Group Effect from Workers' Strikes in Dong Nai Province

Many strikes by workers in foreign-invested enterprises occurred in some industrial parks (IPs) in Dong Nai province in the first months of this year. They all related to salary increase under the Decree 03 by the Government and some other labour policies.

 

Apart from low salaries, the reason for workers’ strikes was that when increasing their worker’s salaries under the Decree 03, enterprises paid workers who have worked for a long time and those who were newly-recruited almost indifferently. For example, at the Viet Truong Electronic Company of Taiwan in the Bien Hoa II IP, over 2,000 workers went on strike because the salary of those workers who worked a for a long time was just tens of thousands of Vietnam dong higher than salary of newly-recruited workers. After the working group of Dong Nai province worked with the enterprise, salary and allowances for workers were adjusted reasonably and workers have returned to work.

 

According to authorised agencies, the Decree 03 stipulates minimum salary only, so to ensure the equality and reasonability, enterprises should have salary scale as a basis for adjusting salary of their workers. So far, among 520 foreign-invested enterprises, operating in Dong Nai province, around 20 enterprises have built their salary scales which have been approved by authorised agencies. When implementing the Decree 03, many enterprises have adjusted worker’s salaries mechanically or levelled the salary of all workers. Some enterprises have even adjusted the existing salary, which was below the minimum salary and belonged to newly-recruited workers. As a result, after being adjusted there is not much difference in salary of those who have worked for a long time and those who have recently been recruited.

 

Also, annual salary increase is often low and goes along with tough conditions on emulation. This has added pressure on workers. During a strike of over 7,000 workers at the Mabuchi Motor, which is 100 per cent owned by Japan and specialises in manufacturing electronic accessories, workers complained that despite working for the company for nine or ten years, they were paid VND 1.1 million per month, a low increase from their starting salary of VND 881,000.

 

Another reason is that enterprises are slow in announcing their salary adjustments. As a result, workers misunderstand that enterprises do not want to increase salary for workers even though this was warned by authorised agencies after the Decree 03 took effect. The poor quality of food is another reason.

 

Recent strikes of workers in Dong Nai have resulted from the reason that enterprises have not observed the State’s regulations on the building of their salary scale and allowances. Accordingly, many enterprises have opted to cut welfare and allowances so as not to expand their salary funds, which has angered workers. This is a reason for possible disputes within enterprises.

 

However, investors blamed a sudden and unclear change in policies on salaries for workers in foreign-invested enterprises. Enterprises complain that they could not contribute their inputs and comments the decision on increasing minimum wage for workers. In fact, the decree on the minimum wage for Vietnamese workers at foreign-invested enterprises was issued in a short time, so enterprises did not know how to settle with the most important variable cost - labour cost.

 

The fact that workers go on strike as their interest is violated is reasonable. However, many workers do not know that going on strike is just the final option after negotiation efforts fail. According to leaders of union organisations, workers should not go on strike when they disagree on unimportant issues. Instead, they can propose and negotiate with enterprises’ leaders.

 

A representative from a Japanese-owned company in the Amata IP said that he was surprised to learn that Vietnamese workers went on strike for small things, such as the quality of their food, behaviour of their managers. In the mean time, these problems could be solved by submitting proposals to leaders of their enterprises. Every month, the company organises meetings with workers, in which workers can contribute their comments. However, many workers have opted for silence and then suddenly launch strikes.

 

Thomas O'Dore, president of AmCham in Hanoi, said that US enterprises worried about violent and illegal strikes of workers in some IPs in the south. In some cases, valuable production equipment was destroyed. This was repeated from IP to IP. O'Dore said that local authorities and police reacted too slowly, so investors all felt that they were not protected.

 

According to representatives from Auscham in Vietnam, widespread and violent strikes are real concerns of Auscham members. This may produce a negative impact on Vietnam’s image as an attractive destination for investors.

 

According to investors, most strikes were illegal. Under the Labour Code, a strike should have three steps, including mediation, negotiation and strike. However, most strikes did not observe the regulation and were illegal. In the mean time, the law does not stipulate any procedure for settling strikes. At present, measures are temporary with enterprises being convinced to meet the demand of their workers.

 

Auscham said that illegal features of strikes and a lack of legal ground for settling them proved a necessity for a further reform in the system for dispute settlement and labour relationship in Vietnam.

 

Strikes are popular in developed societies. When employers and employees fail to meet each other’s demand on interests, strikes occur. However, when strikes are unprompted and illegal, they are signs of poor knowledge of workers and the investment environment. Therefore, the education of workers’ behaviour and improvement of their knowledge about strikes are as important as the supervision and examination of employers’ observation of the law on labour.

 

According to the Baker & McKenzie law firm, in the first half of 2005, 50 strikes occurred. This is a big figure in comparison with a total of 1,000 cases over the past decade. Notably, two thirds of strikes took place in foreign-invested enterprises.