Vietnam A new union approach - IV to the country, its trade unionism and its clothing and footwear industries. June 2015

Transcription

1 1 Vietnam 2015 A new union approach - IV to the country, its trade unionism and its clothing and footwear industries June 2015 Isidor Boix Víctor Garrido International Secretariat of CCOO Industry Coordination of IndustriALL Global Union for the Global Framework Agreement with INDITEX

2 2 Index 1. Objectives of this fourth trip to Vietnam 2. Vietnam today. Some information and impressions 3. Labour legislation 4. The clothing and footwear industry 5. The factories visited. Inditex in Vietnam 6. Observed working conditions 7. Trade unionism in the companies visited. Collective agreements 8. Trade unionism in the country. The textile-clothing agreement 9. Employers organisation 10. The relationship between the Trade Union and Party in Vietnam 11. Perspectives of union coordination

3 3 1.- Objective of this fourth trip to Vietnam This was the fourth union trip to Vietnam. The first one was in September 2009, then in November 2010 and October The first and third as part of a union-employer delegation with MANGO to visit factories in Hanoi and Ho Chi Minh City. The second in a CCOO Confederation union delegation to promote relations between Spanish and Vietnamese unionism. This fourth trip was made, once again, as a union-employer delegation, with INDITEX on this occasion, to visit factories belonging to its production chain in the country. Here are the links to the reports of the first three trips: _-_Una_aproximacion_sindical_-_II.pdf - The union delegation on this occasion was made up of Monika Kemperle (General Vice- Secretary of IndustriALL Global Union and head of the textile-clothing sector), Annie Adviento (IndustriALL s Singapore Office Manager for Southeast Asia and China) and Isidor Boix and Víctor Garrido (from CCOO Industry, IndustriALL Global Union s coordinators for applying the Framework Agreement with Inditex). The employer delegation was made up of Félix Poza (Director of Inditex s CSR Department), Indalecio Pérez (in charge of this Department s Compliance Area), Antonio Yanes (member of this Department) and Kevin Bui (person in charge of Inditex s CSR in the country). Both in Ho Chi Minh City and in Hanoi- Haiphong, we were accompanied by two interpreters, Sofía and Eva respectively (according to their Spanish names), Vietnamese teachers that teach Spanish in the corresponding universities. On this occasion, we decided to visit 4 factories, 2 clothing ones and 2 footwear ones, in the country s two most important industrial areas: Ho Chi Minh City and Hanoi-Haiphong. In both industrial regions, we also held prior meetings with the management of the Vietnamese General Confederation of Labour (VGCL), to exchange information and opinions about this and previous experiences. Also to specify which VGCL personnel would accompany us, as well as examining the possibilities and ways of union collaboration in the future. In Hanoi we met Tran Van Ly (with whom we had dealt on previous conditions since he was then the person in charge of the International Department), now Vice-President of the VGCL Confederation and in charge of organisation, Truong Van Cam, President of the Textile-Clothing Sectorial Federation and Ha Thi Phuong Thao, Division Vice-Director of the International Department, who accompanied us to visit the region s factories. In Ho Chi Minjh City we met Nguyen Tran Phuong Tran, Vice-President of the territorial Trade Union, and Ha Phuong, who accompanied us to visit the factories in this area. In Hanoi there was also a meeting between the Inditex delegation and the union delegation, made up of VGCL s management and the IndustriALL representation, with the objective of establishing a regular relationship between Inditex s CSR managers and Vietnam s trade unions.

4 4 2.- Vietnam today. Some information and impressions While first of all pointing out, as on other occasions, the characteristics and limitations of these reports, and their approximate nature, below we provide some background information to better understand what we observed in our factory visits and, thereby, in the country itself. Apart from the first impressions recorded in previous reports, there is not much more to add in relation to the country s three main cities that we visited: Ho Chi Minh City (formerly Saigon), Hanoi (the capital) and Haiphong (the third in number of inhabitants and the Hanoi area s sea port). Perhaps a new increase in the number of motorbikes, although the official figure is still 3 million per city; they still seem to be the main means of transport and all factories have spacious areas where workers can park their motorbikes. The country s most important figures are shown in the table (with data from 2013, unless indicated otherwise) that we previously used in the reports on China and Bangladesh. In this case, we have corrected some data and updated the information about China and Vietnam after our trips there this year. We have also added three rows prepared by ourselves: the purchasing power parity (PPP) quotient (the quotient between income data in PPP 1 and its nominal value), which we apply in this table to minimum wages and mean real wages and then to the evolution of wages in Vietnam. While underlining the indicative nature of all these figure, we must not forget the still confusing and generally heterogeneous preparation of statistics. Therefore the attached table is essentially useful for comparing between countries to the extent that each line (unless otherwise indicated) contains figures from the same source. A further observation has to do with the variations in recent years in the different exchange rates involved (Vietnamese Dong, American Dollar and the euro), which makes comparisons even more difficult. These figures, on the other hand, confirm Vietnam s important economic growth in all these years, developing the process initiated in 1986 with the new economic policy ( Doi Moi ) and which was manifested and also supported, among other factors, by its incorporation into the ASEAN in 1995 and into the WTO in Item Vietnam Spain USA Germany Japan India China Bangladesh Population millions , , Area in km2 330, million 357, , million million 148,460 GDP million 128,422 1,058,469 13,113,060 2,903,220 3,690,018 1,413,095 7,129, ,795 GDP per capita in 1,432 22,800 41,100 35,200 28,977 1,137 5, GDP in PPP in M USD 509,466 1,533,590 17,416,253 3,621,357 4,788,033 7,277,279 17,632, ,645 GDP in PPP per capita in USD 3,550 30,740 54,609 40,756 38,297 3,944 9,143 1,790 1 GDP in PPA (in purchasing power parity ) refers to the total amount of the country s goods and services (or per capita) that can be acquired at the country s own prices.

5 5 PPP 2 quotient Debt % of GDP Deficit % of GDP Public expenditure % of GDP Education % of public expenditure Health % of public expenditure (2010) 9.52 (2012) (2012) (2010) (2012) (2010) (2012) 9.46 (2012) (2012) (2012) 4.98 (2012) (1999) (2012) Defence % of public expenditure , (2009) 8.71 (2012) Annual RPI % February (2014) 7.5 Exports Millions 99, ,422 1,188,895 1,093, , ,228 1,663,745 21,921 Imports Millions 99, ,163 1,755, , , ,792 1,468,551 27,394 Birth rate per thous. per thous. per thous. per thous. per thous. per thous. per thous. Fertility rate ,27 1,88 1,38 1,41 2,51 1,66 2,21 Mortality rate per thous. per thous. per thous. per thous. per thous. per thous. per thous. Life expectancy Homicides per 100,000 inhab Unemployment 2.3 % Jan 2015 (2011) Monthly 4 MIW 89 to 129 in (2015) 757 1,035 1,473 1,148 MIW in 164 in PPP to ,014 1,267 1,125 Wage in, annual average 26,126 37,693 45,952 34,794 Wage PPP annual average 9.8 (2011) 70 to 90 (2014) 180 to 231 4,320 (2014) 25,864 36,939 39,518 34,098 11, per thous per thous (2011) (2011) 250 to (2015) (2014) 322 to ,800 to 12,000 6,192 to 15,480 And focussing on Vietnam, it seems to be of interest to point out the evolution of some essential matters, including the equivalences in parity purchasing power, in accordance with the aforementioned concept and method and without overlooking what was mentioned 2 Advancing in the comparability of wages and purchasing power between different countries seems to us to be of interest, especially when economic globalisation shows the need for globalisation of rights. We will not now go into more detail regarding this PPP quotient, but we invite those interested and those who study this matter to investigate it further to establish more useful references in this regard. 3 Corrected figure with regard to previous reports, based on the country s official figures and compared with other reports. 4 Legal Minimum Interprofessional Wage in each country. The figures for China and Vietnam have been updated after the trips there this year.

6 6 regarding the approximate nature of the calculations made as a result of the heterogeneity of the figures used. Item / year GDP per capita PPP 3,924 USD 5,635 USD (2014) Minimum Wage 30 euros/month 60 to 75 5 euros/month 89 to 129 euros/month 6 Minimum Wage in PPP 55 euros/month 110 to 138 /month 164 to 237 /month Effective wage (workshop) 7 46 to 70 /month 120 to 200 /month 200 to 280 /month Effective wage in PPA 85 to 129 /month 221 to 368 /month 368 to 515 /month Annual RPI 23.1 % 18.1% 4.1 % (2014) These figures show, for example, that Vietnam, with an annual GDP increase between 5% and 6% in the last decade, has now surpassed the minimum wage of other countries in the area, such as Cambodia or Laos, which used to have higher salaries. Official forecasts in this regard, after important increases in recent years (the highest in % and 15% in 2014 and also in 2015), point to a regular increase in the minimum wage until attaining, in 2017, a 21% increase compared to the current one, and a 55% increase in It is also worth analysing this last table to consider the figures incorporated into parity purchasing power, which would amount to this year, in relation to purchasing power, equivalent salaries ranging from 164 to 237 euros monthly as a legal Minimum Wage and salaries for workshop operators ranging from 368 to 515 euros monthly for annual worktime ranging from 2,500 to 2,800 hours of effective work, as detailed further on. These figures enable a more suitable comparison, between different countries, of their purchasing power with their respective wages, and thereby a more objective assessment of the important differences that still exist between countries, between North and South, between developed countries and emergent countries; at the same time, we should take into account the different durations indicated above of worktime and not overlook the fact that globalisation tendencies are resulting in union pressure towards a globalisation of rights (including minimum wages) as well as an upward trend regarding price homogenisation. It is particularly interesting to carry out a comparison with China, taking into account the trend towards relocation from China to other countries in Southeast Asia, including Vietnam, due to their lower labour costs, although transport expenses, duties and other costs may reduce the final differences. While China s minimum wage is now approximately double that of Vietnam s, real wages in the workshops of China s clothing and footwear factories are only 50% higher since Vietnam has more bonuses for different items (some are the result of incipient collective bargaining), which we will discuss later on. 5 Established by the National Wage Council in unequal amounts according to 4 regions into which the country is divided. 6 Except for information that is supplied directly in US Dollars (USD), the figure of this and other items are shown in euros to make them easier to understand. In Vietnamese currency ( Vietnamese Dong VND), the minimum wage currently ranges from 3.1 million VND for region 1 to 2.15 million VND for region 4. 7 Wages for workshop operators, working 6 days a week, 8 hours per day plus 30 to 35 hours of overtime per month, as explained later on.

7 7 Other matters of interest are: Its Gini quotient (inequality index) is 37.8, less than that of China and USA, and higher than that of Germany, Bangladesh, India, Spain and Japan. The 40% increase in GDP from 2005 to 2010 was the result, in almost equal proportions, of increases in the active population, the redistribution of the population among different sectors and its productivity. The percentage of active population compared to total population was 48% in the year 2000, increasing to 56.5% in 2010 and it is forecast to be 54.4% in Unemployment, constantly decreasing since the year 2000, remains very low: the official rate is currently 2.2%. All of this is linked to an age pyramid and its expected evolution, currently having the following characteristic figures: 8.1% over-60s, 30% under-14s and 50% under-30s. Agriculture, which accounts for 18.4% of the GDP (compared to 38.3% for industry and 43.3% for services), still occupies 47% of human resources, which explains the campaign we saw in the media regarding an increase in agricultural efficiency and mechanisation. The price of a motorbike (massive means of individual and even family transport) ranges from 150 to 250 euros for the most economical ones (the monthly wage for a workshop operator), and which are imported from China, to 1,000 euros for the better ones. Vietnam, which was still importing rice in the 1980s, became one of the main producers (behind China, India, Indonesia and Bangladesh) and the second world exporter at the beginning of this century. It is now the main exporter ahead of India and Thailand according to some sources (other sources cite export figures that are very similar to those of these countries and those of Bangladesh). A Trans-Pacific (TPP) Free Trade Agreement is being negotiated between the USA and 11 countries (including Japan but not China) on both sides of the ocean, which will result in a space of around 28 trillion USD of production (39% of the world total) and 2 trillion USD of exchange between them. Vietnam has expressed strong interest in such, but there exists the problem, among others, that this country produces certain articles subcontracted from China, which are labelled Made in China and would therefore be excluded from its benefits. Its exports are 27% to the European Union, 17% to the USA and 13% to China, while its imports are 25% from China, 13% from South Korea and 9% from Japan. Online sales doubled between 2013 and Permanent tension continues with China, currently centred on border areas, as well as the territorial waters of the South China Sea, as China calls it, or the East Sea as it is referred to in Vietnam. Other disputes involve the extension and creation of islands, which resulted in recent conversations with the UN Secretary-General with the Vietnamese proposal of an international Code of Conduct under its auspices. According to the press, there is going to be a modification of the Civil Code regarding transsexuality (which will be carried out) laying the basis for procedures enabling transsexuality whenever necessary. And to complete this miscellaneous information, which provides an approach to some aspects of its more general reality, we would just like to add that in Vietnam, unlike the case

8 8 in China, it is possible to access Google, El País newspaper, our blogs and also the of CCOO s server. 3.- Labour legislation The following are the legislative references that regulate working conditions in Vietnam: The 2013 Constitution 8, which resulted from changes made to the 1992 one, leaving 7 articles intact, supplementing another 12 and modifying 101. It was passed with 486 yes votes and 2 abstentions (from the Civil Society Group ), after collecting 26 million opinions at 28,149 conferences and discussions. The new Work Code, in force since May 1, 2013, which replaced the 1994 one after it had been greatly modified in 2002, 2006 and The Trade Union Law, in force since January 1, 2013, which replaced the 1990 one, with articles that can be developed, as mandated by law, by the Government in accordance with the VGGL (Vietnam General Confederation of Labour). The most significant, country-specific regulations of the above are as follows: 1. Work Contract: It has to be in writing with trial periods of up to 30 days for nonqualified jobs and up to 60 days for qualified jobs. There are three types of contract: 1) permanent, 2) temporary, for 1 to 3 years; after 2 successive temporary contracts, the next one must be a permanent one, and 3) seasonal, for up to 12 months; if it is not formally renewed after 30 days, it automatically becomes a 24-month contract. Contracts can be unilaterally cancelled by the employer: in permanent ones, due to illness lasting more than 12 months, and in temporary ones, after 6 months of illness, or in the case of contracts for less than 12 months, after an illness lasting more than half of the contract s duration. The minimum hiring age is 15; in the case of workers ages 15 to 18 ( young workers ), it is considered special work, with a maximum of 8 hours daily and 40 hours weekly. Apprenticeship contracts can be made starting from age 14. Dismissal due to unjustified absences: 5 per month and 20 per year. Compensation for unfair dismissal amounts to 15 days per year of employment. 2. Trade Unions: The VGCL (Vietnam General Confederation of Labour) forms part of the country s political-social system. It represents all workers, not only members. All grass-roots (company) union organisations have to join the VGCL. In non-unionised companies, the representation and responsibility (right to collective bargaining, declaration and management of strikes, issuing of company bonus criteria, knowledge of disciplinary actions, of decisions regarding the company s work organisation, ) are assumed by the Executive Committee of the company s higher-level union organisation. Paid union hours: 24 per month for the union structure s President and Vice- President, 12 for the members of the Executive Commission (the union s management body in the company). Companies should also provide a place for union activity. 8 Which indicates that The Vietnamese Communist Party is the force that runs the State and Society.

9 9 Finances of union structures: the union quota is 1% of the monthly salary. Additionally, there is a union fund made up of 2% of the payroll, which is used to pay for National Insurance, which is paid by companies even if there is no company union. The company union is allocated 65% of the quotas and 60% of the fund, while the rest goes to the higher-level union structures. 3. Collective agreement: This can be company based and/or sectorial, with the former being obliged to respect the latter s agreement. It can last for 1 to 3 years and can be modified by mutual agreement 3 months after its signing, in the case of agreements for less than one year, or after 6 months in agreements lasting 1 to 3 years, and negotiation of the next agreement begins 3 months before its expiry. Before beginning the negotiation, the company must provide information regarding its economic and production figures. At the end of the agreement, while the next one is being negotiation, it is extended (ultraactivity) for up to 60 days. The administrative authority (People s Court) can render the collective agreement null, in which case labour relations would be governed by general legislation and individual contracts. 4. Health and Safety: There should be a Health and Safety Committee and a doctor in companies with more than 1,000 workers. The President is appointed by the company and the Vice-President by the union. In companies with dormitories, these should have a minimum area of 9m2, with a minimum of 3m2 per person. 5. Right to strike: recognised since 1995 in the Work Code. A strike is only possible in relation to a collective interest and not in a dispute regarding the interpretation and application of the Law. Strikes are not allowed in companies with activity of public interest. It is forbidden to disturb public order. The strike is called by the company union, if it exists, or by the higher-level union structure. Its regulation involves a complex structure of notification-mediation in several phases and levels, whose different periods amount to a total of at least 15 days. The President of the provincial People s Committee can suspend the strike. Strike days are not paid for and any strike that does not respect its regulation may be penalised. 6. Wages: Minimum Wages, established by the Government at the proposal of the National Wage Council, are regulated differently in the 4 different regions. There must be at least a 5% difference between each professional level in the wage scale. In the case of qualified workers, a minimum wage of at least 7% above the regional minimum is established. In the trial period, the wage must be at least 85% of the normal wage (70% before the latest modification of the Work Code). Night-shift work is paid at 130%. Work during holidays is paid at 200% if voluntary and at 300% if imposed by the employer. In the case of sick leave, the worker is paid 75% of his/her wage for 30 days if he/she has been working for less than 15 years, for 40 days in the case of 15 to 30 years, and for 60 days in the case of more than 30 years. In relation to National Insurance contributions, 18% is paid by the company and 8% by workers, plus 3% and 1.5% for illness, and 1% and 1% for unemployment. Wages are taxed (income tax) although this does not appear in the payslip; according to different sources, income tax is paid starting from the first Dong or only from the equivalent to 250 or 450 euros monthly. 7. Ordinary worktime: Maximum (ordinary) worktime is 10 hours daily and 48 hours weekly. Breaks during 8-hour days: 30 minutes in practice. If there are more than 2

10 10 hours overtime, another 30 minutes. The minimum daily rest is 12 hours between shifts, and the weekly rest is 24 consecutive hours or 4 days per month, as determined by the company. In the case of menstruating workers: 30 minutes more per day. In the case of childbirth: paid maternity leave at 100% of salary for 6 months (5 months up to 2009), before and after childbirth, with a maximum of 2 months before. 8. Overtime: the company can assign overtime up to 50% of a normal workday, with a maximum of 4 extra hours daily (and a maximum workday of 12 hours as the total of ordinary and extra hours), 12 hours weekly, 30 hours per month and 200 hours per year (which can be increased to up to 300 hours with administrative authorisation). Extra hours can be compensated with rest, otherwise they have to be paid at 150% of ordinary hours when worked during the work week, 200% on Sundays and 300% on public or personal holidays. 9. Public holidays: 10 days per year: January 1 st, National Day (commemoration of King Hung, March 10 th in the lunar calendar), Victory Day (April 30 th ), May 1 st, National Holiday (September 2 nd ) and 5 days for the new lunar year. 10. Holidays: 12 paid days per year, plus 1 day for every 5 years of seniority. Their accumulation can be negotiated every 3 years. They are established by the company after consulting the union. If the worker is from distant, mountainous areas, his or her return journey is paid for and they can be given 2 days more. If anyone works during their holidays, they are paid 200% of their normal wage. 11. Paid leave: 3 days for a worker s wedding, 1 day for a son or daughter s wedding, 3 days for death of spouse, parents and children. 12. Retirement: men at age 60, women at Workers can continue working up to the age of 65 and 60, respectively. If they have paid National Insurance contributions for 20 years, they can retire early, receive a pension and continue working. 13. Work organisation: Companies with more than 10 workers must have written Interior Regulations, which are decided by the company after consulting the union. 4.- The clothing and footwear industry This is one of the country s main industries, the first in number of workers and also the first in volume of exports, along with articles from the fashion industry, which makes Vietnam the world s fourth exporter, behind China, Bangladesh and India. The country s Textile-Clothing sector has 2.5 million workers (3 million according to some statistics) in 5,000 companies, while the Footwear sector has 1 million workers in 600 companies. In the Textile-Clothing sector, the great majority of companies are private, some as a result of the privatisation of workplaces that used to belong to the old national company, others that were established later on, mainly due to investments by businesspeople from China (People s Republic of China and Taiwan), South Korea and also Vietnam. In the Footwear sector, most private companies have Chinese capital from Taiwan. 9 These ages have gradually been increasing and there is talk of another increase as part of the ongoing discussion about the National Insurance system and how to calculate pensions.

11 11 In both sectors, the volume of production has been increasing in recent years and is forecast to continue doing so, due to attaining a level of quality comparable to the region s best and to the country s stability. A pending matter is their capacity for adapting to larger production orders and for meeting shorter deadlines, which we saw was especially important in the case of Inditex orders (whose deadlines are generally half as short as those of other brands). What we observed in this trip was greater personnel stability, which results in greater professional qualification and productivity (which had increased by around 50% in 10 years in one of the footwear factories we visited). 5.- The factories visited. Inditex in Vietnam Inditex produces in Vietnam around 30 million units per year (37 million in 2014), between garments and footwear for its different brands, which amounts to around 3% of its total sales. In 2014 it worked with 111 factories that have 95,000 workers. Past experience points to a clear growth potential in Inditex s production in the country. We visited 4 factories, 2 clothing and 2 footwear ones. One in each sector in both of the industrial areas we visited: Ho Chi Ming City (the former Saigon) and Hanoi-Haiphong. The number of workers per factory ranged from 1,000 to 8,000 (one of the footwear ones), with women making up around 85% of the workforce. The owners of two of them, the footwear ones, were from Taiwan, while the two clothing ones had a Korean and Vietnamese owner, respectively. In the non-vietnamese companies, the main directors, almost all men, were Chinese in one case and Koreans in the other. We observed a notable reduction in the high annual staff turnover we saw in previous trips, attaining levels of 20% to 40% in the factories visited in Now staff turnover ranged from 5% to 7% in clothing factories, and varied greatly in the footwear ones: 30% in the one in Ho Chi Minh City and 3% in the one in Haiphong. Less staff turnover undoubtedly contributes to the aforementioned improvement in professionalism. Textile factories often buy fabric in China. Both the textile and footwear factories only produced goods for export, i.e. we have not yet observed the domestic market being partially supplied by the same factories that work for the main worldwide brands, as is beginning to happen in China. The production for Inditex ranged from 5% to 100% of the total in the footwear factories, and was around 20% in the clothing ones; the rest of their production was for brands from the European Union (quite a lot of German ones) and the USA. We saw that other Spanish brands also manufactured in Vietnam. One of the factories made garments for Spain s Civil Guard. The possible increase in the order book that we observed has not yet resulted in a shift system or in night-shift work, which would be possible with up to 2 shifts according to the hours they work and up to 3 shifts if overtime was eliminated. Our impression is that this is due to the shortage of technical and executive managers. Peaks in production are generally satisfied by doing overtime, although two of these companies occasionally transferred part of their production to other workshops, which they claim to report to Inditex when the production is for said company. In one of them, they satisfy peaks with temporary workers (part of whom stay on in the factory at the end of their contract), who can account for up to 7% of the workforce in factory facilities designed for almost double the current workforce.

12 12 One of the factories told us that they belonged to the WLO s Betterwork programme in the country, which involves additional control regarding work conditions, although Inditex does not yet consider that this can replace its own audits in verifying the fulfilment of its Code of Conduct. This approach is similar to the one applied in Cambodia in this regard. 6.- Observed working conditions The working conditions in the 4 factories we visited have many elements in common. What we observed can be summarised as follows: Worktime, workday We begin with this subject due to its evident impact on final pay and because it is probably one of the most important problems in the country s labour relations. We already mentioned the limits in Vietnamese legislation: 8 hours daily as a normal workday, 6 days per week, and a maximum of 4, 12, 30 and 200 hours of overtime per day, week, month and year (with the possibility of reaching up to 300 hours yearly if administrative authorisation is granted). It is true that authorisation exists in order to reach 300 hours, in both the textile and footwear sectors. However, in practice, this annual maximum is almost considered a minimum and is often surpassed in accordance with a supposed agreement with the unions in the company. Nevertheless, we have not seen any cases in which this was the result of effective negotiation in which other alternatives were discussed; rather, it is a reality that is apparently assumed by companies without discussion, although it is highlighted as a problem by higher union structures. In the odd company, the management declared that no authorisation was required, while in another they told us that the fact of surpassing the 300 annual hours of overtime was known to the municipal authority. In one factory they explained that they prepare a weekly programme of hours and workers sign it as proof of consent; in another they notify workers verbally one or two days in advance, and occasionally on the same day. In the meeting with the VGCL in Ho Chi Minh City, we were told that annual hours of overtime in the sector could reach 400 hours. On the part of workers, this workday of around 10 hours is generally assumed as normal and this assumption is justified by the need for earning more money. The voluntary nature of overtime generally means that it can be rejected when there are specific reasons justifying the impossibility of staying on. However, we did not observe any tension in relation to this matter and conversations with workers revealed that it is relatively easy not to do overtime. Very occasionally, they work on Sundays, whenever there are urgent orders or so that they can enjoy a long weekend. The idea that long workdays do not only result in negative working conditions for people but also contribute negatively to product quality was accepted when expressed, but it does not seem to be the object of effective consideration or specific projects to reorganise the productive activity. Perhaps because the alternative is greater work efficiency, but also higher wages. All of this currently involves normal annual worktime ranging from 2,500 to 2,800 hours of work. Personal holidays and public holidays seem to be applied correctly, including the additional day for every 5 years of seniority. Annual holidays, generally 12 or 14 days (the latter figure

13 13 seems to be widespread, resulting from a possible increase due to the distance of the workers place of origin, which they normally visit once a year), were normally enjoyed in accordance with the company but individually administered by each worker throughout the year, according to personal or individual interests; in some cases, depending on the family s agricultural activities, mainly harvests Wages We have already discussed above the evolution of minimum and actual wages, with an important increase 10 in both. As something new in this trip, it is worth highlighting a greater difference between the legal minimum and actual wages. This is due to fairly widespread salary bonuses (although not all are paid in all companies, nor in the same amount), which can range from 5 to 20 euros per month for workshop operators for each one of the different items observed: 1) a bonus to establish the company s base salary, 2) an attendance bonus if there are no absences, 3) a seniority bonus (in one factory from 1.50 for 1 year to 5 for more than 6 years), 4) a production bonus, for each individual or line, 5) another bonus due to high temperatures (less widespread), 6) a rent allowance, 7) a food allowance of 1.50/day, 8) a responsibility bonus for managers, There may also be an annual bonus equivalent to one or two monthly wages, which is general in some companies and only for office personnel and managers in others. In one factory, we were told that they do not have to pay National Insurance contributions for this bonus or other ones. One company pays a 12-euro allowance to those who have to travel far to see their family during the new lunar year celebrations. And all of this is the result of a kind of collective bargaining linked to collective company agreements, which we will discuss later on. Midday lunch conditions are diverse, from a free supply on the part of the company to payment (around 10 euros per month) by each worker. Wages were paid in all companies in cash during the first fortnight of the following month, generally with a fixed amount on account of around 15 to 20 euros according to the company, before the end of the month. All of this results in a monthly wage structure (nominal wage, i.e. without applying the aforementioned purchasing power parity quotient, which would mean multiplying these figures by 1.84 as mentioned above) that can be approximately summarised in the following scale for normal worktime, i.e. around 30 hours of overtime per month: Workshop and storeroom operator (cutting, sewing, shaping, ironing, ): from 200 to 280 euros (in one footwear factory, up to 300 euros for some) Line manager: from 350 to 500 euros Offices (organisation, accounting): from 350 to 400 euros Specialists, managers: 400 to 1,000 euros (in one factory the General Director told us that he earned 2,000 euros per month) 10 In this regard, we should also take into account the high inflation rate in recent years (it reached 23% in 2008, thereafter decreasing to 6.3% in 2014), which has given rise to strong social tensions, including strikes, and has contributed to the important wages increases that have taken place.

14 14 Some observations in this regard: in one company: the wages, including overtime, of the line and office managers (even the accounting manageress) indicated in the payslips did not reach 300 euros, less than those of some operators in their own line, with the explanation on their part that the operators work is harder. We have the impression that they receive payments that do not appear in the salary documentation. In the case of foreign specialists and managers (Chinese and Korean), they told us that the company paid for their general maintenance expenses, without going into more detail Work contracts In all the companies, the workers that we chose randomly had a written contract with correct particulars as well as the correct application of two temporary contracts and a third permanent one, in contrast to previous trips in which we observed a widespread system of 1-year contracts that were extended indefinitely year after year (which is, on the other hand, frequently the case in the region s countries). The progressive hiring of workers during these years, observed in almost all companies, means that permanent contracts generally account for around 50% of the workforce. The trial periods, which some companies called learning periods, could last up to 3 months, when the legislation establishes a maximum of 1 month. No under-18 workers were detected in any of the companies Health and Safety We observed a general problem (at least for us) of heat, with unequal ventilation and cooling systems, although most workers replied they were used to it. The legislation establishes a minimum of 20ºC and maximum of 32ºC, with the latter being the most problematic, since in some of the factory workshops we visited, they indicated higher temperatures, although nobody seemed to be complaining. The workers also did not seem to mind the smell of glue and other smells in the footwear factory, although practically all workers wore facemasks. There were some minor problems regarding the fire-fighting systems, which mainly had to do with emergency signs and the location of fire extinguishers; another problem was the fact that some emergency doors did not open outwards. All companies had a body in charge of health and safety, but none had a committee with workers representatives chosen by them for this purpose. They were technical teams, designated by the management, with participation, in one case, of the company union s president. Only one of the 4 companies we visited had dormitories, only for women, which were used by less than a fifth of the workforce. These were long spaces of 38 m2 with bunk beds on both sides of a corridor, used by 8 to 12 persons; each person paid around 2 euros per month for maintenance. We observed, also in the toilets, a notable (higher than in other countries in the region) level of cleaning in the rooms with bunk beds Means of transport None of the companies used public transport, with the motorbike being the most popular means of transport; there were large parking areas for motorbikes in all the factories, with a smaller area for bikes, which means that the factories are close to residential areas in most cases.

15 Trade unionism in the companies visited. Collective agreements The important union structure, from company to confederal level, corresponds to a single regulation and a single culture, derived from its history and the prevailing legislation. However, we noticed greater awareness regarding the changes taking place, and of the resulting demands, in the confederal structures compared to the company ones Trade unionism in the company and its relationship with the workers therein In 3 of the factories we visited, we were told that there was 100% membership, that all workers joined the union after working for 6 months. In the other, there was 70% membership. Members pay a union fee that is officially 1% of their wages; however, we saw that the fee ranged from 0.75/month in one to 1.75/month in another, the same quantity for the entire workforce, i.e. the fee is below the said percentage of actual wages. More important is the 2% of the payroll that the company pays directly to the union funds. In relation to these quantities, we obtained different answers regarding their administration, but all close to what the legislation indicates: 65% of the fees and 60% of the funds stay in the company. When we asked workers the reason why they joined the union, 2 (out of 25) replied in order to solve problems, specifically mentioning salary problems among others (although most indicated that they went to the line manager or personnel department with such problems). However, all replied that it was due to the benefits of membership. And when asked what these benefits were, the unanimous answer was, first of all, allowances in the case of a worker s illness, the death of a relative, parties organised by the union, birthday presents and gifts on some other occasions, which coincided with almost the only replies obtained in previous trips. We also began to detect some, still only a few, answers regarding working conditions (heat, food, although not the pace or organisation of work). In one factory, we were told that the local union organised professional training courses. The other matter about which we asked all the workers we interviewed individually, was regarding the union s organisation in the company and their participation in electing the union s management body therein. Most of them knew about this management body and had participated in its election in one way or another. The difficulty we detected in explaining to us how the said election had taken place was later understood in view of its complexity, which we will discuss below. Only in one of the companies, the one that worked 100% for Inditex, did one of the interviewees know something about a Code of Conduct, Inditex s one, which was displayed in large letters, translated into Vietnamese, on a wall that workers frequently passed by Union management in the company In all the companies, there was a company union management body made up of from 5 to 9 workers. Their characteristics and election system can be summarised as follows: Although all of their members were line managers or office personnel and managers, there were no longer, unlike previous trips, personnel managers or production managers. On a couple of occasions, the company and even the union leaders tried to justify the absence in such bodies of workshop operators (which made up from 91% to 96% of the

16 16 workforce in the factories visited) due to the difficulty this would entail for such ones, having a union responsibility without being able to move around the company to take care of their companions problems. Their replies to our questions showed that they did not know that Vietnamese legislation establishes paid union hours during the workday in order to take care of this responsibility. Moreover, we saw that this lack of knowledge also applied to union leaders, who made use of the flexibility (company tolerance) afforded by their professional activity but not their union rights. Only in one company did we find a union leader (the President) that did not have an assigned job. Of the 20 persons with union management responsibility with whom we met, 10 were men and 10 were women, with the same proportion as regards Presidents and Vice- Presidents, the latter being the really effective posts as well as the only that seemed to be known by the workers we interviewed. The election procedures varied as regards their details, but all cases followed a complex system that can be summarised as follows: the election takes place in two phases (sometimes called Congresses ). A first phase for proposing candidates up to a limited number (up to 150% of the posts to be filled), and a second one for choosing the union management from among these; either of these phases can also be divided into two. Apparently in order to simplify the procedure, in one factory we were told that the outgoing union management put forward the candidates that were put up for election. In some phases all the workers participate, while in others the electoral body is not all the workers but only the ones elected by each line or office for this purpose. In one of the factories, this system meant that the vote of workshop operators for choosing the intermediate electoral body was only worth 50% of that of office personnel. The activities described by union leaders coincided with the workers answers (parties, gifts, personal interest in case of health problems, family problems ), mentioning in last place (if at all) matters regarding some kind of negotiation with the company. In relation to their union coordination with union members from other companies in the sector or territory, the clearest explanation had to do with local or regional sports activities, as well as the odd meeting or conference held in union offices The sectorial Collective Agreement and the company Collective Agreement In relation to the sectorial Textile-Clothing Collective Agreement (the first national sectorial agreement 11 ), none of the businesspeople, union members and workers in any of the companies knew about it. However, in all of them they spoke about some kind of collective bargaining (which is something new compared to previous trips), being referred to as a collective agreement in two of them, although it was unknown to the great majority of workers interviewed. In our meeting with the VGCL, we were told that in the textile-clothing sector there were 100 company agreements affecting 136,200 workers, without being able to specify how many of these agreements were related to the sectorial agreement. It was not easy to specify the content of these company agreements. Based on the translation of one of the two that we were provided with and what we were told in the different interviews, they seem to be texts that are generally signed yearly, in which reference is made to the country s legislation (national, regional or local), not to the sectorial collective agreement, and in which matters that require dialogue are indicated, some with general 11 Its significance and efficiency still seem to be very limited, as we saw in previous trips, since it only affects around 120,000 workers in little more than 100 companies (the ones coordinated by the national sectorial Federation), out of 2.5 million workers and 5,000 companies in the sector.

17 17 criteria and others with greater precision. These mainly involve wage bonuses, which vary according to company and were mentioned in this report s section 6.2; types of contracts; leaves; holidays (generalising, the 14 days), etc. In one factory, the union leaders told us that the most important point in their agreement was having reduced to 1 the price of a bunk bed in the company dormitory; in another, establishing the price for using the company s motorbike park ( 0.75 monthly) The strike in the Pou Yuen footwear factory In early April, an important strike broke out in a large footwear company in the Ho Chi Minh City area. It was the Taiwanese-owned company called Pou Yuen, which has 90,000 workers and makes footwear for Nike, Adidas and other brands. The strike arose due to the project to modify the current retirement pensions. At present there exists a complex formula in order to receive such, as a single payment or by instalments, before the retirement age (60 for men and 55 for women) if the worker has paid National Insurance contributions for a sufficient number of years (20 according to some documentation). The strike lasted a week with occupation of the workplace and street protests, apparently without any serious incidents, and the workers went back to work when the Government promised to reconsider the matter. Since the strike was still recent, and in view of the sector and area that were affected, we thought that it would be interesting to ascertain what impact it had on the workers in the factories we visited. Quite a lot of the workers we interviewed said that they knew about the strike and its essential content (retirement pensions), and they had also received information about it on the radio and television, as well as in union meetings. In these factories with informed workshop workers, the office workers or managers that we interviewed said that they knew nothing about the matter (by the look on their face it was clear that they preferred not to speak about it). And in one company, the workers, and then the union s management body therein, explained to us that they had gone on strike for 2 days for the same reason, coinciding with the one in Pou Yuen. And they explained how it happened: during lunch in the factory canteen, someone said that they had seen on the Internet information about the strike that was taking place, and they immediately decided to join it. And that was what they did; almost nobody went back to work. The company union s leaders immediately met with the company management and they suggested that there should be no sanctions, that the workers should be able to go home and that they would find out about the matter, so that the following day they could explain the matter to the workers. And that is what happened. The following day, the workers turned up but did not start working while waiting to receive information. A local union leader then informed them about the government s commitment to reconsider the matter and the workers decided to continue the strike for a second day, with the company allowing them to go home. They went back to work the following day, so that the two days of striking were counted as holidays. They told us, however, that they did not know how the strike had been settled. In this company, the union leaders indicated that other companies in the area also went on strike for the same reason, but the way it developed was more complicated due to the lack of a union presence or union initiative therein.