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    Tuesday, January 17, 2006

    Labor Strikes in Vietnam 2

    I finally found an official media source in Vietnam that mentioned the strikes. It's the Saigon Times Daily, an english language Business newspaper. Even then, it only has it in Monday's print edition (16 Jan 06), so if you're looking it up--good luck. I couldn't find it on the net.

    I also talked to a very prominent lawyer in Saigon about the situation. The two sources confirm old news and shed some new light on the subject.

    Typically, workers at private (and government) factories live in the outer areas around the big cities (in this case Ho Chi Minh City). They work, on average, 12 hour days, and make a total of about 626,000 VND a month. This was based on a previous labor contract with the government. So, even if they work for a private company, the government mandates a minimum wage of 626,000 VND per month.

    There is nothing uncommon with this--America is exactly the same. We have a minimum wage (although there are people like me that oppose it being raised...but that's another issue). In this case, as you can expect, workers for over 25 companies said, "hey, 626K per month is not nearly enough for the time we work." In fairness, the wage was set years ago by the government, when 626,000 VND was the proper minimum wage for factory jobs.

    A couple companies had workers go on strike, and it spread to other companies. In response, the Vietnamese government raised the minimum wage by about $4 USD, to 710,000 VND. But actually, this is misleading, because the minimum wage is gradiated, and many workers will make between 790,000 VND and 830,000+ VND. Depending on the nature of the job, hours worked, and experience, pay will be increased to one of those levels--with most increases going to the 790,000 VND level.

    It is also mandated that many workers make 7% more than the minimum wage--I don't know all the details, but it's safe to say that most of the workers striking, under the law as written, should earn more that 710,000 VND a month.

    However, there was a second wave of strikes--this one not aimed at the government but at employers. Once employers were forced to increase wages, they decreased benefits, putting the workers back at the old wage--and obviously ticking them off. So, the government has stepped in again to force the employers to pay the regular benefits and "encourage" employers to pay workers more than the minimum wage.

    A couple thoughts on the situation.

    1. This sounds an awfully lot like labor disputes in America. The US government frequently gets into the market mess and dictates to employers the amount of benefits and wages to pay employees. Currently, it is helping numerous legacy carriers through bankruptcy (including the horrible United Airlines--never fly them) and one of the reasons commonly quoted for the bankruptcies are the enormous benefits packages owed to retirees and insurance for workers. The government is trying to help these carriers get out of bankruptcy without shedding all benefits for the workers.

    This issue is especially salient with today's medical insurance crisis.

    2. This problem stems from the inefficiency of socialism with a free market. It exists here because the government has to dictate to private employers what to pay. Dictating other things besides a minimum wage might help workers and the economy more overall. However, this is not special for Vietnam. America's practices of minimum wage, etc., cause the same inefficiencies.

    3. This sounds a whole lot different than the Chinese riots. Whereas China visited peacefully protesting citizens with death and violence, the Vietnamese government not only allowed the people to strike, but brokered a deal--first with them and now with the companies--to increase wages. In fact, Vietnam has a history of allowing strikes (see the Thanh Nien News). The Vietnames government's ability to tolerate strikes, and flexibility to work with the demands of the people, are a big reason why I originally (and still do) felt that the society of Vietnam is relatively stable and transition to a society with more protected basic rights and more open government system will be peaceful and natural. China should take a better look at Vietnam and try to emulate it.

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