Vietnam: Wildcat strikes win pay hike

More than a dozen strikes by more than 40,000 workers in Ho Chi Minh City's export processing zones have forced the Vietnamese government to raise the country's minimum wage by nearly 40 percent.

Submitted by Steven. on January 18, 2006

The hikes -- up to 55 US dollars a month in Vietnam's two biggest cities, 50 dollars in mid-sized cities, and 45 dollars in the rest of the country -- show increased frustration among workers who are only allowed to affiliate with a single, government-run trade union.

Two dozen workers at Ho Chi Minh City's Danu Vina factory enjoy beers and a beef hot pot after a hard days work. But even with the wage increase, they'll still earn less than two dollars a day making stuffed animals which are sold in the U.S. by Hallmark, Disney, and Starbucks.

''In everyday life all things go up in price," says Minh, who has packaged toys for two years. ''Everything that you use, food and drink become more expensive and we find that we're struggling to live. We're protesting to have a better quality of life."

Before this recent wave of strikes, the Vietnamese government had not raised the minimum wage in six years. During that time, the Dong had lost almost 15 percent of its value against the U.S. dollar. At the same time, inflation totalled 28 percent.

The strikes, running for more than month now, worsened after an 18,000-strong walk-out by workers at Freetrend, a Taiwanese company whose factory makes shoes for brands like Nike and Adidas.

Huong, 23, has worked for Freetrend for five years. She makes more than the minimum wage but says that is barely enough to pay for her boarding house bed near the factory.

She says low wages aren't the only thing making workers unhappy. ''The work is very tiring," she says. "The food the company serves us is not enough. It's not cooked well and does not taste good so the workers do not have enough energy to work."

Many of the strikes have occurred in foreign companies, with workers citing communication problems with non-Vietnamese managers -- among other things.

Huong is critical of her bosses. ''We're always on guard at work," she says. ''The officials yell and swear at us and mistreat workers."

While labour action is not new in Vietnam, workers have become more militant in recent years, according to Long Nguyen who manages security guards in Ho Chi Minh City's export processing zones.

''There are people who sit and people who stand," he says, ''And those who just mill around without any organisation. At other sites, people sit down in an organised fashion and they select a representative to speak with management. There are a number of protesters who are aggressive. They throw things and they kick and destroy property."

Faced with this new growing grassroots pressure, the government finds itself in a tough spot and the Communist Party has chosen not to react to wildcat strikes showing the effect that the newly opened economy has on getting authorities to respond to the needs of civil society.

On the other hand, the government will have to keep in mind the competitive nature of foreign investment and Taiwanese companies affected by the strikes and the minimum wage hikes have threatened to move elsewhere.

Taiwanese manufacturers accounted for more than 1,408 direct investment projects in Vietnam worth 7.93 billion dollars by the end of Dec. 2005, according to government statistics.

''China has low wages, Vietnam has to keep wages at a similar level in order to be competitive," says Carey Zesiger, who monitors labour conditions in Vietnam's export factories for the consulting firm Global Standards.

But the minimum wage in China is 63 dollars a month, 13 percent higher than Vietnam's new level.

Vietnam's government, Zesiger says, is "trying to balance the interests of their citizens who work in the factories and the standard of living of the workers against that of foreign investors who they need to attract to create jobs and develop the country.."

On paper, at least, Vietnam has some of the strongest labor laws in the world. Under the Communist system, workers in every factory are required be represented by the official government union within a few months of opening.

But observers note that since the influx of private companies started a few years ago, enforcement of the policy has been lax. This, they say, has led to worker frustration and wild-cat strikes.

''When foreign investors enter Vietnam, they must follow the country's labour rules," says security manager Long Nguyen. ''If they don't, the Vietnamese government has the responsibility to enforce the law or expel the company. The government has to protect the worker. The unions that represent workers in factories of foreign and joint-stock companies are weak. They don't have the strength to stand up to the management."

But this latest wave of strikes has led to one victory. The new minimum wage will take effect from the beginning of February, the quickest labour settlement in a time longer than anyone can remember.

Aaron Glantz and Ngoc Nguyen