I. Background on Vietnam

Vietnam is a socialist republic of about 80.5 million people. Although the number of people living in poverty has decreased significantly over the last ten years, 37 percent of the population still lives below the national poverty line, and around 25 million are unemployed or underemployed.¹ In 2003 Vietnam was ranked 109th in the United Nations Development Program (UNDP) Human Development Indicator rankings.²

Vietnam is in a transition from a centrally-planned to a market-oriented economy. Much of this shift has depended on an export-led growth strategy that emerged from the doi moi ('renovation') reforms of the late 1980s. Following implementation of the Enterprise Law in January 2000, the private sector has flourished in Vietnam, with more than 18,500 new businesses starting in 2001 alone. The domestic private and foreign-invested sectors currently produce almost 60 percent of industrial output.³

With a gross domestic product (GDP) of more than US$35 billion in 2002, the Vietnam was the world's 56th-largest economy, according to the World Bank. During the period from 1998 to 2002, the Asian Development Bank estimates GDP growth at 5.5 percent a year,⁴ which is about the same as India, but much slower than the growth rate of China and Bangladesh during the same period. Exports rose from US$9.1 billion in 1997 to US$16.5 billion in 2002, which meant that exports were increasing by an average of more than 12 percent each year.⁵

Textiles and apparel production is an important element of Vietnam's export-led growth policy, currently accounting for more than half of the country's manufactured exports and approximately 16 percent of total exports. The industry employs 1.6 million workers, approximately 25 percent of all industrial workers in the country.⁶

There are approximately 187 state-owned enterprises, 800 private enterprises, and more than 180 foreign-invested enterprises in the textile and apparel sector. Foreign investment in the sector amounts to more than US$1.8 billion.⁷ The industry is dominated, however, by VINATEX, a conglomerate of state-owned enterprises that accounts for more than one-third of all textile and garment exports.⁸

Beginning January 2005, the Multi-Fibre Arrangement will no longer be effective, and World Trade Organization (WTO) members will remove any remaining quota restrictions on textiles and apparel. If Vietnam has not yet become a WTO member, however, it will still be subject to quotas applied by the European Union (EU), Japan, and the United States, which are its most important export markets.

	Key Facts: EPZs in Vietnam Vietnam's first export processing zone (EPZ) was established in 1991. In 2001, there were 10 EPZs in the country employing 107,000 workers. EPZs are covered by the same laws as the rest of the country. Jean-Pierre Singa Boyenge, ILO database on EPZ, ILO, Geneva, 2003.

II. Freedom of Association

Vietnam has ratified three of the eight fundamental conventions of the International Labor Organization,⁹ namely the Equal Remuneration Convention (No. 100), Discrimination (Employment and Occupation) Convention (No. 111), and the Worst Forms of Child Labor Convention (No. 182). Vietnam has not ratified either of the two fundamental ILO conventions concerning freedom of association: the Freedom of Association and Protection of the Right to Organize Convention (No. 87) and the Right to Organize Convention (No. 98). Nevertheless, its membership in the ILO requires the government to respect, promote, and realize the right to freedom of association and the right to collective bargaining, which are included among the ILO's fundamental rights.

The Vietnamese Law on Trade Unions of 1990¹⁰ defines a trade union as a large political and social organization of the working class, voluntarily established under the leadership of the Vietnamese Communist Party, that represents Vietnamese workers.

The Labor Code of 1994 provides that all workers are entitled to establish and join trade unions, within the framework of the trade union laws of Vietnam. Employers may not prejudice a worker because he/she has formed, joined, or participated in the activities of a trade union organization, and may not apply economic pressure or other measures to interfere with the organization and activities of trade unions.

	Current Vietnamese Law Dealing with Freedom of Association Constitution of 1992 Labor Code of the Socialist Republic of Vietnam of 23 June 1994 (as amended 2 April 2002) Law on Trade Unions of 7 July 1990. Decree No. 196-CP of 31 December 1994, detailing and guiding the implementation of a number of articles of the Labor Code providing for collective labor agreements

A. Trade Union Monopoly

Under Vietnamese labor law, the Vietnam General Confederation of Labor (VGCL) is the only legal trade union in Vietnam. The VGCL is required by law and by its articles of association to maintain close relations with the ruling Communist Party. All trade unions are required to join the VGCL. The law also stipulates that government authorities must give their approval before a trade union may be created.¹¹

In 2000, there were a total of 79 VGCL affiliates -- 61 provincial/municipal and 18 industrial. These affiliates had membership consisting of 95 percent of the public-sector workers, 90 percent of state-enterprise workers, and 50 percent of private-sector workers.¹² According to the Vietnamese government, there were 47,161 enterprises with trade unions in 2000 -- 41,517 in state-owned enterprises and 5,644 in private enterprises.¹³

To further the reach of the VGCL, Vietnam's 1994 Labor Code directed the regional branches of the VGCL to establish unions at all new enterprises with more than 10 employees, as well as at existing enterprises that operated without trade unions. Despite the Labor Code, many enterprises in export processing zones (EPZs) still have no union presence. According to the International Confederation of Free Trade Unions (ICFTU), only about 10 percent of workers in EPZs have long-term employment contracts. The remaining workers are reportedly on contracts of between three months and a year, which helps employers avoid the legal requirement to set up unions in enterprises with more than 10 full-time employees.¹⁴ For workers in EPZs, this means precarious contracts and limited opportunities to join a union.

B. Union Relations with Management

In Vietnam, it is fairly common to find that union representatives are directly appointed by management or that union officers hold management positions in the factory. Most labor experts believe that such intersection of duties compromises the independence of unions from management. In these situations, many workers may not even be aware that the union exist, or may not be familiar with the union's functions or duties.

Different enterprise ownership arrangements seem to result in differences in the performance of unions. A study prepared by the World Bank in 2002, which analyzed unions in different footwear factories, found that there were higher degrees of accountability to workers in the foreign-invested firms, less in the domestic private enterprises, and considerably less in state-owned enterprises. It also highlighted that there was considerable variance in the skills of enterprise-level union leaders to represent workers and bargain with management. The study also determined that communication between workers and management in Vietnamese shoe factories ranged from non-existent to highly-adversarial.¹⁵

III. Right to Bargain Collectively

The Vietnamese Labor Code provides for union recognition and collective bargaining. Collective agreements have been signed at 56 percent of state-owned enterprises, 36 percent of foreign-invested enterprises, and 20 percent of private domestic enterprises.¹⁶ It is reported, however, that these agreements are often drafted without a negotiation process or consultation with workers and their union representatives.

On April 2, 2002, amendments to 56 articles of the Labor Code of Vietnam were passed. The amended law clarifies a number of issues regarding collective agreements, including: who may sign the agreement; how many copies must be executed; and in what circumstances the collective labor agreement may be deemed void (e.g., if it is signed by unauthorized parties or the provisions are illegal).¹⁷

The amended law also provides that labor disputes may be resolved via an internal labor dispute resolution panel formed by the trade union and representatives of the employer or via the courts. The courts are empowered to resolve all disputes that cannot be dealt with internally.

IV. Right to Strike

While Vietnamese labor law recognizes the right to strike, it permits the right to be exercised only after a lengthy pre-strike procedure that requires management and workers to take the case to the enterprise's own labor conciliation council or, in its absence, to the provincial labor arbitration council. This requirement can be problematic, since it is not uncommon to find that neither the enterprise does nor the province in which it is located has a labor conciliation council.

Despite these legal restrictions, strikes do take place - even without fulfilling all pre-strike legal requirements. They are generally tolerated by the authorities.¹⁸ Between 1995 and 2000, there were 212 strikes in Ho Chi Minh City alone (177 in the private sector and 35 in state-owned enterprises).¹⁹ At least 57 strikes were reported to have taken place during 2002 (37 in foreign-invested enterprises, 15 in domestic private enterprises, and 4 in state-owned firms).²⁰ Although neither the VGCL nor its affiliate unions sanctioned these strikes officially, the local and provincial levels of the VGCL reportedly supported many of them unofficially.²¹

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