Everything looks calm and quiet in front of the gates of Ching Lu Shoes factory, a Taiwanese supplier for Nike, 35km from Ho Chi Minh city in Long An province. The security guard smiles at some Taiwanese staff passing by the doors, as they pass by with their families for a Sunday stroll; they all live in the compound. The lawn is freshly cut and flowers impeccable. Noone would ever suspect that early April, here took place one of the most important strike since Nike started up business in Vietnam : 15,000 workers went on strike for a week, demanding a 200,000 VND (14 dollar) as a food allowance, which represents a 15% salary increase, and better food at the canteen. And this strike even echoed in international press outside the country. After negotiations between Nike, Ching Lu Shoes and the strikers, the factory management proposed to raise by 100,000 vnd (4 to 6 dollars), according to work penibility and salary basis. “We were hoping for 8 dollars for everyone !” a striker declared, although the factory has been paying staff more than the minimum wage. But due to the rampant inflation (19% in March, the highest level in 13 years), workers, especially low wages, are still struggling to meet daily living expenses.
More and more illegal strikes occur in foreign-owned factories, especially in the South (Tay Nunh, Long An, Binh Duong, Dong Nai) the heart of the Vietnamese economy.These strikes cost millions of dollars of losses for the investor and its partners.
Illegal strikes are a social disease in Vietnam and it is spreading rapidly. In 1995, there were 63 strikes. In the last 3 years, there were 200 strikes a year. In the first two months of 2008, the General Confederation of Labour already reported 200 strikes, all of them illegal : the factories management have no time, no notice, no negotiation opportunities before the strike start. Just like in Ching Luh factory, where the management faced a surprise strike without a clue. « Workers and Unions should be explained that there are rules and that they must go through appropriate steps to raise grievance and negotiate before going on strike », a manager comments. In a factory with 300 employees, at least 50% of the workers must sign and agree before going on strike. In a factory employing over 300 workers, 75% of them must agree. But in Ching Luh factory, only a small portion of the workers were actually willing to go on strike.
Strikers represented only 10% of the workers estimated the management. The vast majority did not agree to go on strike and most of them accepted the salary raise. This is when violence occured. Others were adamant and decided to continue the strike. As non strikers were willing to go inside the factory, they were blocked a the gates by the mob of strikers. Then sparked some fights between strikers and non strikers. Ching Luh management then decided to stop all activities, expecting an intervention from the authorities, while threatening that they could set up the factory elsewhere, leaving everyone jobless.
There is confusion among all parties : unions, management, workers, governement. Noone knows how to handle this new situation.
« About illegal strikes, we are in the dark », a foreign investor complains. « Noone knows what they are supposed to do. Who is liable for factory losses ? ». There is a strong need to clarify the role and responsibilities of authorities and labor federations, local and provincial police as there is no prcedure or policy jointly put in place yet. For exmaple, when such an illegal strike occur, the management has no clue on what to do : there are no regulation , no standard operating procedures to deal with these strikes, and it has led to a radical situation.
Some investors are indeed re-evaluating their commitment in the Vietnamese market. Some of them tent to doubt the governement ability to deal with the situation in the long run as they receive little support from the authorities. « Our common goal is to avoid is to avoid labor disputes as they cause strikes. Vietnamese workers love their work and they are proud of the companies they are working for. If treated properly, they do not go on strike », a governement official recently told the investors in a meeting. « The factories which take care of workers, operate according to the law have not seen illegal strikes ». he has added.
To add to the confusion, the media often cover the events and take side, demonising most of the time foreign managers and talking about « victory for the employees » when the management give in to their demands.
Furthermore, when the management is willing to discuss with labor representatives, they have noone to talk to : the leaders of the strikes are usually not the union representatives. Most of the time, like in Ching Luh factory, they are « ring leaders », with no official power. They would raise a minority and use violence. In another factory in Long An, the local police arrested 7 strike leaders who threatened to beat workers willing to work. The case went to court but they were finally freed for « lack of evidence ».
So what needs to be done to improve the situation ?
The main reasons of the strikes are usually salary demands. After the governement announced the new minimum wage for workers in foreign-owned factories, new investors proposed higher salaries to get experienced workers. Then the workers see this new situation and go on strike to get it. Some ways of improvement were suggested the governement by major investors in Vietnam.
« During the wide-spread illegal strikes with violence occured in the Southern Economic Zone before tet this year, there were no governement reaction or assistance in preventing these strikes », an investor complains. « They could help by encouraging communication between workers and management of foreign direct invested factories. While workers this time have legitimate problems caused by inflation, we need to find a clear framework for the present and future times », he adds.
The American Chamber of Commerce wrote a letter to the Chairman of the People’s Committee of HCMC, Binh Duong and Dong Nai in which they made several recommendations. First, changes to compensation and other labour rules should be consulted and notified to all parties concerned before they are introduced. Such changes should not be introduced by means of rumour or hints in the press as it happned in the past. Secondly, where disagreements between employees and employers arise, as they will naturally do form time to time, these events should be handled in accordance with the rule of law, not the rule of mob violence.
It comes as a paradox that current investors may reconsider their investment now, especially when Vietnam has just entered the World Trade Organisation last year. Foreign invested enterprises accounted for 38% industrial output in 2006 and almost 60% of exports. The situation is now critical as new investors may be willing to invest in the country... but these illegal strikes may deter them form doing so.
Nike in Vietnam
Nike is working with around 50 suppliers in Vietnam, where one third of its total worlwide shoes output is now produced (together, the factories produce about 75 million pairs a year). Nike has been in the country since 1995 with both apparel and footwear factory partners. They employ directly or undirectly 230,000 workers, most of these workers are young women between 18 to 25 year-old. Nike accounts for USD 1 billion in exports of apparel and shoes and 30% of Vietnam’s export shoes.
Nike was consulted by the government on the 2008 minimum wage increase (13%) for workers in foreign-owned factories and they work jointly with the governement on the illegal strikes issue.
In a statement, during the Ching Lu strike, Nike said: "We recognize the impact that rising inflation has had on the people ofVietnam and support the government's move to raise the minimum wage at the beginning of the year. We strongly support the workers' right to freedom of association, and hope the situation will be resolved quickly and amicably. The factory will reopen when the factory management is sure that all workers subside by the agreement with the strikers».
In December 2007, Nike already faced a strike with 10,000 strikers.
"These strikes reflect the economic pressure going on in all economic sectors in Vietnam", Nike added.
