Balancing Benefits between Employees and Employers

10:37:22 AM | 8/23/2019

Numerous opinions on the draft Labor Code from specialists, businesses and associations have been collected by the Vietnam Chamber of Commerce and Industry (VCCI) to submit to the Government.

According to Dr. Vu Tien Loc, President of VCCI, the business community basically reach strong consensus with the revised Labor Code. However, enterprises have proposed additional contents concerning overtime, labor relation and wage.

He said, Vietnam’s economic growth this year may be as high as last year, though tending to decrease. In this tough period, the previous draft provided increased costs, which will bar enterprises from maintaining production and send them into difficulty.

Vietnam is losing its advantage to countries with lower labor costs. Therefore, it needs to share with businesses for national interests. “Employers and employees are in the same boat. If the former is in difficulty, the latter will face a lot of obstacles as a result,” he analyzed.

Dr. Loc said, for example, the bill revised down working hours from 48 hours a week to 44 hours or a decrease of 220 hours a year. This is really unreasonable for businesses. The revised draft needs to add provisions on employers’ representative organizations in Vietnam to ensure a dialogue mechanism for employers and employees.

Furthermore, Resolution 27 stipulates that minimum wage meets minimum living needs. In fact, most businesses have paid workers more than the minimum wage rate. However, the increase in minimum wage entails numerous costs such as union dues and insurance pays that concern employers. Such double effects do not bring benefits to workers but cost more in intermediate stages.

Dr. Bui Sy Loi, Vice Chairman of the National Assembly's Committee on Social Affairs, said that the draft should establish a clause to express rights and obligations of the employer representative organization - VCCI and similar business associations. Basically, National Assembly deputies agreed to expand the overtime working hours and they have not reached consensus on only one point - Overtime wage calculation plan for employees. Currently, the draft is still open for two options: Applying the current overtime wage formula or progressive formula as proposed by the Trade Union. According to this formula, a 150% wage is applied to the first two hours of the workday, 165% is subject to the third hour and 180% is applied to the fourth hour. In the weekly days-off, the overtime wage will be 200%, 220% and 240% of salary is applied to the first two hour, the third hour and the fourth hour of work, respectively. On holidays, the respective wage rates will be 300%, 330% and 360% of wage.

Mr. Pham Minh Huan, former Deputy Minister of Labor, Invalids and Social Affairs, said that enterprises are most affected in the law revision in both cost and social responsibility. Therefore, they should be considered further in the draft, which should include one more article on employers.

A representative from the Japanese Chamber of Commerce and Industry (JCCI) also emphasized that, in this draft revision, workers are vulnerable and necessarily protected and favored more while businesses face increasing costs and other difficulties. Presently, workers are no longer vulnerable because many Japanese businesses in Vietnam have to increase recruitment costs and increase a lot of incentives for employees to retain them. The representative hoped that the Drafting Board will get more opinions from enterprises and business associations to have more multidimensional views to ensure fairness for employers and employees.

Mr. Truong Van Cam, Vice Chairman and General Secretary of the Vietnam Textile and Apparel Association (Vitas), said that, with the progressive overtime wage formula as described in the draft, businesses will face a lot of difficulties because of soaring personnel costs.

“I propose keeping the current regulation on overtime stipend. If the progressive overtime wage formula is adopted, small and medium-sized enterprises (SMEs), which account for more than 90% of the business community, will be affected most. This will eventually reduce the capacity and competitiveness of domestic enterprises,” he said.

According to a representative from the Ministry of Labor, Invalids and Social Affairs, until the draft is submitted to the 8th meeting of the National Assembly as expected, the ministry will continue to organize many more consultations to seek opinions of various entities to create a social consensus on amendments and supplements to the draft law.

Huong Ly