between two interviewing environments (with some employees interviewed at trade union offices of EPZs, industrial parks and some officials and employees via telephone, which in some cases had the benefit of anonymity). Listening to the voices of insiders helped the research team (made up of the author and 12 assistants) understand many things beyond the statistics. Workers’ voices explained the behaviours of the participants and also helped them verify their preliminary assumptions, broadly observing and developing new insights.

Results

Based on data collected from a sample of private and FDI private companies operating in HCMC’s industrial parks and export processing zones in June 2018, with funding from the HCMC Department of Science and Technology, We have discovered some findings presented below

Institutional factors affecting labour relations at the EPZ and industrial parks enterprises in HCMC and in Vietnam as well

The available documents show that Vietnam’s labour relations system is directly influenced by three main political, economic and cultural factors, within which the political element, the Communist Party’s policy, has the most direct impact on labour relations in Vietnam. The transition toward a socialist-oriented market economy has been gradually institutionalized.

HCMC is a pioneer in building and developing EPZs and industrial parks in Vietnam. The development of EPZs and industrial parks reflects a part of the HCMC industrialization and modernization process over many years. According to information from the HCMC Export Processing Zone Authority (HEPZA), from the first Tan Thuan EPZ construction project in 1991–2017, HCMC City has 3 EPZs and 16 industrial parks established:

The Southeast region (including HCMC) is home to the highest proportion of migrants working (87.8%), followed by the Red River Delta (81.0%), these are the two areas with the majority of industrial parks within the country and thereby attract a large number of migrant workers to work. (GSO, 2016: 3).

According to the accumulated data of the Ministry of Planning and Investment, ‘up to August 20th 2018, Ho Chi Minh City is the leading locality in the country in FDI attraction at US$ 45.3 billion, accounting for 13.6% of total capital’. According to the data, there is considerable foreign investment in these enterprises: ‘In particular, the countries/territories with the highest total capital into Vietnam are Singapore at US$ 10.58 billion, British Virgin Islands at US$ 5.98 billion, South Korea at US$ 4.85 billion, Malaysia at US$ 4.64 billion and Japan at US$ 4.06 billion (Nguyen, 2018: 71). We can expect this investment to continue and it will inevitably lead to increasing the number of FDI enterprises, one of the factors affecting the subjects of labour relations at enterprises of EPZs and industrial parks in HCMC.

The Ordinance on Labour Contracts was issued on 30 August 1990 to convert state-owned permanent staff recruits to labour contracts. This was an important milestone that transformed labour relations. It was followed by the 1994 Labour Code, which was first promulgated in Vietnam to regulate labour relations between wage employees and employers, and to coordinate social relations directly related to labour relations. During the implementation process, the Labour Code 1994 was amended and supplemented in 2002, 2006, 2007, 2012 and 2019. The legal system related to labour and labour relations in Vietnam was gradually improved with the promulgation of the Law on Trade Union in 2012, the Law on Employment in 2013, the Law on Social Insurance 2014 and the Law on Occupational Safety and Health in 2015.

The 2012 Labour Code provided the foundation and core for establishing labour relations and aimed to develop harmonious, stable and progressive labour relations in the workplace. The 2012 Labour Code affirmed the employee’s right to freely find jobs and to choose jobs and workplaces, including the right to negotiate agreements with employers on matters related to their interests in the course of employment. Notably, the 2012 Labour Code brought up the issue of workplace dialogue through collective bargaining, establishing that when a party requests dialogue, it is mandatory. The institutions for resolving labour disputes continue to be improved in the 2019 Labour Code. The resolution of labour disputes through conciliation and arbitration is respected. The adoption of the CPTPP in January and the revision to the Labour Law in November of 2019 were further steps that align Vietnamese labour regulation with international expectations.

Policy renewal is especially relevant in the context where Vietnam is in a process of deeper and broader integration into the world economy. It has signed a number of relevant new free-trade agreements, that include commitments to comply with ILO labour standards on the employees’ rights to form and join organizations and the right to collective bargaining (Ministry of Labour – Invalids and Social Affairs, 2018: 10–13). The commitments of the government to these regulatory agreements are accepted because rapidly expanding private businesses and FDI numbers can contribute substantially to employment creation (World Bank, 2016: 89). It is in the direct interest of the government and the party as well as the people to smooth production and facilitate viable economic advance wherever it is possible to negotiate the conflicts and contradictions between the competing interests of the labour relations system. These interests have been expressed in the revised Labour Law 2019, which contains 10 new articles that apply to employees and 6 new articles that apply to employers. The right to freely choose the representative of the workers at the workplace has been officially recognized. Dialogues and collective labour agreements are focused and have been regarded as conditions for a harmonious labour relationship (Article 63. Organizing dialogues at the workplace; Article 65. Collective bargaining; Article 68. Right to bargain collectively at the grassroots level in the enterprise; Article 69. Representation of collective bargaining at the enterprise; Article 75. Collective labour agreement. Chapter V: Dialogue at the workplace, collective bargaining, labour agreement). They are especially more flexible articles on the right to choose the labour dispute settlement mechanism (Article 180. Principles of labour dispute resolution, Article 182. Rights and obligations of both parties in labour dispute settlement. Chapter XIV: Solving labour disputes) (National Assembly, 2019).

The subjects of labour relations at the enterprise and their status and role

According to the Vietnam Labour Code, labour relations are social relations arising in hiring, employing and paying wages between employees, employers, and representative organizations of the parties (Article 3 of Vietnam’s Labour Code, amended in 2019). Therefore, the labour relations subjects at the enterprise level are the employers, employees and employees’ representatives with their status and roles in labour relations.

Employers are the owner of all assets, capital of enterprises and operating all production many advantages in labor relations.

Implementing a market economy model, recognizing many economic sectors and attracting foreign investment, regional and global economic associations have created a diversity and difference of employers in terms of economy, power, social prestige and culture. They are the business owners who have created advantages in relationships with employees at the workplace, and who make decisions in the organization of production and the distribution of resources, salaries and bonuses for employees. At the same time, they are both Vietnamese and foreign, with their own cultural norms and values that guide the behaviour pattern of an employer in the master-worker/boss – staff relationship.

According to our 2018 survey results, 77.3% of employees in companies in industrial parks and EPZs in HCMC are migrants. They come from agriculture and rural areas, have lower educational levels and are unskilled, but have a strong sense of discipline, even as their industrial labour skills and styles of work are not yet fully engaged. Their qualities show that these employees remain in a weaker and more dependent position relative to employers in labour relations. This is especially so where the labour market provides more labour than labour demand, as is almost always the case.

At the enterprise level, the relationship between employees and employers is now basically regulated according to market mechanisms. The content of labour relations is explicitly expressed in the labour contract through terms relating to the working regime, termination of labour contracts, working time, wages, bonuses and social insurance, etc. However, when comparing the types of labour contracts signed between employees and employers in all surveyed enterprises in industrial parks and EPZs in HCMC, the data obtained reflects four remarkable points. First, in the survey, those who answered that they had signed an ‘indefinite-term labour contract’ accounted for the highest percentage of 74.7%. Second, 19.1% of people surveyed responded that they had signed the ‘labour contract with a term of 12–36 months’. Third, 4.3% of surveyed people answered that they had signed a ‘seasonal labour contract’. Fourth, 0.4% of the respondents said they had signed ‘a labour contract but did not know the content’ and 0.5% of the respondents said they ‘do not have labour contracts’.

The above survey data raises questions. Why did the majority of employees in all types of enterprises, both FDI and domestic enterprises, agree to sign ‘indefinite-term labour contracts’? Is this evidence that reflects the comparative status gap between the employee and the employer at the time of negotiating the labour contract? Is this the underlying factor leading to conflict in labour relations?

I know, the indefinite-term contract means I can be stopped working anytime, especially when there are no orders in this case. The boss said what I have to follow. No other choice. (Female, 23 years old, leather shoes company)

The word ‘money’ is always in our head. Having money will help our family in the countryside. (Female, 29 years old, garment company)

It’s good luck of getting accepted into a job, having a salary. (Female, 18 years old, Thanh Hoa village)

When signing a labor contract, it would require ‘dead wages’ – that means monthly fixed wages. Whether the company has an order or not, the workers are still paid monthly. (Male, 29 years old, footwear company)

There were 54.1% of surveyed employees in domestic enterprises and 64.6% of those in FDI enterprises who answered that they knew the rights and obligations of employees and employers as stipulated in the Labour Code. This evidence reflects not only the perceived limitations of many employees, but also shows their ‘weak and dependent’ status when negotiating with employers on issues related to rights and benefits:

I sometimes did not understand how our salary was calculated, for example, the company paid me VND 15.8 VND million/month; meanwhile, the company paid other colleagues in the same production line VND 13.5 VND million/month (The State Bank of Vietnam quoted the central rate of VND versus USD on September 24 2018: Exchange rate. 1 USD = 22,654 VND). The company does not have a scale to evaluate and set a clear salary; We are not satisfied but only dare to question each other. (Female, head of the sewing line)

Because the company based on the agreements in the signed labour contract. (Female, staff in charge of personnel, electromechanical company, Tan Thuan EPZs).

The annual salary is adjusted according to state regulations, but the percentage of salary increase is very small, there are no other benefits. I am a worker in a factory, if I want to receive an allowance, I have to write a proposal to the director. Like diligent money, only 80,000 VND/monthly, then increased to 200,000 VND/monthly. That money is not enough to live. (Male, production manager, Hong Kong FDI company)

Information from the interviews mentioned above suggests that in negotiating and concluding labour contracts, workers are always weak. They often do not fully understand the legal provisions on their rights and interests, hampered as they are then with a lack of negotiation skills.

Trade union staff at enterprises

Following the traditional organizational model of the Vietnam General Confederation of Labour, trade union staff at enterprises are elected by employees at the grassroots trade union congress. However, before the congress takes place, upper-level trade union officials often meet with business owners to agree on which one of the employees at the enterprise should be the grassroots trade union president. The purpose of this agreement is to create favourable conditions for grassroots trade union staff to perform their representative functions. On the other hand, grassroots trade union staff are responsible for cooperating with business owners in the enterprises’ production activities. Therefore, the grassroots trade union staff at the enterprise have a dual role that is both an employee, paid monthly by the employer, and a representative of the workers at the enterprise. They will receive an allowance which is usually 15% of the total dues paid by the employees monthly.

The dual role of grassroots trade union staffs/cadres exists from a subsidized-centralized economic model to a socialist-oriented market economy. The right of a business owner to decide on salaries, bonuses and employment for employees in the market economy model is one of the main factors affecting the status and roles of grassroots trade union staff in an enterprise:

Previously workers often complained to me about a raise, bonus, or something with the expectation that the situation would improve. I have already reported to the boss, but I have not decided yet . . . After that, nobody told me . . . When I informed them of the boss’s regulations about production, they did not follow . . . They follow the production line head rather than me. (Male, 37 years old, grassroots trade union staff, Taiwan garment company)

I often advised them to calm down, then the boss would handle it rather than to take part in strikes. (Female, 40 years old, grassroots trade union staff, footwear company)

Receiving salaries and bonuses from business owners makes it difficult for them to side with employees when there is a conflict of rights and benefits between the employees and the employer.

Interaction between the labour relations subjects at the enterprise and the result of that interaction

Interaction between employees, the representative organization of employees and employers in labour relations are of two types: first, individual labour relations through labour contracts; and second, collective labour relations through collective bargaining and signing collective labour agreements. Survey results at industrial parks and EPZs in HCMC show that employees most often have a weak status and are usually wholly dependent upon employers; the signing of labour contracts in enterprises is still formal, failing to ensure the principle of equality and voluntariness, or the basis of mutual agreement; the content of the labour contract does not always specify the rights and obligations of the parties in labour relations. This has affected employment stability for employees.

According to the survey results at industrial parks and EPZs in HCMC, the formulation and issuance of collective labour agreements are only formal, dealing with inspection or customer requirements. Collective labour agreements are almost exclusively supportive of the employer’s policy. Negotiating wages and allowances is very limited. The main content of the collective labour agreement is social welfare, such as visiting and sickness benefits for employees, bonuses for holidays and New Year, etc. Dialogue at the workplace is a new stipulation in the Labour Code of 2012 but, in fact, is hardly ever implemented:

(An) employee meeting is held once a year. Usually the representative of the company reads the policies, regulations and then employees agree, sign the certification without agreement. (Female, FDI company, Tan Thuan EPZ)

Opinion boxes are available but . . . very few people write complaints and petitions because most of them are not satisfactorily resolved. Being a labourer with very limited rights, our voices to the Board of Directors are not considered immediately, even for a few months or even a year. (Male, production manager, Hong Kong FDI company and Male, technical staff, Domex Company)

There are about two dozen ideas. (Male, Japanese FDI company)

The Board of Directors does not organize dialogues with workers. Usually when workers have any concerns, (they) contact the union to resolve (them). If conflicts occur, causing harm to the company, workers will be fired. (Female, Hugo Company, Linh Trung EPZ)

Labour relations are mediated through interactions between the employer and the employee during the labour process. This is an ideal interdependent relationship in which employees create profits for employers and employers create jobs and conditions for employees, thereby in turn creating income for employees, and profit in terms of surplus value extracted. It is conflict inherent in this symbiotic relationship that makes employers and employees always face situations of interference, obstruction, exclusion or even injury to each other. Employers seek to maximize profits and employees aim for wages, bonuses and benefits, and the higher these are, the better. On the other hand, the two main subjects (employee and employer) in labour relations at the enterprise have different characteristics, personalities and specific priorities that lead to incompatible behaviours and activities. The situation of inequality in status and roles of the two subjects in labour relations at the enterprise, as well as the quality of implementing the interaction mechanisms in labour relations as mentioned above, negatively impacted the operation of labour relations. In this context, conflicts in labour relations at enterprises and labour disputes arising in labour relations are an inevitable phenomenon in the changing working environment.

Strikes are a manifestation of the phenomenon of conflict in labour relations and the changing characteristics of strikes. The general trend is a reduction in the number of strikes, but strikes in FDI enterprises are more frequent than domestic ones, and most strikes are illegal but reasonable.

Summarized information from the report of trade unions at enterprises in the period from 2006 to March 2018 (HEPZA, 2019) shows that the number of strikes was highest in 2011 with 90 strikes, but this plummeted to 14 cases in 2016 and 11 strikes to March 2018. When comparing domestic enterprises and FDI ones, there is a clear difference. The number of strikes in FDI enterprises is higher in the whole period of 2010–2016, with FDI enterprises registering 73 cases in 2011 while only 17 strikes occurred in domestic enterprises.

To understand the workers’ coping strategies when they feel that an agreement in the labour contract is violated, we asked workers the question: ‘If your agreement in the labour contract is violated, what will you choose to do to solve the problem?’ The data results show that the majority of workers use a mediation mechanism through the trade union organization. This behaviour model reflects the behavioural culture of Vietnamese people, driven by the value of ‘conciliation’. Strikes are the second priority of employees when they think their rights are violated because 85% of the respondents said that ‘most of the strikes are small-scale and the demands of the workers are small, so the owners and managers agree immediately’ for workers to return to work.

Information from the in-depth interviews shows that strikes are a major manifestation of conflict in labour relations, and their size varies among business types. There is diversity in the coping strategies of employees when they feel agreements in the labour contract have been violated. Interviewees commented about strikes:

(S)trikes mainly in production departments, 1–2 sewing lines to turn off lights, do not work; lasting 1 or 2 or 5 days. (Female, head of sewing line in Garment Company)

There are 4000 to 5000 participants. (Female, 15 years working in garment company)

Every year, about two, three times, just stop working. (Male, technical staff, working for more than 21 years in the company)

Managers of departments or production line leaders do not participate in strikes but advised workers to reconcile and support business owners. They reported in interviews:

I did not strike but advised them if there were any problems, write a proposal or send a representative to the manager. (Female, head of sewing line, garment company)

Strikes will affect the reputation of the company with partners, customers and companies to compensate, suffer losses, workers will have deductions from their wages, even they will be fired again. (Female, deputy director, electromechanical company, Tan Thuan EPZ).

Why are strikes common?

The effect of strikes is so small that business owners compromise with workers, settle on the same day (Female, 7 years working at FDI company and Female, chief manager, garment company).

Workers often organized strikes at times when they had to complete production contracts, to put pressure on, to make claims (for salary increases, bonuses, etc.) and for this reason their concerns were often immediately resolved by business owners. This has led to the phenomenon that whenever workers feel their interests are violated, they go on strike and make sure their requests are resolved, without the need for mediation and not necessarily through their own representative organization. The strike behaviour of workers is considered reasonable in that context. It follows from this that close to 100% of strikes are illegal and do not follow the cumbersome and complicated procedures prescribed in the Labour Code 2012 of Vietnam. It is ruled that: ‘3. Within 05 days after the arbitration council makes a record of successful mediation and one of the parties fails to implement the agreement reached, the labour collective has the right to carry out the procedures to go on strike. In case the arbitration council makes a record of unsuccessful mediation, after 3 days, the labour collective has the right to conduct procedures for a strike’ (Clause 3 Article 206 of the Labour Code 2012). Any strike has to be led by a trade union (Article 210, Labour Law 2012).

In 2018, the situation had changed somewhat as compared to previous years. A business owner had used a strategy in the face of a strike to ensure commitment in production contracts with partners by linking up with a domestic company outside the industrial park. This situation reflects the weakness of workers in the relationship with business owners:

Workers stand together in front of the company, bored and then go back home. Business owners or managers say nothing. They kept leaving workers standing there. They are not afraid of workers not producing. They are also not afraid to miss orders because there are outside companies doing it right away . . . how many big orders are solved . . . Finally, only one person comes back working, others do. If they quit their jobs, they were afraid of being deducted from their salary, so . . . because workers did not know how to organize. (Male, 35 years old, union staff, garment company and Female, 40 years old, union staff, Leather Shoe Company).

This situation shows that the workers’ organization has lost the role of negotiation, and the conciliation mechanism is bypassed, hindering the movement of labour relations according to the market mechanism.

Strikes are mostly due to employees feeling it was not their ‘rights’ but their ‘benefits’ that had been violated.

Most companies comply with employees’ rights through the terms of their labour contracts. However, the benefits of employees are often violated:

Strikes are due to the late salary. (Female, Taiwan FDI company. Female, the head of sewing line. Female, Taiwan FDI Company, Tan Thuan EPZ. Female, Technical staff, Korean FDI Company)

Strikes occurred at Taiwanese companies rather than Japanese ones because of, for example, not complying with the state’s annual minimum wage increase stipulation to 230 thousand VND/monthly; while a company of Taiwan only increased to 100 thousand VND/month, the workers were pressing and striking. (Male, Japanese FDI company)

There is a conflict between the team leader and the workers; between personnel and workers. For example, when workers go to the hospital, they are off work under the social insurance regime, but the company deducts that day’s pay for workers . . . (S)trikes for the company did not announce any raise of wages for workers (even) when the State decided to raise wages. (Female, technical staff, garment company. Female, department manager, electromechanics company, Tan Thuan EPZ. Female, union official, garment company)

A strike occurs, and, besides the trade union that used to be the inherently sole legal representative of all Vietnamese employees, others are chosen to represent employees in negotiations with the business owner.

The process of economic diversification is also a process where trade unions officials face many challenges, especially concerning domestic and FDI enterprises. Here, they are unlikely to be proactive in their role as employee representatives, less willing or able to protect the rights and benefits of employees when employers violate those rights. Employees’ confidence in trade unions is declining. Trade unions used to be the only representatives of employees to solve the problems between employees and employers, but this has now changed. When conflicts, disputes and strikes occurred, 48.3% of the surveyed employees chose trade unions as representatives, while 51.7% wanted their own representatives to negotiate with the business owner (including employees’ representatives, personnel officials, production team representative, and other employees). This trend is likely to increase in the context of international integration as Vietnam implements its commitments in labour in the international and regional multilateral trade agreements. Accordingly, employees working in an enterprise are allowed to set up grassroots labour organizations without prior authorization. This provision is a challenge for Vietnam’s traditional union – which has been the unique representative of Vietnamese workers (ILO, 2018).

Discussion and conclusion

Labour relations in Vietnam have generally complied with the principles of the market while adapting to specific local conditions as well. The regional characteristics are, first, that the centrally planned and subsidized economy in Vietnam had existed for a long time, shifting to a socialist-oriented market economy. Employees in industrial parks and EPZs are mainly recruited from rural areas and are often former agricultural workers. Awareness of the roles and function of representative organizations for employees within labour relations in the market, and awareness of legitimate rights and interests more generally, are still limited and unclear. The abilities to deploy self-negotiation rights and employment agreements, and to raise issues related to employees’ rights and benefits, are minimal. Without independent organization and training, the employees’ status is weaker than that of the employers’, especially in industrial parks and EPZs. A supply–demand relationship imbalance not only in quantity but also in the quality of labour has a significant impact on labour relations. Individual employees are always in a weaker position compared to employers as regards negotiating agreements. This is especially so on issues related to labour relations, especially those related to the rights and benefits of employees as described above, with the failure to highlight this difference leading to conflicts in labour relations in the enterprise.

Second, strikes are a common manifestation of conflicts in labour relations. There is a tendency to reduce the number of strikes, but the characteristics of strikes in the surveyed enterprises are changing:

Strikes that were considered special events in Vietnam have come to be seen as inevitable.

Most strikes are illegal but reasonable, because of the complexity of strike procedures and the lack of legal knowledge of employees; strikes occur mostly because workers feel their ‘benefits’ and not their ‘rights’ have been violated. Strikes are considered to be the only means for workers to get their requirements met by employers in the shortest possible time. Strike action by employees can be considered as a kind of social action to rationalize and recognize their status and roles in an interdependent employer–employee relationship. At the same time, strikes can be considered as employee behaviour oriented towards ‘reciprocal values’. They expect what they get from the employer to be commensurate with their contributions.

Third, the trend of liberalization in the selection of representatives for employees is evident. Surveyed employees choose their own representatives to negotiate with business owners, instead of trade unions – the only legal representative of employees. This trend will increase and be a major challenge facing Vietnamese unions in the context of international integration as Vietnam implements its commitments to labour organizations in international and regional multilateral trade agreements made in November 2019.

Survey results at the EPZs and industrial parks in HCMC suggest some issues that need further study. Questions for further study might include how to achieve a balance of benefits in the relationship between the subjects of labour relations, or whether it is necessary to use strikes or other forms of conflict as a means to reach a collective agreement. Finally, what are the mechanisms in labour relations when Vietnam has implemented its commitment to freedom of association via the signing into law of the CPTPP in practice?

Footnotes

Acknowledgements

This research was funded by HCMC Department of Science and Technology. I would like to thank the Management Board of Industrial Zones and Export Processing Zones in Ho Chi Minh City (HEPZA). I would also like to thank my colleagues, especially John Hutnyk and students at the Faculty of Social Sciences & Humanities, Ton Duc Thang University, Ho Chi Minh City, Vietnam for their encouragement. Without their support, I could not have finished this article.

Funding

The author disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This research was funded by Ho Chi Minh City Department of Science and Technology.

Author biography

Le Thi Mai, has a PhD in Sociology and since joining Ton Duc Thang University has been involved in studies related to social integration, social mobility, social stratification, migration, employment and labour relations. She teaches Introduction to sociology; Sociology of labour-industry, Sociology of economics (up to now) and was a Visiting Researcher at the Department of Sociology, Temple University, US (in 2014).

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