VIETNAMESE TRADE UNION S RESPONSE TO THE CRISIS

VIETNAMESE TRADE UNION S RESPONSE TO THE CRISIS

OUTLINE OF PRESENTATION 1. Overview 2. Economic crisis and its influences 3. Government measures and recommendations 4. Wages development: Situation & Union views and responses 5. Promotion of employment: Situation & Union views and responses 6. Conclusion

About Vietnam Physical Size: 331,951.4 Sq Km Population: 88.78 million Labour Force: 51.4 million (51.1%) Unemployment rate: 2.3 % GDP: USD 136 billion Per Capita GDP: USD1,362

About Vietnam General Confederation of Labour (VGCL) 1. The first TU center in Viet Nam established in 28 July 1929. 2013: marks 84 st founding anniversary 2. Today: VGCL is only national center with 7.7 million members and 113,000 workplace unions in all economic sectors 3. Structure: 4 level: - VGCL - National industrial unions (20) and provincial federation of labor (63) - District - Workplaces 4. Congress: highest decision making body held every 5 years. The 11th National Congress of VGCL will be held in July, 2013.

Government measures and recommendations Macroeconomic indicators The more integrated into the world economy, the more Vietnam s economy affected by the up and down in the world economy GDP declines: 2010 (6.78%); 2011 (5.89%); 2012 (5.03%) High inflation: 2010 (9.2%); 2011 (18.6%); 2012 (9%) VN Index was slashed by more 50% Increasing trade deficit Unemployment is high: Nearly 1 million in 2012 (Around 50,200 enterprises having difficulties that they had to go bankrupt or stop operation, increased by 6.5% in comparison with 2011) Threats to peace and stability: Food, energy, financial security; Poverty; Inequality Government measures Vietnam Government approved stimulus programs. Stimulus measures are aimed at subsidizing/compensating interest rates for enterprises Develop infrastructure Help low income families Provide Financial assistance for unemployment Encourage companies to look for new export markets, to buy equipment, machines, technology for post crisis business Look for FDI

Wages Development Situation 2008 2012: Average nominal wage increased 26.8%/year. Even when taking into account inflation, which remained high, the real wage increased by 12.6% on a yearly basis. Government has used minimum wage as a policy instrument to gradually raise the wage floor with more than 20% increase each year => a key instrument for reducing working poverty and providing social protection for vulnerable employees =>a leading mechanism for wage development in general. Vietnam has been very successful in this Minimum Wage and Collective Bargaining two types of minimum wage: The general wage is set as 830.000VND/month (USD 41) and is adjusted in line with inflation and GDP growth indicators; Area minimum wage is applied for workers of the enterprises/companies and categorized in 04 areas

04 areas of Minimum Wages Area I: Inner districts of Hanoi and Ho Chi Minh city VND 1.550.000 (USD 77) applied for FDI (foreign-invested) enterprises VND 1.350.000 (USD 67) applied for domestics enterprises Area II: Outer districts (rural districts) of Hanoi, Ho Chi Minh city; cities which are directly responsible to central government, cities of provinces. VND1.350.000 (USD 77) applicable to FDI enterprises VND 1.200.000 (60 USD) applicable to domestic enterprises Area III: Cities of remote provinces, central districts of the remaining provinces VND1.179.000 (USD 59) applicable to FDI enterprises VND 1.050.000 (52 USD) applicable to domestic enterprises Area IV: Remote districts of all provinces. VND1.100.000 (USD 55) applicable to FDI enterprises VND 830.000 (41 USD) applicable to domestic enterprises

Wage Agreement Mechanism Individual wage agreements are under the form of labour contracts. Due to pressure of employment and more supply than demand in labour market, the individual wage agreements are not advantageous to workers. There is no separate collective wage agreement. It is included in the CBA. There is no minimum wage agreement at industry level due to non-existence of a CBA at industry level. At national level minimum wage is tripartite consulted but the consultation is rather formalistic.

Employment Policy The Employment Policy Convention, which takes effect from June 2013 in Viet Nam, would help push the country forward in establishing a comprehensive framework towards a conductible employment policy. Priority to the employment of Vietnamese labor Training plans and programs to enable policies to encourage and create favorable conditions for investment by organizations and individuals within and outside the country National Employment Fund, a system of employment service agencies and local employment program and funds Training and retraining for continued employment in new jobs Loss of employment allowance

Conclusion & Recommendations More expansive wage policy Wages above inflation plus productivity More equal wage distribution Strengthening domestic demand Contribution for a more balanced economic development model between domestic and export economy Strengthening of wage setting institutions National statutory minimum wage Increase of the bargaining coverage through: -more extension of collective bargaining - strengthening of union power at company level

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