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Wildcat strikes, labour shortages and a poorly educated workforce pose risks to companies in Viet Nam – new Maplecroft report

19/08/2010

A new labour standards report on Viet Nam, released by Maplecroft, pinpoints the risks and highlights insights and recommendations for companies and investors with interests in the country.

According to the report, companies with operations or suppliers in the established economic zones of Ho Chi Minh City and Hanoi have been experiencing an increase in wildcat strikes. These strikes are usually over higher wages and better working conditions, due to the high costs of living in these cities, which outstrip compensation.

Furthermore, there have been labour shortages in major cities over the past couple of years. Labourers, who are often internal migrants from rural areas, are moving back to their areas of origin, so they can enjoy a perceived cheaper standard of living and improved quality of life. Salaries in Viet Nam are low compared to other regions of the world and as a result, companies investing in the country might be expected to be able to afford to increase wages and enhance workers' job security, which would in turn likely decrease the risk of wildcat strikes, particularly in the wake of similar widely reported industrial unrest in China.

Localised labour rights and protection risk

The shortage of unskilled and uneducated workers is also a risk for business. Although Viet Nam's working population is abundant and young, most are unskilled and 65.3% lack any sort of vocational training. Similarly, statistics show that only 25% of the workforce has completed high school education, which means workers are ill-equipped to cope with the transition from an economy based on agriculture to one focused on industry, services and manufacturing.

"Viet Nam is touted by experts as being the next China, but there are clear risks when working in the country including wildcat strikes affecting productivity and the large pool of low skilled labour," said Maplecroft labour standards analyst, Monique Bianchi. "These risks can be mitigated by taking a socially responsible approach when investing in Viet Nam for the long term".

Professor Alyson Warhurst, CEO of Maplecroft adds, "Viet Nam is one of the world's fastest growing economies and companies will rush to procure from there and distribute to the country when consumers increase their buying power. The missing ingredient right now is a living wage - enough to feed a family and some discretionary income, as China is experiencing now - Viet Nam is next. The gradual empowerment of workers - who are increasingly seeking improved wages and working conditions - will result in more discretionary income and contribute to Viet Nam's economic development through boosting domestic consumption. Watch this space."

The Labour Standards Report on Vietnam offers in-depth analysis for all major labour issues including: working hours, compensation, health and safety, freedom of association, labour contracts, discrimination, migrant workers, forced labour and child labour. In addition, country scores from Maplecroft's labour rights and protection indices are provided, plus a sub-national map of labour rights infringements, key recent events and stakeholder viewpoints are supplied.

To buy the Labour Standards Report contact Maplecroft at info@maplecroft.com

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