Strikers to be hit by costs for

Foreign investors are worried about the strikes’ impacts on production flows

Circular 07/2008/TTLT released by the ministries of Labour, Invalids and Social Affairs (MoLISA) and Finance guides the implementation of government Decree 11/2008/ND-CP, which regulates this compensation.
The circular states that executive boards of trade unions must take responsibility for compensation if they are the instigators of an illegal strike.

If employee representatives carry out the illegal strike, those participating representatives and workers must make compensation. The employers are responsible for calculating losses caused by illegal strikes, including machine, equipment and material damages, operating and repair costs.

The employers and those engaged in illegal strikes will negotiate the compensation value, which must not exceed three months’ wages. Employers can bring the cases to the local people’s courts where the illegal strikes occurred if the strikers refuse to negotiate.

In recent years, the number of strikes has increased, particularly in foreign-invested manufacturing factories. Reasons for strikes include low wages, excessive overtime hours, unpaid social insurance and lack of communication between employers and workers.

Preliminary figures from the MoLISA show that around 2,300 strikes have happened in Vietnam since 1995, many of which were unprompted. There had been 295 spontaneous strikes reported in the first four months of 2008.

Foreign investors have expressed worries about the increasing number of strikes in the country, stressing that they undermine international confidence in Vietnam as a manufacturing base. “If it loses its reputation for its hard-working, law-abiding workforce, Vietnam will not be able to keep the jobs it has now and much less attractive to more investment,” said Fred Burke, managing partner of Baker & McKenzie law firm.

Burke said the illegal strikes were partly prompted due to ineffective communication between management and workers, and if both sides were better educated about their legal rights and obligations, then the suspicion and conflict would subside.

“A lot of work will need to be done to convince workers that illegal, sometimes violent strikes are not the best means for securing long-term improvements in their living standards,” he said. Speaking at the recent National Assembly session, MoLISA Minister Nguyen Thi Kim Ngan said while strikes were defined clearly in the Labour Code, they had not been dealt with legally.

The MoLISA would attempt to improve the labour law enforcement and increase education of the law for both employers and workers in the time to come, Ngan said. She also said further action would be taken requiring enterprise management to abide by labour laws and ensure worker rights and encouraging communication between management and workers.