Vietnam--a socialist country integrating into the global capitalist
system--can serve as a useful case study on labor and globalization
because it reflects larger global trends. These include domestic and
international labor migration with the increased mobility of capital,
and the complex role of the government and recruitment companies in all
types of migration. Workers--both inside and outside of Vietnam--have
used their agency to fight for their rights and human dignity in this
environment. Human rights advocates have forced open a small space in
the multi-level global supply chain for the establishment of codes of
conduct toward workers, and ethical consumers and investors try to speak
and act on behalf of migrant workers worldwide. This article will
discuss the causes and implications of these changes in Vietnam, as well
as how they relate to a broader global framework of labor.
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Domestic Migration and Workers' Agency
Domestic labor migration is no longer a one-way workers'
movement from rural to urban areas to work in manufacturing hubs. It
also includes workers who return to their hometowns, villages, or
provinces, as mobile global capital expands and sets up factories in
poor provinces to take advantage of even lower wages. This circular
rural-urban-rural labor migration has occurred in Vietnam, China, and
other countries.
In Vietnam, as of 2009, about 47.7 million people worked in all
economic sectors, while 6.85 million worked in manufacturing, second
only to agriculture and forestry Most manufacturing workers were in
textile/apparel and leather shoe factories in export processing zones
(EPZs) and industrial zones (IZs); they earned very low wages, on
average less than US$100 per month. Over 60 percent of the workforce in
140 EPZs and IZs nationwide are young females, around 20-35 years old,
from poor provinces in the northern and central regions of Vietnam. Most
domestic migrants found work through both informal channels (families
and friends) and a formal recruitment process in which they had to pay
(mostly state-owned) recruitment companies around US$50 to secure their
jobs. Most foreign-owned suppliers are from Taiwan, Japan, South Korea,
and Hong Kong. Recent trends show that many suppliers have established
factories in rural areas to get access to even cheaper labor in
provinces such as Tra Vinh, Long An, Thanh Hoa, and Quang Ngai, far from
the global cities such as Ho Chi Minh City and Hanoi, which now have
developed labor shortages.
However, workers are not victims: they have agency and have been
rising up against both management and governments to fight for their
rights and human dignity. This is not exclusive to Vietnam: there have
been protests in China, Bangladesh, Cambodia, Thailand, and Mexico. In
each country, workers develop strategies and tactics to fight for their
rights and dignity that reflect the political and economic conditions of
the factories' locations. In Vietnam, workers have developed
strategies and tactics that reflect Vietnam's socialist past and
market-oriented present.
The common reasons for strikes in those countries have concerned
labor rights (pay, work hours, working conditions, labor contracts,
overtime compensation, daily productivity targets, meals, fines as
disciplinary action, apprenticeship period) and non-wage benefits
(social security, health and unemployment insurance, paid leaves, meals
at work). The Vietnamese workers invoked the bonus and benefits they
used to receive under the socialist system, such as the 13 th month pay
(usually given around the Vietnamese Lunar New Year), and demanded to be
treated with dignity and respect. They have also exposed physical and
verbal abuses by foreign experts, managers, and owners.
The minimum wage strike waves that started in the middle of the
past decade galvanized the collective action of hundreds of thousands of
workers in EPZs and IZs in Ho Chi Minh City In 2006, workers in three
foreign-owned shoe factories in a Ho Chi Minh City export processing
zone sparked a series of minimum wage strikes. Up until then, the
minimum wage in the foreign direct investment (FDI) sector had been
frozen for seven years (1999-2005) at less than US$40 per month. While
on the surface these strikes were staged against FDI owners, in reality,
by demanding higher minimum wages, these strikes were actually against
the state policy. In 2007, workers demanded raises in wages to
compensate for spiralling inflation, which led to the Prime
Minister's decision to adjust wages for inflation, effective in
January 2008. Again, in 2008, workers went on strike to expose FDI
factories that refused to implement the inflation-adjustment decision or
did not implement the adjustment properly.
But the minimum wage strike waves have had some larger implications
for workers in all sectors in Vietnam. First, higher minimum wages are
not only adjusted for inflation, but also tied to correspondingly higher
social benefits, such as social insurance and health benefits. The 2006
minimum wage strike resulted in the establishment of an automatic annual
increase in the minimum wage that adjusts for inflation: every November,
the state announces the minimum wage increases (for both FDI and
domestic sectors) to take effect in January of the following year.
Second, the minimum wage strikes have forced the state to bridge the
disparity between the minimum wage levels in the FDI sector and those in
the state and domestic private sectors (which are lower than the FDI
rates), which is expected to reach parity by 2012. Moreover, as
foreign-invested factories expanded to poor provinces outside of big
cities to take advantage of even lower minimum wage requirements,
strikes spread beyond Ho Chi Minh City and Hanoi. In short,
workers' agency in Vietnam shows that when workers took ownership
of their rights and responsibilities, they effectively secured positive
responses from the labor newspapers, the labor unions, and the Ministry
of Labor.
Labor Migration, Newspapers, Brokerage States
International labor migration has become another option for
workers, in which the nation states play a complex and active role. In
socialist Vietnam, the state has become a "labor brokerage
state," sending hundreds of thousands of workers overseas, and
benefiting from these workers who must pay to work outside of Vietnam.
This global practice of inter-governmental agreements to send and
receive migrant workers is seen in many countries: Vietnam, the
Philippines, Indonesia, and even the United States, such as the
1942-1964 Bracero Program that sent millions of Mexican men to the
United States to work temporary jobs in agriculture. While the duration
of the contracts varied in these cases, they shared some common
features: management controlled and considered workers as disposable
commodities and sent them home at the end of their contracts, paying no
attention to their well-being and working conditions. Both home (labor
sending) and host (labor receiving) governments have strong shared
interests with management to sustain transnational labor migration. In
Vietnam, the state meets host countries' demands for cheap,
temporary, and compliant workers who will fulfill the terms of the
contract and return to Vietnam at the end of their contracts. While some
host countries do care for workers' well-being, overseas migrant
workers do not have the right to organize and most are not represented
by labor unions.
However, the Vietnamese case is different from others due to the
socialist pro-labor legacy and the inherent contradictions in the
state's self-proclaimed "market economy with socialist
orientation.".The media, especially the labor newspapers, while
well ensconced within the state and labor union structures, have used
their connections and knowledge within this system to expose migrant
labor violations perpetrated by capital (both foreign and domestic) and
some state recruitment companies. As early as 2004, they alerted the
public to fraudulent activities and irresponsible behavior of many state
recruitment compa nies when state bureaucracies and people's
committees had turned a blind eye. But the media also faces constraints
because they are part of the state structure, which can compromise and
censor journalists' reportage. At the same time, while the
Vietnamese General Confederation of Labor (Vietnam's only legal
labor union) has made considerable efforts to overcome their structural
and capacity weaknesses to represent workers within Vietnam's
borders, they have played no role in representing and protecting
Vietnamese migrant workers overseas thus far.
Exporting labor is not new in Vietnam. Since 2000, the Vietnamese
state has been brokering its workers through inter-governmental
agreements: over 500,000 Vietnamese workers had paid to work in over 40
countries. When still a part of the former Soviet Bloc from 1980 until
its disintegration in 1989, the Vietnamese state exported over 250,000
Vietnamese workers to Eastern Europe, primarily to the former Soviet
Union, in order to repay the debts and also benefit from their
remittances to relatives back home. After the fall of the former Soviet
Bloc, the Vietnamese state redirected exports and monopolized the
authority to control and regulate workers to work in other countries. In
2000, Prime Minister Phan Van Khai echoed support for this strategy,
saying that, "Exporting labor is a very important and major
strategy because it helps solve the unemployment problem, increase
foreign exchange for the country We must consider labor export as an
important and long-term strategy ..."
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Export labor has expanded tremendously since Vietnam joined the
World Trade Organization in 2007. The state-sanctioned recruitment
companies--most owned by state ministries, state corporations, local
state governments, and social-political mass organizations, such as the
labor unions--grew to 165 companies as of 2011. Vietnamese migrant
workers had been sent to work in over 40 countries; topping the list are
Taiwan, Japan, South Korea, and Malaysia. Nations of the Middle East,
including United Arab Emirates, Saudi Arabia, Bahrain, and Qatar,
follow, as well as some countries in the former Soviet Bloc.
Who Benefits from Export Labor?
The Vietnamese state and their recruitment companies have benefited
most from Vietnamese labor migration: both domestic and international.
Over 80% of total costs charged to Vietnamese migrants working overseas
goes to processing fees accumulated by recruitment companies (in both
home and host countries), interests on loans disbursed by state banks,
and fees to send remittances home. The economy in general benefits from
labor remittances to about US$1.7 billion (annual average between 2005
and 2008) from these fees and from money sent home.
The Vietnamese state has used labor export as a social policy to
reduce poverty, but the results are mixed at best. In 2009, the
government started a 12-year poverty reduction campaign (for the period
between 2009 and 2020) in the 62 poorest rural districts in the northern
and central regions by encouraging ethnic minorities (53 groups
throughout Vietnam) to work abroad. They offered low-interest loans from
the state-owned banks and other subsidies on vocational training, room
and board while studying, free health check-ups, and passports. Since
2009, about 4,500 people of different ethnic minorities in these poor
districts have left to work overseas; most can only afford to go to
Malaysia for low-skilled and low-paid jobs (on average about less than
US$300 per month), not Korea and Japan, which require higher fees, more
education, and language skills, and in turn pay higher wages. A strategy
many ethnic workers use is to pool their wages and take turns sending
remittances home to repay the debts they incurred from borrowing to work
in Malaysia. While this prompt repayment saves them some interest costs,
long-term benefits for these workers and their families remain to be
seen. In reality, parents of many ethnic workers are already in
debt--mostly due to poor health, illnesses, and natural disasters--so as
soon as they receive remittances from their sons and daughters, they
must repay these existing debts, and have very little left to invest in
any productive ventures. The vicious cycle of poverty and indebtedness
thus continues for these people, who have very little financial cushion
for any mishap. Preliminary evidence shows that this process exacerbates
the gap between the rich and the poor in local communities and villages
and provides no alternatives to escape poverty.
Moreover, there are a lot of uncertainties and unforeseen risks in
host countries. In Malaysia, the most common destination for the poorest
migrant workers, these adversities include not knowing where they are
being sent to work, since they are vulnerable at the hands of Malaysian
outsourcing companies. They have also included inadequate official
response from Vietnamese recruitment companies and embassy officials to
their concerns and passports being impounded by their bosses. And of
course, there exist the constant fears of gang violence and robbery.
Most rely on bonding and social networking with fellow Vietnamese
migrants to support each other.
While both female and male Vietnamese workers have to pay the same
fees to the recruitment and outsourcing companies, women face more
demeaning entry regulations and fears while they work in Malaysia,
consistent with other scholars' findings. Upon arrival in Malaysia,
most women workers had to undergo blood and urine tests to determine
whether they were pregnant. Moreover, there were cases of abortion in
which these women workers went to back-alley doctors to abort their
pregnancies with poor safety conditions.
Overall, the Vietnamese migrant workers in Malaysia have responded
to those uncertainties and forms of exploitation on the factory floor in
creative ways. They slowed down the speed-up process by saving the
completed products for another day. They protested to demand safety in
the hostels. They even reached out to religious support groups,
Malaysian legal assistance, labor unions, and nongovernmental
organizations for help. However, these types of assistance are not
systemic, and therefore do not spread the benefits to all Vietnamese
migrant workers there.
Global Supply Chain and Codes of Conduct
Workers in Vietnam and other countries that manufacture for the
world operate in the multi-level global supply chain. Understanding how
this global production works would reveal the responsibilities of all
stakeholders and what we can do as ethical consumers and investors to
ensure decent working and living conditions for workers worldwide.
As corporate social responsibility initiatives have spread globally
the Vietnam case can shed light on its practices and the need to reclaim
and restore the intent of the codes of conduct to protect all workers
and the environment worldwide. Most corporate social responsibility
studies, including International Labor Organization (ILO)-sponsored ones
like Better Work Vietnam, do not analyze the multi-level subcontracting
in the global supply chain, which is key to understanding the effects of
uneven power relations in this chain. Multinationals (MNCs) or brands
dictate all the terms of production and income distribution (including
piece-rates to pay workers) and transfer labor responsibilities to their
suppliers, who oversee manufacturing in developing countries like
Vietnam. Most brands promise consumers that they will terminate
contracts with suppliers who fail to enforce the codes of conduct (CoCs)
which are developed from the core ILO conventions that the MNCs promise
on their websites. But the brands' actions have never been
transparent for public scrutiny: it is very difficult to monitor the
relationships between the brands and their suppliers. Even when some
suppliers in Vietnam are found to be non-compliant, there is no concrete
action from the brands to uphold their social responsibilities to
workers as promised to their consumers.
At the top of the chain are the corporate buyers/brands (MNCs) that
place orders with their suppliers (mostly owned and managed by Taiwanese
and South Koreans in Vietnam), who subcontract to small and medium-sized
Vietnamese factories to meet just-in-time delivery schedules. These
Vietnamese factories are legal in that they register with the Vietnamese
government and pay taxes, but they may not be licensed directly by the
foreign brands that produce for them (therefore brand-unlicensed). Their
existence may be unknown to the MNCs, or the MNCs may prefer to close
their eyes to their existence. As such, they are not subjected to codes
of conduct scrutiny and are thus not monitored.
With the MNCs dictating all the terms, their suppliers and domestic
subcontractors compete fiercely to drive down the piece rates in order
to win contracts in this race to the bottom. Ultimately, the brands win:
they secure the lowest contract prices and fastest turnaround delivery
time. The distribution of earnings is grossly unequal. On average, for a
pair of shoes for which a consumer pays US$100, a multinational
corporation would pay a supplier a freight-on-board price of US$16, out
of which US$5 goes towards (mostly imported) raw materials, US$2 for
local management (in a domestic subcontractor), and US$2 for local
labor, leaving US$7 for the supplier's remaining expenses and
profit. In 2008, the brand took a massive 84 percent of the sales price,
while workers received only 2 percent. Statistics for 2010 show that
workers received even less: only one percent.
Moreover, in Vietnam, the brands are very savvy. They basing their
subcontracted prices on a firm legal ground: the government-set minimum
wages, to which they add bonuses such as perfect attendance and bus
fares to go home, are not tied to long-term benefits such as social
security and health and unemployment insurance. Such is the collusion of
capital and the state: the state encourages investment by keeping labor
costs low, and capital points to state-mandated minimum wage laws as its
defense for poor wages.
Global Leverage and Ethical Dimensions
What can be done to protect migrant workers both domestically and
internationally, with a good knowledge of the global supply chain
structure and the interests of key stakeholders? The general public
should hold MNCs and their suppliers accountable, and not allow them to
pay lip service to consumers and shirk their responsibilities.
First, exertion of some existing leverage could be used to protect
migrant workers worldwide. Nation states need reminders to be held
accountable to a declaration that they signed in 2007: the ASEAN
Declaration on the Protection and Promotion of the Rights of Migrant
Workers, signed by ten heads of state, including Vietnam and Malaysia,
in Cebu, the Philippines, in January 2007. This document is based on the
Universal Declaration of Human Rights adopted by the General Assembly in
1948, as well as other appropriate international instruments adopted by
all the ASEAN member countries to safeguard the human rights and
fundamental freedoms of individuals. It clearly stipulates obligations
of both sending and receiving states to promote the full potential and
dignity of migrant workers in a climate of freedom, equity, and
stability in accordance with the laws and regulations of ASEAN
countries. As one of the general principles, it further states that for
humanitarian reasons, both sending and receiving states shall
"cooperate to resolve the cases of migrant workers who, through no
fault of their own, have subsequently become undocumented."
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Second, empowering global labor standards, articulated in most
brands' codes of conduct, can be achieved by pressuring the brands
to be transparent and have concrete actions to comply with their CoCs.
Specifically, ethically conscious consumers can vote with their feet if
the MNCs do not make transparent the vio lations of their suppliers or
continue to subcontract with the violators. Also, consumers can pressure
the brands to raise the contract prices the brands pay their suppliers
in order to raise wages for workers, with an understanding that the
brands would receive a small reduction in their lion's share of the
profits. The brands should share the monitoring costs with their
suppliers and subcontractors in Vietnam, as well as the costs to fix
non-compliance issues, notably working hours, overtime compensation, and
occupational safety and health.
Finally, as conscious consumers and investors, people can reclaim
the real intent of CSR. Investors can influence the decisions of MNCs
through stockholder meetings, or pressure their investment companies to
uphold labor and environmental standards. With the increasingly aging
population, we can put pressure on ways in which pension plans are
invested by demanding that MNCs do ethical business and uphold their
CoCs. In short, simple direct action can improve the circumstances of
millions of workers globally, who deserve to live enriching and
meaningful lives.
ANGIE NGOCTRAN serves as a professor in the Department of Social
and Behavioral Sciences and Global Studies at California State
University, Monterey Bay (CSUMB).
Employment in Vietnam
Average Employed Population in State Sector by kind of Economic Activity
2009
Social Services 28.8
Party/Membership Organization Activities 115
Recreational, Cultural & Sporting Activities 48.2
Health & Social Work 241.4
Education & Training 1211.5
Public Administration & Defense 1491.1
Real Estate 55.5
Science & Technology 27.3
Financial Intermediation 72.8
Transport, Storage & Communications 215.7
Hotels & Food Service 40
Wholesale & Retail Trade; Mechanics 94.7
Construction 407.7
Electricity, Gas & Water Supplies 119
Manufacturing 561.3
Mining 114.5
Fishing 2.4
Agriculture & Forestry 184.2
General Statistics Office of Vietnam; 2009.
Note: Table made from bar graph