Copyright 1997 Journal of Commerce, Inc.
Vietnam protects its labor force; Foreign investors face fines for infractions
BY TIM SHORROCK
July 7, 1997, Monday Journal of Commerce
Anyone reading Doonesbury over the last month knows that thousands of Vietnamese who make shoes for Nike Inc. earn $46 a month, one of the lowest wage rates in Asia.
But left untold in Garry Trudeau's satirical comic strip, which Nike denounced as false and misleading, is the hard line Vietnam has taken toward foreign investors that overstep their bounds.extent to which that hard line adheres to standards set by the International Labor Organization, however, could lead to tensions with organized labor in the United States.
Nike, which employs 37,000 workers at five Asian subcontractors in Ho Chi Minh City, is a case in point.
It is one of hundreds of multinationals that have shifted operations to Vietnam as wages have risen in the Philippines, Indonesia and other Asian countries.
Total foreign investment in Vietnam rose to $2.2 billion in 1996 from $90 million in 1990, with the flow responsible for more than 100,000 jobs, according to Vietnam's Ministry of Industry.
Nearly 25 percent of Vietnam's total foreign investment is in consumer goods industries such as shoes and garments, with the top investors coming from Japan, South Korea, Taiwan and Singapore.
But as Vietnam has thrown out the welcome mat to foreign investment, Nike and other multinationals have encountered militant unions, strikes over wages and working conditions, and state-run newspapers that compete daily to cover the underside of market capitalism.
Last week, a floor manager at Sam Yang Vietnam Corp., Nike's largest subcontractor, was sentenced to six months in prison for forcing employees to run laps as punishment for not wearing regulation shoes.
In May, South Korea-owned Sam Yang issued a public apology after a leading Vietnamese newspaper revealed it had cheated workers on overtime pay. ""When a company violates too many laws, Vietnam can't tolerate that because it would no longer be our country,'' said Hoang Thi Khanh, vice president of the Vietnam Confederation of Labor, in an interview recently in Washington. Vietnam also criticized foreign investors' labour practices Thursday when the official Vietnam News blamed low pay, long working hours and excessive production targets for growingunrest among the ranks of local factory workers.
Vietnam's tough stance toward multinationals contrasts sharply with the rest of Southeast Asia, where foreign investment is usually accompanied by a tough approach toward labor.
""What we saw on the Nike case really bears that out,'' said Jeffrey L. Winters, an associate professor of politics at Northwestern University and an expert on economic developments in Southeast Asia. ""Vietnam's advocacy for workers was pretty impressive. You don't see the Indonesian government do that.''
Vietnam's labor confederation, like China's and Indonesia's, is ultimately state-controlled. But Vietnam's unions have more autonomy and political clout than their counterparts in both countries, said Anita Chan, a professor at Australian National University who specializes in worker rights under market socialism.
""Vietnam's unions are more for the workers,'' Ms. Chan said in an interview. ""The state is more willing to allow the unions to do more independent work.'' One reason for that, she suggested, is southern Vietnam's exposure to capitalism during the 1950s and 1960s.
Thuyen Nguyen, a Vietnamese-American businessman who fled Vietnam in 1975 and returned this year to investigate conditions at Nike's factories, said Vietnam's attitude toward foreign investors reflects its centuries-long struggle against foreign domination.
""There's a lot of nationalism and pride in being Vietnamese,'' Mr. Nguyen said.
Mr. Nguyen provided Mr. Trudeau with much of the information used in his comic strip. He said the Vietnamese unions exercise their independence through a popular daily newspaper owned and operated by the labor confederation.
""It is used as a vehicle for opinion and rallying public support'' for Vietnamese workers, he said.
Labor Issues Brewing
Despite Vietnam's pro-labor reputation, U.S. companies doing business in Vietnam are bracing for a major fight with the AFL-CIO over worker rights.
""I think there's going to be a hell of a war on labor issues in Vietnam,'' said Ernest Z. Bower, president of the U.S.-Asean Business Council.
At issue is Vietnam's adherence to the core labor rights standards established by the International Labor Organization. Over the next few months, the Clinton administration must decide whether Vietnam meets those standards as part of a broad effort to normalize trade with Hanoi.
Meeting the ILO standards is critical for two programs from which Vietnam hopes to benefit. The first is the Generalized System of Preferences, which allows certain developing countries duty-free access for their exports to the U.S. market.
The other is the Overseas Private Investment Corp., which insures U.S. investments against expropriation, war and revolution. Both programs require countries to meet specific labor conditions. The main sticking point for Vietnam is a law that requires all unions to belong to the Vietnam General Confederation of Labor. That statute violates a key ILO provision on freedom of association.
The AFL-CIO has traditionally opposed contacts with unions in communist countries. Although that policy is under review by the federation's new leadership, Vietnam still remains a potent political issue, particularly to the old guard.
Issues Are Explored
A senior AFL-CIO official who asked not to be identified said the federation is considering participating in an OPIC delegation to Vietnam this summer ""to observe labor conditions.'' So far, U.S. business groups and Vietnamese officials seeking to discuss labor issues with the AFL-CIO have been met with hostility.
When Ms. Khanh came to Washington last month, not a single union official would receive her.
""Why would I want to meet with someone from a union dominated by the Communist Party?'' said the president of an AFL-CIO affiliate who was approached about Ms. Khanh's visit.
""Going in there and making Vietnam's Communist Party more legitimate seems nonsensical to me,'' the official added.
Vietnam has its own suspicions of the AFL-CIO.
During the Vietnam War, a U.S. longshore union helped break a strike on the Saigon waterfront that was disrupting the U.S. war effort. One of the most enduring images from the 1960s is union construction workers beating up anti- war demonstrators in New York.
New Relationship
Ms. Khanh, a former member of the National Liberation Front that led the resistance against U.S. forces in South Vietnam, said her confederation is eager for a new relationship with U.S. unions.
""For our trade unions, the war is past,'' Ms. Khanh said. Having ties with the AFL-CIO would help Vietnam in its dealings with U.S.-based corporations such as Nike, she said.
Nike in the News