Workers learn costs of cheap labour the hard way

VietNamNet Bridge – Almost all Vietnamese high-school students learn of the competitive advantage of cheap labour helping boost Viet Nam’s development and economy.

Although salaries are very low, they are within the limits set by the Government. In fact, many foreign enterprises pay between VND50,000 ($3) or VND100,000 ($6) more than the minimum salary.

But few thought about the consequences of cheap labour before they entered the job market. Twenty-two-year-old Nguyen Thi Tuyen, an employee at Volex Cable Assembly Company Ltd in Ha Noi, said she has worked at the company for three years and gets a salary of VND1.4 million (US$83) per month, including travel allowance.

Tuyen and four other workers share the VND700,000 ($41) monthly rent on a house, and she cannot save much money, since inflation has eaten up her extra cash.

“Thankfully the Landlords are very understanding and have not raised rent in four years,” she said.

“I planned to send money home to my mother in Bac Giang Province, but I haven’t been able to yet.”

Bui Thi Hoa, who works for Canon Company, says her salary is also VND1.4 million per month, but she receives few other allowances. “I think that is unfair,” she said.

“We each receive VND50,000 ($3) on Labour Day. If we work a night-shift, we get VND20,000 ($1.2) more. My salary this year is higher than last year, but I cannot save any money,” said Hoa.

Hoa says many young people take work in industrial parks in the hope they can save money to pay for training in other fields.

“I hope to save money and learn fashion design in the future,” she said.

“But my salary is too low, I only have enough money to live, but I must continue working, I have no choice.”

According to statistics supplied by the Deputy Chairman of the Viet Nam Confederation of Labour, Mai Duc Chinh, there have been an alarming number of labour strikes this year, challenging companies to do more for workers.

In the first eight months of this year, there were 541 strikes, nearly 110 more than the total number of 2007. Around 80 per cent of strikes were at foreign companies, mostly from Taiwan and Korea.

Legal lows

Chinh said that, although salaries varied from company to company, labourers in the garment, wood processing and shoe making sectors received the lowest average salaries, ranging from VND900,000 ($53) to VND1.2 million ($71) per month.

“In the context of increased prices, it is very difficult for labourers to maintain even a modest lifestyle, renting a house has become extremely difficult,” said Chinh.

Although salaries are very low, they are within the limits set by the Government. In fact, many foreign enterprises pay between VND50,000 ($3) or VND100,000 ($6) more than the minimum salary.

“It is legal, but not reasonable,” said Chinh.

Benefits overlooked

Although salaries are often above set levels, bonuses and insurance are often overlooked, with many companies disregarding compulsory social insurance for workers.

In fact, many Foreign Direct Investment (FDI) enterprises were found to have ignored insurance laws, bonuses and salary increases.

According to the HCM City Federation of Labour, there are 180 of the total 525 Korean enterprises that have any kind of salary scale, with the rest paying a flat salary no matter how long a worker stays with the company.

At HCM City-based Anjin Company Ltd, 170 workers on maternity leave do not have access to social insurance, as the company is VND314 million behind in insurance payments. Vina Haeng Won Industrial Company has an insurance debt of VND2 billion.

Director of HCM City’s Social Insurance Company Cao Van Sang said there are 74 enterprises that have a total insurance debt of VND57 billion, most of them were FDI enterprises.

Sang said the insurance fees were compulsory, and a part of labourers salaries were supposed to be set aside for insurance. Many enterprises had simply kept six per cent of workers salaries, and had not paid it into insurance schemes as required by law.

“Companies want to maximise profits, low-cost labour is one of Viet Nam’s competitive advantages, the cost of labour here is about one-twentieth that of Korea or Japan,” said Director of the Salary and Wage Department of the Ministry of Labour, Invalids and Social Affairs Pham Minh Huan.

Huan said the labourers’ salaries depended on the negotiation skills of labour unions, and was also limited by workers having little understanding of their rights.

“Low salaries are due to weak negotiation. But many people have blamed low salaries on the minimum wage,” said Huan.

(Source: Viet Nam News)

Update from: http://english.vietnamnet.vn//social/2008/11/814592/