A Look at Viet Nam’s Wildcat Strikes

Last week in Viet Nam, a Nike footwear supplier saw an end to a five-day 14,000 worker strike, after agreeing to increases in transportation stipends and improvement in canteen food quality.  The strike occurred at a Korean invested facility outside of Ho Chi Minh City.  For Viet Nam, this is nothing new.  Since 1995, the country has averaged over 100 strikes per year and the number has been increasing.  The strikes have come as a result of discontentment in low wages, quality of canteen food, and factory adherence to labor laws – violations in overtime and contract laws are frequently violated in the country.  But above all, the perception of low wages has been the primary cause of the strikes. 

After a wave of strikes in late 2005, the Viet Nam government hastily signed a minimum wage increase on January 6, 2006 for Foreign Direct Investment (FDI) enterprises.  The decree called for a minimum wage increase of 40%, effective February 1, 2006.  So the idea was if the minimum wage was increased workers would be happy, strikes would no longer occur, and factories would operate smoothly with no disruptions...  Right? 

Not-So-Fast

The business community complained.  Their complaints were essentially two-fold:  1) control the workers and 2) reconsider the time period for minimum wage implementation.  Recent strikes in Viet Nam caused not only operating losses, but property and equipment was damaged due to violent protests.  Of all the strikes that had occurred in Viet Nam from 1995 thru 2005, almost all of them did not go through the legal process and were therefore illegal.  The government, up to that point, had done little to enforce elements of the law on striking workers.  Secondly, businesses did not necessarily gripe about the increase to wages, but rather the short time span given to implement the changes.  After companies had created budgets and plans for year, the government decided to increase wages, basically on whim.

The government’s response to the complaints?  Delay implementation for another two months to April.  Now everyone’s happy.  Workers get a raise and employers have time to implement the increase. 

Not-So-Fast-Part-2

As a result of the delay in minimum wage implementation, Viet Nam suffered its worst case of labor unrest.  According to the Ministry of Labor Invalids and Social Affairs, 303 strikes occurred during the first half of 2006 – more than two times the number of strikes in 2005.  While companies were given time to implement the minimum wage increase, workers grew very impatient with their low wages.  Viet Nam has since revised the Labor Code to clarify procedures for legal strikes, improve the arbitration process, and shortened the length of time to resolve disputes. 

So far the changes have not stopped strike action.  In October 2007 alone, it was reported that 38 companies went on strike due to low wages, poor conditions, and poor food quality.  And yet, in a span of two years the government plans to increase wages again.  With inflation at 9.5% for the year, workers are saying that their purchasing power is quickly eroding.  As a response, the government is increasing the minimum wage by about 12% in 2008. 

If history serves as an indicator of future performance, then it doesn’t look like these increases will prove to stop the strikes.  This begs the question, whether Viet Nam is actually interested in having the illegal strikes stopped.  So far, Viet Nam seems content to placate its workers by incremental increases in minimum wages and inconsequential changes to legislation as issues arise.

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Paul Dinh has been a Research Associate with CSCC's Research and Development Department since 2005.