martes, 20 de diciembre de 2016

Vietnam 2016 - III - Trade union approach

Another trade union approach to the country, its trade unions and its garment and footwear industries (this time by means of MANGO suppliers)

Translation of the report in Spanish found in:


1.       Objectives of this new trip to Vietnam, the second this year
2.       The factories visited, characteristics and working conditions
3.       Trade unions in Vietnamese factories
4.       A business point of view
5.       An interesting article
6.       Some conclusions

1.- Objectives of this new trip to Vietnam, the second this year

Starting in September 2009, this was our sixth trade union trip to Vietnam, the second this year (2016). In April, we went to Ho Chi Ming City for the creation of the South Trade Union Network[1] of Inditex suppliers. This new trip had two objectives. On the one hand, visiting factories that supply MANGO, linked with the work carried out on other occasions[2], for another trade union inspection and to monitor the country’s garment and footwear industry, particularly the factories that supply Spanish brands[3]. And on the other hand, our aim was to create the National Trade Union Network of Inditex suppliers[4], after the meetings we had previously held in Hanoi and Ho Chi Minh City to establish the North and South Trade Union Networks.

The trade union delegation was made up of Isidor Boix and Víctor Garrido (in charge of GFAs and CSR at CCOO-Industry, IndustriALL Global Union coordinators for the application of the Framework Agreement with Inditex). In the end, unlike other occasions, a representation of Vietnam’s trade unions (VGCL) was not able to accompany us as originally planned. We mention this to highlight the difference with China’s official trade unions, in relation to our initiatives of trade union approach to the industry in countries that supply Spanish brands and the application therein of the employers’ CSR commitments. Mango’s business delegation was made up of Beatriz Bayo and Laura Guiu, Director and Vice-Director of Mango’s CSR Department, along with Mai Phuong, a Vietnamese auditor that works with Mango.

In relation to the country’s economic and social reality, we would like to cite our previous reports, along with some more recent figures that are enlightening: GDP per capita in 2015 was € 1,882, which amounts to a 22% increase compared to 2014, and a 235% increase compared to 2005[5].

2.- The factories visited, characteristics and working conditions

We visited 4 factories in the region, 2 garment ones and 2 footwear ones. Three had Vietnamese capital (the 2 clothing factories and a footwear one, which subcontracts production from a Taiwanese factory) and one (a footwear factory) with Chinese-Taiwanese capital. The 2 garment factories belong to large Vietnamese business groups, one of which has 25 factories with 30,000 workers. One of the factories with Vietnamese capital, the footwear one, had 28% public capital (which we were told does not intervene in the factory’s management). They all work exclusively for exports, producing articles for European and American brands, some of which, particularly in the case of footwear, are top of the range. Their clients also include Spain’s Inditex and El Corte Inglés. The percentage of production for Mango in the factories we visited ranged from 5% to 40%. The machinery used was generally Chinese, Japanese or German, and the raw materials were mainly from China, and from Indonesia in some cases.
We also saw that some of Vietnam’s garment production has evolved, with “basic” articles being displaced towards other countries with lower costs, generally in the same region. One of the factories specialises in the production of men’s suits.

Prior to our visits, MANGO provided us with the latest audits carried out in the different factories. This enabled us to see that some of the detected problems had been solved and others were being dealt with, although some of the deadlines indicated in the audits had not been met. It also highlighted once again the limitations of the business auditing system, if it is not accompanied by sufficient trade union intervention in the company.

The main figures regarding working conditions are shown below:

2.1.- Hiring and characteristics of the workforce

·         In all the factories we visited, as in 2015, we verified the correct application of the hiring system in relation to the maximum number of temporary contracts, according to which the third contract should be permanent. However, in our visits before 2015, we found an endless succession of 1-year contracts in most factories. One factory still applied a 3-month trial period for operators, instead of the maximum of 1 month, which in fact concealed another irregularity by not complying with compulsory registration with Social Security.
·         The number of workers in all the factories we visited ranged from 200 to 800, although some, as indicated above, belong to important business groups (of up to 25 factories with 30,000 workers). The proportion of women varies from 60% to 80%, without noticeable differences between the garment and footwear industries.
·         Staff turnover in the garment industry seems to have decreased, while it ranges from 30% to 50% annually in the footwear industry, probably due to harder working and professional conditions, and longer workdays. In all cases, workers seem to give up their jobs entirely at their own initiative. A fair number of workers that leave return to the same factory after a short or long period due to different reasons (professional, family, ...). One of the workers we interviewed told us that he came to work in one of the factories “because they pay Social Security.”
·         Absenteeism is also higher in the footwear industry. It is not clear whether this is due to the working conditions and if it is the first step towards leaving the factory for this or other reasons.

2.2.- Wages

·         The legal minimum wage ranges from 3,100,000 to 3,950,000 Dongs[6] (122 to 156 euros) per month, in addition to two compulsory bonuses (hazardous pay and toxicity) of 7% (for everyone) and 5% (highly generalised).
·         With overtime, generally 20 to 30 hours per month (except in one factory referred to below), the factory salary ranges from 230 to 340 euros per month, including different bonuses for productivity, attendance, …
·         In some cases, production workers are paid by the job with a formula that guarantees that they receive at least the legal minimum wage (by means of a bonus if necessary). However, this formula guaranteeing the legal minimum may be deceptive due to remuneration by the job and/or working overtime (which could mean that the legal minimum is not attained by working what should be considered an “ordinary workday”). This is also an important problem during trial periods (which may last for up to 3 months and affect a significant part of the workforce, in the case of high staff turnover).
·         The line manager or “supervisor” earns about 400 euros per month and the factory manager € 800, with the largest salary in the factory reaching up to 2,000 euros, according to official wage lists, which may differ from the real situation, especially in factories that still pay in cash.
·         Some factories have seniority bonuses of around 5 to 7 euros per month after the second year, and “attendance” bonuses ranging from 10 to 20 euros monthly.
·         There may be other wage bonuses, such as the monthly 3-€uro “transport” bonus in one factory. Another factory has a monthly bonus ranging from 4 to 8 euros, according to seniority, to “help to pay for mobile phone use.”
·         Wages are paid in cash in two of the companies, and in one of them several of the workers we interviewed indicated net remuneration higher than what appeared in the wage list.
·         Two of the factories pay a 13th monthly salary, ranging from half to 1.3 times the monthly average. One factory pays an annual bonus of up to two monthly salaries, the amount of which per worker is decided by the company management.
·         In some factories, workers bring their own lunch (in one factory, they eat at their work stations or outside the factory if it is not raining). Other factories have a canteen, one factory offers free lunch for workers, another charges 0.06 euros, claiming that the company pays a € 0.70 subsidy per meal.     

2.3.- Working time

·         As in all southeast Asia, there is a problem with long workdays. Vietnamese legislation establishes a maximum of 30 hours overtime per month and 200 per year, which, by means of administrative authorisation, may reach up to 300 (which is, in fact, considered the generally applied rule). In 3 of the 4 factories, this level of maximum overtime is indicated by the sign in/sign out sheet. In the case of the fourth factory, which also apparently kept the same record, we saw that the collective lists did not coincide with the individual documents and verbal explanations; a fair number of employees worked, for some or quite a few months, up to 60 hours of overtime per month, and some up to 90 hours (triple the monthly legal maximum and well above the annual maximum). We also detected that this factory worked some Sundays, without clear indication of whether this was subsequently compensated for by means of rest days.
·         As in all countries of the world, overtime is “voluntary” according to legislation but, as in almost all countries, it is viewed as obligatory whenever the company indicates such. What does vary is the worker’s capacity for not working overtime. Almost all the factories indicated that you have to “ask for permission” if you do not want to stay on, without too much justification, and it is almost always granted. We have seen progress in this regard too.
·         The volume of overtime is, in fact, one of the main problems in the region, particularly in China and, it would seem, in the footwear industry. This undoubtedly requires a global trade union initiative, aimed at involving leading brands in the fashion industry, as well as the effective commitment of local trade unions and the workers’ representatives in the workplace. However, this may prove to be difficult in practice, either due to trade union weakness (as in India) or their use as instruments of power (China). Vietnam could, however, be a sphere of possible trade union participation in the project, with a specific global approach including proposals for the improvement of vocational training, in the case of both workers and managers, of work organisation, etc.

2.4.- Health and Safety

·         All the factories, in conjunction with the nursing service, carry out medical check-ups twice a year in the entire workforce.
·         In all of them, the female workers explained that the legal disposition regarding a half-hour daily break during menstruation is fulfilled, after notifying the line manageress so that she can organise such breaks.
·         We observed generalised problems in the working conditions with regard to heat and ventilation, as well as, in the case of footwear factories, the atmosphere, and in one factory in relation to the storage of chemicals.
·         When we asked about industrial “accidents,” the reply was always negative, although sometimes the workers mentioned being “pricked” by a needle.
·         In relation to matters of hygiene, in some factories we observed an excessive lack of order in handling waste and its accumulation near work stations.

3.- Trade unions in Vietnamese factories

The trade union organisation and activity that we observed in the visited factories did not differ substantially from what we saw in previous visits. In this regard, during our visit in 2015, we were able to talk at length (and to coincide in the detected problems) with the management of the country’s General Confederation of Labour (VGCL), particularly in relation to working conditions (overtime) and trade union representation in the factories (a fair number of business managers occupy posts of trade union management), as well as the scarce relevance of the current agreements, both those considered “company agreements” and the sectorial agreement in the textile-garment industry. We observed the following main elements on this occasion:

·         Declared union membership ranges from 80 to 100 % of the workforce, in relation to which we have to take into account the formal freedom of unionisation as regards becoming a member or not. However, we came across one worker who said that she was not a union member because she was not interested in the matter, but her payslip included a deduction for union dues. On the other hand, an absurd situation still exists in which union membership is not allowed during the trial period, which is compounded by the duration of such and the possible volume of the workforce that is affected.
·         Individual dues ranged from 0.60 to 1.40 euros per month in 3 of the factories, and amounted to 3 euros every 3 months in another. In one factory (the latter one), they are payed directly by workers to the production line’s union representative; in the other 3, dues are deducted from the salary.
·         In addition to individual union dues, companies pay the trade union 2% of the payroll, which evidently accounts for the substantial part of trade union finances.
·         Trade union funds are divided between territorial trade union structures and trade union (welfare) activities in the company. The distribution between both items seems to be 60-40, or 40-60, but it was difficult to receive specific figures from the company trade union leaders that we interviewed.
·         The election of the company trade union management is governed by complicated procedures and occasionally by a reduced electoral body, whose explanation does not really coincide among the different companies (on one occasion, it took us almost an hour to specify it to some extent). It can be summarised by 3 electoral procedures: one for electing the candidates, another for electing those who then vote, from among these, for the company trade union management and a third procedure for carrying out this election. In all of them, we detected an indirect, and sometimes direct, influence from the company management. However, it is worth mentioning here what we observed in other visits, namely a feeling of class among company trade union representatives; although this has probably not yet become generalised, it is now possible in the current circumstances and is an important point to be taken into account for the development of real trade unionism in the future.
·         Such a complex procedure (most of the workers we interviewed were unaware of or did not remember all the details of it) almost always results (as was the case in all the companies we visited on this occasion) in the posts of company trade union President and Vice-President being occupied by business managers (production manager, factory manager, personnel manager, …). In the meeting to establish the National Trade Union Network of Inditex suppliers we saw, however, that this negative reality does not affect all companies, and the persons that best represented their work colleagues played an essential role, regardless of their proportion in the meeting itself.
·         Some of the business managers that were also (formally) trade union leaders, tried to justify this irregularity by highlighting the advantage of “knowing well” both sides of the interests at stake. They almost reached the point of justifying this strange negotiation with themselves in order to settle inevitable labour tensions.
·         Trade union activity in the factories is mainly centred on welfare (economic aid, care for the sick, with a paternalistic view of such activity –“looking after the workers”–, …), some leisure activities, anniversary presents, … In a few cases, they insinuated that they also speak about salaries and working conditions, apart from the quality of the food or excessive working temperatures.
·         In all the factories, the business management claimed to have a collective agreement, although some workers were not aware of it and most of them could not explain how it affected them. On the other hand, this is understandable in view of the limited effect of such “agreements” on the workers’ actual working conditions and salary.
·         The “negotiation” procedure involved, in one of the companies, the trade union representatives obtaining the workers’ opinions beforehand; in other cases, it had to do with a direct proposal from the personnel department that was submitted to the company trade union for its consideration. There may be some prior conversations between the business and trade union managements, with the confusion resulting from their make-up. The business proposal is formally presented to a trade union “Congress” that is entitled to reject it, but all the companies told us that this has never happened. In one company, the final business proposal was signed by the workers (“all of them,” we were told) as an expression of consent.
·         These “agreements” incorporate the main legal regulations regarding labour relations and add some company particularities, such as the wage scale (the bonuses to be added to the legal minimum), but without specifying their amounts. These are decided annually by the business management, without any formal negotiation.
·         As an example of the limited effect of the so-called agreements, one worker that had been in the company for 11 years claimed that she did not even know what an “agreement” was.
·         In one company, a document on the notice board caught our attention regarding an agreement between the company trade union and the factory’s “youth” organisation on productivity objectives. We were told that these were “communist youths” that make up approximately 15% of the workforce, but that the indicated objectives had not yet been reached. This could, however, indicate a line of political initiative (of disputed interest, particularly due to the lack of trade union initiative) aimed at influencing matters regarding the necessary improvement of work organisation, productivity. These are matters that, with a view to appropriate labour relations, and probably with a view to their efficiency, cannot be limited to the workers’ subjective stimulus.
·         On this occasion, all the factories claimed that they had never had any labour disputes. In one, however, they told us about a strike in 2012 when the workers felt that they were not being paid properly for overtime. Seemingly, they were convinced by being presented with information indicating that the minimum wage in their region was lower than that of the company with which they had compared themselves. However, this situation highlights a series of relations among workers of different companies that are beyond the formal official mechanisms. In another factory they told us about a half-day strike, which was generalised in their area, as a protest over “Chinese aggression” against disputed islands in the South China Sea.

4.- A business point of view

In one of the companies we visited, a business manager shared several considerations regarding the country’s working conditions and salaries. Our notes produced the following main points from the employer’s opinion:

·         Salaries have been rising more than inflation for years. One wonders whether things can continue like this.

·         These larger increases are forecast to continue until 2018. By then, salaries should be at a level that satisfies the workers’ needs and, from then on, wage increases should be in line with inflation.
·         Prices in the global market of Vietnam’s productions are not rising. We will therefore have to increase work productivity. Otherwise production will move to areas with lower wages, although other costs should be taken into account, such as taxes, rents, energy, …

When asked about his own experience in this regard, he gave us the following figures:

·         Between the year 2000 and this year, 2016, in 16 years the minimum wage has increased 12 fold, the workforce has decreased by 40% and the value of the obtained production has doubled.

An interesting business point of view that should be contrasted with the elements of labour relations, trade unionism, … that we highlight in this report.

5.- An interesting article

Coinciding with our stay in Vietnam, the official English-language newspaper “Vietnam News” of November 5 published an article entitled “Measures needed to prevent labour disputes.” Some paragraphs are quoted below:

“Labour disputes kept increasing over the past years and became more complicated, demonstrating a need for adjustment of… relations between workers and employers… The country recorded 3,146 strikes… 132 strikes were reported during the first six months of this year… A representative of the ministry’s Department of Legal Affairs said that disputes… are inevitable because of on-going changes in the labour market.”

He then indicated the following, after referring to several disputes and strikes in relation to “salary, working hours, and food safety and hygiene”:

But the strikes that resulted did not follow legal processes… This shows that some legal regulations were ineffective or not effective enough… The law should be adjusted to increase mechanisms related to dialogues and negotiations between employees and employers…”

The article, however, did not deal with what is probably the main problem: how to carry out such “dialogues and negotiations” and with which organisations representing the interests at stake.

 6.- Some conclusions

Our observations during our factory visits point to some ideas for the immediate future. In relation to working conditions, the main matter is undoubtedly working time. We have previously discussed this at length in relation to the opportunity of a particular effort in Vietnam, with the necessary involvement of leading brands, global and Vietnamese trade unions, with evident possibilities of advancing due to its particular characteristics. With a joint project since this is a generalised problem, and also with specific approaches in extreme cases.

All of this underlines, on the other hand, the importance of the highlighted trade union matters. It is undoubtedly easy to reach some conclusions in this regard, contrasting the considerations in the aforementioned “Vietnam News” article with what we have observed in this and previous trips. It is interesting, in this regard, that the newspaper recognises the need for “adjustment of.. regulations.” However, it is questionable whether the main problem is “procedures” of “dialogues and negotiations,” without first identifying those who should dialogue and negotiate, i.e. if those in charge of this indispensable task are suitably representative. This objective will be difficult to fulfil if the “trade union leaders” are also personnel or factory managers.

What we observed in the factories we visited shows the need for an in-depth review of the regulations governing trade union activity, in order to guarantee the suitable election of trade union representatives, which is a key element in this regard. We have to accept that in companies, despite the common interest in their success, there exist contradictory interests in relation to salary, working conditions, …, and this requires effective representatives, who enjoy the trust of those whom they represent, differentiated between company and workers, who can dialogue, negotiate. And reach efficient agreements, with the necessary trust of those whom they represent, that can impact the quality and productivity of the work.  

Any possible pessimism resulting from these observations, in relation to the factories we visited, is offset by the aforementioned sensitivity in this regard on the part of VGCL leaders. Also by some positive symptoms detected in other visits and, above all, by those indicated in the meeting to create the National Trade Union Network of Inditex’s supplier factories, and the work plan established therein, whose report is cited above. In addition, there are also the possible consequences of what has become a constant feature in recent years, namely the relationship that is being established between the Vietnam General Confederation of Labour (VGCL) and international trade unionism, the ITUC and, in our sphere, IndustriALL Global Union. We can undoubtedly vouch, by means of these pages, for the Vietnamese trade unions’ complete willingness to cooperate in dealing with the next chapter, on the part of the ITUC, IndustriALL Global Union and, of course, ourselves personally.

December 2016

Isidor Boix
Víctor Garrido
 International Secretariat of CCOO Industry
Coordination of IndustriALL Global Union for the Global Framework Agreement with INDITEX

[2] In relation to MANGO, we have previously visited supplier factories in Vietnam, China and Morroco. And in Vietnam, we have also visited factories that supply INDITEX.
[3] Below is a link to the report from the last such trip:
[5] In order to contextualise the significance of these figures, it is worth mentioning that the same source (“Macro Data”) indicates the following GDP per capita figures for 2015: 23,200 euros for Spain, € 7,337 for China and € 1,044 for Cambodia.

[6] All other figures are expressed directly in euros for ease of understanding. However, when considering these figures, we should take into account the country’s economic reality and considerations regarding the “purchasing power parity” (this would mean multiplying wages by about 2 in order to evaluate their purchasing power) that we mentioned in the 2015 report.

No hay comentarios: