Vietnam: Government Fails to Deliver on Vision of Equal Society, Worker Rights, Oxfam Says

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By Lien Hoang

Vietnam does not come off as a workers' paradise in the latest Oxfam report, which warns that the socialist country faces yawning inequality, in part because it neglects labor rights and fair wages.

The anti-poverty group singled out weaknesses in the labor landscape that on the surface might appear to be strong points for Vietnam. Official membership is high in the nation's one labor union, for example, which is a nationwide body monopolized by the ruling Communist Party. Collective bargaining is nevertheless rare, according to Oxfam's new report Even It Up: How to Tackle Inequality in Vietnam, and many Vietnamese fall outside union representation, including those working on farms, in the informal economy or without contracts. In addition, while the minimum wage increases every year by at least 7 percent, it doesn't meet basic needs in the fast-growing economy, and employers concoct ways to recoup some of these wage costs.

“Research shows that even in the case of increasing salaries, enterprises may ‘distort the law’ by reducing ‘soft benefits' or overtime incentives to ensure the total salary paid is not affected,” the Jan. 12 report said, adding that “the deck is stacked against the poorest workers.”

While the labor code requires that minimum wages support minimum living standards, Oxfam found that 2016 wage levels covered just 85 percent of workers' minimum subsistence needs.

One Person's Day Equals Another's Decade

Despite Vietnam's egalitarian doctrine, Oxfam found that the rich and the poor are drifting further apart. The charity calculated that Vietnam's wealthiest man earns more in one day than the poorest citizen earns in 10 years.

The country's income gaps are not as severe as in most of Asia, however. Its Gini score is 35.6, outperforming the likes of Indonesia (38.1) and Thailand (39.4), as well as the U.S. (40.8), according to 2013 data published by the United Nations Development Program, but today's wealth disparities are still larger than any seen since before the Vietnam War.

[The Gini coefficient is the most commonly used measure of income distribution. Higher scores denote greater inequality. A score of 0.0 indicates perfect equality, a score of 100 total inequality (one person has all the wealth)].

The Trans-Pacific Partnership, a trade deal that is now just about defunct, was meant to fortify workers' rights, especially by letting Vietnamese create their own labor unions.

“I would argue it would have been beneficial if TPP had gone through and brought in the labor law changes in relation to free association, right to organize, etc., independent of the state and employer,” Ross Macleod, a foreign consultant at Aliat Legal in Ho Chi Minh City, told Bloomberg BNA.

Wildcat Strikes

Macleod was referring to the perception reported by Oxfam that Vietnam's single labor union is more closely aligned with employers than employees, leading to ineffective negotiations and forcing workers to resort to wildcat strikes.

Oxfam's report estimated that 55 percent of people in the manufacturing-reliant country wouldn't file a labor complaint with the government, which they don't see as a helpful referee. The threat of retaliation also prevents some from speaking out.

“Labor law violations by employers are common, but migrant workers dare not raise their voices out of fear of losing their jobs,” according to the report. “Many workers lack contracts and thus cannot protect themselves from risks of employment, health and safety.”

Vietnam could allay the public perception of government ineffectiveness by disclosing any offenses uncovered by state inspectors and the penalties and remedies that follow, Oxfam said.

Narrowing the ‘Economic Gulf’

Part of the problem for Vietnamese authorities is that low wages are a key draw for foreign companies, especially factories relocating to Southeast Asia from an increasingly expensive China.

Firms at the latest Vietnam Business Forum, an annual dialogue between the government and the private sector, argued that labor productivity needs to rise to justify pay hikes.

“The most recent minimum wage increases [of 7 percent annually on average] were very reasonable and positive for attracting investment,” VBF said in a report summarizing its Dec. 5 gathering. Wage increases for 2017 are expected to average 7.3 percent.

To narrow Vietnam's “economic gulf,” Oxfam recommended that the government in Hanoi participate in more global pacts that favor workers. The country has not, for example, signed the International Labor Organization conventions on wage protection, collective bargaining and the right to organize.

To contact the reporter on this story: Lien Hoang in Ho Chi Minh City at correspondents@bna.com

To contact the editor responsible for this story: Rick Vollmar at rvollmar@bna.com

For More Information

Oxfam's report is available here, UN Development Program inequality figures here, the Vietnam Business Forum report here and information on Vietnam's status on ILO conventions here.

For more information on Vietnamese HR law and regulation, see the Vietnam primer.

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