Business leaders speak up on working time plan

A drop in working time could wipe billions of US dollars from labour-intensive sectors like garments and textiles (Photo: Le Toan)

The Japan Chamber of Commerce and Industry (JCCI) in Vietnam, together with many other business associations in the country, have been like a cat on hot bricks thanks to a reduction in normal working time proposed among many National Assembly (NA) members.

“If the existing working time of 48 hours in a week is reduced to 44 hours, it will cause a reduction in Vietnam’s export turnover, and make the economy’s competitive advantages in the international export market valueless,” said the JCCI in a statement. “It will also make the government’s efforts to attract more foreign direct investment (FDI) harder and harder.”

According to Article 105 of the latest draft of the revised Labour Code, currently discussed by the NA and scheduled to be adopted on November 20, the weekly working time is proposed to be 48 hours as it is currently applied now.

Last week, however, the issue of amendments to the working time heated up the NA, as the changes could impact millions of workers and thousands of employers in Vietnam. Many NA members have expressed their mixed views on whether the time needs to be kept unchanged or be reduced to 44 hours per week, meaning that half of a working day in a week or two working days in a month will be reduced as compared to the existing working time.

In favour of 48 hours

Minister of Labour, Invalids, and Social Affairs Dao Ngoc Dung told the NA that if the time is reduced to 44 hours per week, each year would see the reduction of 208 hours.

“This means that annually, total labour costs will rise by another 17 per cent, total export turnover will decrease by $20 billion, and the economy’s economic growth will reduce by 0.5 per cent,” he stressed.

NA deputy Vu Tien Loc representing the northern province of Thai Binh stated that the working time needs to be retained at 48 hours per week because “it is suitable to the reality of the economy.”

“If it is reduced to 44 hours per week, it will decrease national competitiveness, undermining the implementation of growth targets. Currently almost all nations directly competing against Vietnam are keeping the time at 48 hours,” explained Loc, who is also chairman of the Vietnam Chamber of Commerce and Industry (VCCI) representing the benefits of the Vietnamese business community.

“Moreover, the reduction will lead to a drop in salaries and incomes because of low labour productivity, while making enterprises’ costs rise and their competiveness decline. As a result, many labourers may lose their jobs,” he continued.

According to the VCCI, if the weekly working time falls to 44 hours, the labour-intensive sectors of fisheries, garments and textiles, electronics, and foodstuffs will suffer from a total annual loss of at least $20 billion due to reductions in output and exports, badly affecting the country’s exports and economic growth.

“Foreign investors will move to economies that have a lower labour cost to invest, meaning Vietnam will not be able to maintain high growth of FDI,” Loc warned.

Many others like deputy Doan Thi Thanh Mai representing Hung Yen said that it is not suitable for any working time reduction now as the country’s labour productivity remains low. “If we apply the 44-hour scheme, enterprises will have to recruit more employees, while the enterprises’ costs will increase, leading to a climb in product prices,” Mai said.

Nguyen Xuan Duong, chairman of the Hung Yen Province Business Association, also expressed that the working time should not be changed as it will impact thousands of enterprises in the province.

“I’m CEO of a company which has 16 subsidiaries, of which eight are operating at losses. I have just lost a $1 million order last month due to partners’ difficulties. So if the working time is reduced to 44 hours per week, our business will face more difficulties,” he said.

Do Thuy Huong, representative from the Vietnam Electronic Industries Association also gave the thumbs-down to the scheme.

“If passed, it will only cause difficulties to enterprises. At a modern production chain of an electronics firm, all labourers are counted carefully,” Huong said. “If 48 hours a week is needed to complete an order, the 44 hours will make schedules unfeasible because enterprises cannot easily increase workers at their production chain.”

“As local labourers’ productivity remains limited, the best solution is to increase overtime, meaning a rise in costs,” she added.

According to the General Statistics Office, Vietnam’s average labour productivity is low, hitting $11,142 in 2018, equal to 19 per cent of Malaysia’s rate, 37 per cent of Thailand’s, and 55.9 per cent of the rate of the Philippines. These nations are applying weekly working time of 48 hours.

Hong Sun, vice chairman of the Korea Chamber of Business in Vietnam (KorCham), told VIR that in the context of Vietnam’s low productivity and lack of skilled labourers, the proposal to reduce working time to 44 hours a week needs to be re-considered.

“If labour productivity in Vietnam was high and it was easy to find skilled labourers in the country, the proposal may be reasonable. However, it is unsuitable now. I think the drafters should seek comments and feedback from the business community about this issue,” Sun said. “They should carry out surveys on how the proposal will impact enterprises, especially labour-intensive ones.”

Opposition

However, many NA members have argued that the weekly working time needs to be reduced to 44 hours in the new Labour Code. They said that a reduction in working time is an advanced trend, especially in the current context of technologies strongly developing, and labours’ skills have significantly improved. Such a reduction will help ensure health and safety for labourers.

Deputy Phung Thi Thuong representing the northern province of Vinh Phuc said she used to work at a foreign-invested enterprise for 10 years, witnessing the hard lives of workers.

“They had their breakfast in a hurry before spending 10-12 hours inside the factories all day. When they return home, they felt tired and their family members had gone to bed,” she said. “So it is necessary to reduce the working time. We shouldn’t burden them more to pursue high economic growth.”

In fact, since 2012, the Labour Code has encouraged enterprises to apply a weekly working time scheme of 44 hours, so that labourers can have more time to refresh themselves, balance their family and work, and improve their knowledge and skills.

NA deputy Nguyen Thi Xuan representing the Central Highlands province of Dak Lak calculated that in Vietnam, the current working time is 48 hours per week, in addition to another 300 hours in annually maximum overtime. Thus total working time for Vietnamese labourers is 2,620 hours per year, which is far higher than China (2,288 hours per year), and South Korea (2,246 hours).

“There has been a trend in reduction of working time in the world, and Vietnam needs to keep up with this trend,” Xuan suggested.

Also giving the thumbs-up to the working time reduction, deputy Ma Thi Thuy representing the northern province of Tuyen Quang, cited Decision No.188/QD-TTg issued in 1999 by the prime minister on applying a working time scheme of 40 hours per week, stating, “We have applied the scheme to state-owned units. However, we have created a major gap in working time between those working in the state-owned sector and those working in the privately-owned sector. Thus, this issue needs to be solved now through the reduction of working time for privately-owned units,” Thuy said.

However, the JCCI, KorCham, and VCCI still hope that the working time will be maintained at 48 hours per week as currently.

“At present, the supporting industry and Vietnam’s manufacturing are not being developed strongly enough, so it is necessary to create ­competitiveness for both ­Vietnamese and foreign businesses so that they can create competitive products in the market,” the JCCI report stated.

“If Vietnam reduces the working time without reducing other labour costs, it will not help the country compete against other economies such as Thailand and India, and may create a crisis in investment and society.”