Vietnam: Labour vs market

By Long S Le

Is Vietnam’s market-driven economic success starting to come undone? More than 20,000 Vietnamese workers went on strike demanding a 20% increase to their US$59 monthly salaries on Monday at a Taiwanese-owned factory that makes shoes for US apparel giant Nike. As of Friday, the plant remained closed after a scuffle broke out after the two-day work stoppage.

The protest represents the latest in a surge of factory labor strikes in Vietnam, the majority of which have targeted the same foreign-invested companies the Communist Party-led government has in recent years endeavored to attract in support of its export-oriented reform drive.

The large scale of the strike at the Nike-affiliated factory represents perhaps the starkest indication yet that the Communist Party’s historical promotion of mass revolutionary


movements against foreign exploitation is beginning to undermine badly its new capitalist gambit. Last year at least 541 labor strikes were held across the country, mostly at foreign-invested factories and involving an estimated 350,000 workers.

Those protests have clearly been fueled by a growing sense of economic injustice among factory workers and are now being compounded by galloping inflation rates. Consumer price inflation was 19.4% year on year in March, the biggest jump in over 13 years. Many economists are now starting to revised down their previously bullish economic growth forecasts for 2008.

That’s put the Communist Party-led government in an increasingly tight spot. Much of the government’s political legitimacy rests with its ability to manage and maintain fast economic growth. Market reforms and a new official openness to foreign investment have since 2000 contributed to annual average GDP growth of 7%, which has helped to lift many Vietnamese households out of poverty and given rise to a new and growing urban-based middle class.

At the same time, many low-wage workers have benefited only marginally from leaving the countryside and taking up factory work in industrializing urban areas. Because Vietnam’s authoritarian political system provides no outlets for popular challenge, suggestion or criticism of government policies, the strikes have been organized to influence state labor policies.

Not since French colonial rule have labor strikes been so widespread or such a prominent part of everyday politics in Vietnam. According to Phan An, director of Ho Chi Minh City’s department of labor, war invalids and social affairs, there have been more than 1,000 labor strikes in the southern commercial city since 1998. He said that around 98% of those protests were technically illegal and that most occurred at foreign-invested companies.

Indeed, almost none of the strikes were declared through a legal process, indication of the weak rule of law foundations in Vietnam’s highly repressed political and social contexts. In 2005, the government attempted to better formalize labor codes and make them more efficient in terms of arbitration and implementation.

That concession was in reaction to wave of labor strikes that forced the government to increase the minimum wage at foreign-invested factories by nearly 40% – much to the chagrin of foreign investors who located in Vietnam for the cheap labor. Many workers at foreign factories are required to work up to 1,000 hours overtime a year, often in poor, if not abysmal, working conditions.

That oddly stales in comparison with their public sector colleagues, where the minimum wage at state-owned enterprises (SOEs) is 35% higher and 134% higher for newly skilled employees. Public workers also share in SOE profits through a bonus system and welfare funds. Although low in global terms, the US$200-250 per month workers earn on average at state-owned cement plants, and the US$120-180 paid by government paper mills, are still considerably higher than the US$89 workers at the strike-hit Taiwan-owned factory pays its Nike apparel-producing workers.

The wage differential has provided an ideological buffer for the Communist Party, in that lower-paying foreign invested firms are more widely viewed as exploiting workers than their state-owned counterparts. That ideological commitment also helps to explain why the government has so far wholly failed to crack down on labor unrest – even when the strikes have hit the big name Western manufacturers and producers the country has assiduously tried to lure to Vietnam through road shows and investment incentives. The Vietnamese judiciary, widely viewed as a government puppet for politically-oriented cases, has been highly sympathetic to labor demands.

With advocacy politics severely constrained in Vietnam, labor strikes are gradually starting to transform mainstream politics by giving a voice to people outside of Communist Party-recognized organizations. The strikes are perhaps best contextualized historically by Australian National University academic Benedict Kerkvliet’s previous observation on how Vietnamese peasants have managed to press their demands on government.

Since the 1960s, the government was pressured informally and indirectly by agrarians to abandon collective farming and allow for more individual family farming instead. Those pressures eventually led to the collapse of Vietnam’s collective farming experiment “without social upheaval, without violence, without a change in government, without even organized opposition”, Kerkvliet noted.

Ideological arbitration
Similarly, perhaps, party leaders have at least until now allowed workers to air their grievances, so long as they are aimed at foreign-invested companies and not the party itself. That has until now conveniently put the government in the role of arbiter, where it strives to balance its ideological pledge to uplift the masses while assuring foreign investors that worker demands will only be allowed to go so far – that means maintaining state-enforced minimum wages rates that are still lower than in neighboring China.

That investor-labor balance however is becoming increasingly hard to strike, and some moves indicate that the authorities may soon take a harder line against striking workers. In recent weeks, Prime Minister Nguyen Tan Dung abandoned market principles and called for emergency measures to contain inflation, including price caps until June for such essential goods and services such as water, electricity, petrol, medicines, hospital fees and basic transportation services.

At the same time, in a clear concession to foreign investors, the government is also drafting a decree that will make workers responsible for employer costs in dealing with strikes and will give the state the authority to force workers back to factory lines if deemed in the national interest. If implemented, some labor analysts believe, these actions could soon put workers and the government on a collision course.

Unlike the two resistance wars that were inspired by a future vision of peaceful equilibrium, the current doi moi market reform drive is one of economic necessity and is proving to have several unexpected and unpredictable results. That’s prompted Communist Party leaders to make further revisions and reinterpretations of its original socialist path.

The new generation of economic reform-minded party leaders remains confident that they can co-opt new capitalist concepts such as private ownership while adhering to Marxism-Leninism and Ho Chi Minh thought as the country’s ideological foundation.

But as the labor strikes indicate, the contradictions are increasingly stark – including, for instance, recent government approval to a foreign investor to market and design a Ho Chi Minh golf trail in central Vietnam. They are becoming even starker as inflation eats into recent poverty alleviation gains.

The first major peasant protest against colonial rule in Vietnam, in 1908, was motivated by French administrators’ unwillingness to modify its strict and highly exploitative labor codes. This failure was later exploited by communist rebels, who effectively equated colonialism with slavery. Today’s communist party risks similar criticism, as top party cadres confiscate peasant lands, buy vacation homes and play golf during lunch breaks with Western corporate executives.

Ho Chi Minh once asked, “What has France done so as to earn our gratitude?” Now a new generation of worker activists, at least in private, is starting to ask the same question with a twist: what has the Communist Party government done so as to earn our gratitude? Or, as reputable socialist historian Nguyen Khac Vien, puts it: “Will this integration [of capitalism and socialism] be successful or will it lead to new disappointments and catastrophes?”

So far the broad verdict is mixed, but a growing number of workers are clearly disappointed with their lot in the new capitalist order. Given Vietnam’s strong national ideals of community spirit and collective action, against both foreign and local exploitation, it is not surprising to see young, non-party-affiliated Vietnamese taking up the cause of landless laborers and striking workers.

That includes the young individuals who in October 2006 founded the United Workers-Farmers Organization and in December last year were charged and sentenced to four-and-a-half years in prison on criminal charges of “abusing democracy and freedoms to infringe on the interests of the state, the legitimate rights and interests of organizations and citizens.”

As this week’s 20,000-strong labor strike indicates, there are plenty more like-minded workers and activists willing to fight for social and economic justice. Whether the Communist Party moves to suppress or enfranchise this growing movement, expressed for now in labor strikes but in future possibly calling for more democratic rights, could be the difference between the success or failure of the government’s now straining market reform program.

Long S Le is the director of international initiatives for the Global Studies Program and also a lecturer of Vietnamese studies at the University of Houston in the United States.

(Copyright 2008 Asia Times Online Ltd)

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