Advancing decent work in Vietnam: strengthening dialogue along the global electronics value chain

Rapid growth in Viet Nam’s electronics product manufacturing sector has transformed the labour market and created a significant number of jobs. Yet as new employment opportunities emerge, so does attention to the working conditions of the primarily low-skilled, largely female assembly workforce. Since 2015, the ILO has been forging a unique partnership approach in this sector dominated by multinational enterprises (MNEs) to engage all stakeholders to advance decent work.

A unique approach

Ninety-nine of the 100 largest electronics enterprises operating in Viet Nam are subsidiaries of foreign MNEs. These MNEs have made tremendous contributions to the economic development of Viet Nam and created many jobs. Local Vietnamese enterprises, however, face challenges to become part of global value chains due to lack of technical capability, typically producing non-essential inputs such as packaging materials. Products of most local enterprises require less sophisticated manufacturing technology, such as lighting equipment and electronic white goods targeted for the domestic market.

The Viet Nam Chamber of Commerce and Industry (VCCI), the Viet Nam General Confederation of Labour (VGCL), the Ministry of Labour, Invalids and Social Affairs (MoLISA) and a number of enterprises joined the ILO project (“More and Better Jobs through Socially Responsible Labour Practices in Viet Nam”, known as the MNED project) funded by the Government of Japan to promote socially responsible business practices in Viet Nam. The project works with MNEs, their direct suppliers and the social partners to promote the application of the principles of the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (MNE Declaration).

Since its inception in 2015, the project has followed a two-pronged approach by engaging in dialogue with enterprises on their responsibilities, while at the same time strengthening public labour administration, especially the labour inspectorate. It also works from one end of the supply chain to the other, connecting actors at different levels to promote continuous dialogue – at the enterprise and sectoral and national levels, and between the home and host countries of MNEs - to prompt joint action involving all the stakeholders to advance decent work.

From developing a knowledge base to joint actions

Acknowledging the need for a strong knowledge base, coupled with awareness raising activities, the ILO conducted studies looking at how enterprises can generate more and better jobs, while enhancing the skills of workers and labour law compliance in the electronics sector. MNEs and their suppliers, as well as government officials, employers and workers organisations and other key stakeholders in the industry were interviewed for the studies. Awareness-raising seminars on the MNE Declaration were also held in the north and south of Viet Nam, as an integral part of an action-oriented research process aimed at generating new information through engagement with the stakeholders while coming up with a set of recommendations on the way forward.

The first study mapped out the industry situation and sought to address how enterprises can generate more and better jobs through socially responsible labour practices in Viet Nam’s electronics sector, taking into account the evolving transnational production system as the country further integrates in the global economy. The second study analysed the working conditions in Viet Nam’s electronics industry.

In September 2016, a High Level Policy Dialogue on the future of a competitive and socially responsible electronics industry in Viet Nam brought together more than 80 representatives from government, employers’ and workers’ organizations, sectorial and bilateral business associations, Vietnamese electronics enterprises and MNEs operating in the sector. The two ILO studies served as inputs for discussing the challenges and opportunities facing the sector, allowing for an evidence-based dialogue on ways in which the decent work impact of Foreign Direct Investment (FDI) and the operations of MNEs could be maximized. The dialogue also provided an opportunity to jointly develop a Plan of Action for generating more and better jobs through socially responsible labour practices in the sector. Key issues included: marginalization of Vietnamese enterprises (especially SMEs) in the global electronics value chain; shortage of relevant skills in the local labour market; lack of relevant and quality vocational and training institutions; working conditions, especially in SMEs; and potential inconsistency between laws and policies that affect the performance of MNEs, local Vietnamese enterprises, and the workers.

Despite these challenges, the ILO constituents recognized that MNEs are already an integral part of the Vietnamese economy and society, and are uniquely placed to further contribute to long-term sustainable development and inclusive growth through partnerships to promote socially responsible labour practices. Reconfirming the importance of social dialogue at all levels – within enterprises, between buyers and suppliers, and “tripartite-plus” involving government, employers’ and workers’ organizations and MNEs- , and using the ILO MNE Declaration as a comprehensive policy framework, ILO constituents agreed to launch a Tripartite-Plus Task Force on Socially Responsible Labour Practices in the Electronics Sector. This Task Force aims to promote policy coherence and joint action by strengthening dialogue and national frameworks for the creation of more and better jobs through FDI and MNE operations, and at the same time by encouraging a closer alignment of corporate action with Viet Nam’s development priorities to yield decent work outcomes. The ILO plays a key role in facilitating the dialogue between the host country and the home countries of the MNEs in the implementation of the Action Plan.

Labour inspectors working towards better compliance

Based on the ILO study on labour law compliance in electronics firms, the MoLISA inspectorate developed a strategy for improving working conditions in the sector in consultation with the VGCL and the VCCI. In April 2017, the MoLISA launched a nation-wide labour inspection campaign aiming at enforcing the labour law as well as raising awareness through regional dialogues between employers and workers on key compliance challenges identified in the sector, such as employment contracts, workplace dialogue, bargaining and collective agreements, working time and overtime, wages, social security and OSH. For the first time, wide consultations with the workers’ organization (VGCL) and employers’ organizations (VCCI and business associations) were held to solicit their inputs for drafting risk mapping reports and a national strategy for labour law compliance in the electronics sector. By December 2017, with strong support from the inspectorate of provincial Departments of Labour, Invalids and Social Affairs (DOLISAs), and Federations of Labour and Industrial Zones Management Boards, nearly 400 factories were directly inspected, and the newly-developed electronics sector self-assessment forms for reporting on issues of concern and compliance levels were widely distributed in the course of the campaign.

Building skills for the future of work

The project also supported another study on the “skills gap” and the future of work in the electronics sector, which was subsequently discussed during a national policy dialogue on the future of work in December 2016. This policy dialogue focused on identifying current gaps in relevant skills in the local labour market, an issue identified as one of the major challenges facing the electronics sector during the High Level Policy Dialogue held in September. The event drew some 150 participants, including representatives of the employers and workers organisation, academic institutions, think tanks, training institutes, businesses, donors, the media as well as ILO officials and other stakeholders. The ILO contributed to enhancing collaboration between policy makers, employers and training institutions to modernize the skills development system to fit the changing workplace dynamics and new technology innovations.

The employers in the lead

On 20 October 2017, the Viet Nam Chamber of Commerce and Industry (VCCI) and the Viet Nam Electronics Industry Association (VEIA) launched the Electronics Business Coalition in Viet Nam to Promote Socially Responsible Labour Practices with support from the project. The coalition provides a platform for the MNEs, local companies and business associations to exchange good practices in the workplace in line with the principles of the MNE Declaration. It also aims to collect and represent the voices of the sector in a broader policy dialogue with other stakeholders, and to take further joint actions to address challenges faced by the industry.

Through showcasing and introducing new initiatives that improve productivity, competitiveness and profitability in the electronics industry, the Business Coalition encourages MNEs to contribute positively to economic and social development through socially responsible labour practices. The engagement of MNEs with their suppliers through regular dialogues helps them increase competitiveness in the entire supply chain and demonstrates a clear business case for aligning socially responsible labour practices with company performance. Two consultation workshops were organized to provide support to 50 electronics enterprises in Ho Chi Minh City (South of Viet Nam) and Hai Phong City (North of Viet Nam) to strengthen the networking and capacities of those MNEs and their suppliers to promote socially responsible labour practices.

This Business Coalition led by the employers’ organization may encourage the establishment of a national dialogue platform on CSR going beyond the activities of electronic sector.

An integrated approach for effective development cooperation

Through closer collaboration between the different development cooperation projects implemented in Viet Nam, the ILO has explored a new integrated approach to assisting tripartite partners and major stakeholders in improving productivity, working conditions and industrial relations. Synergies will continue to be explored between the New Industrial Relations Framework (NIRF), OSH, Better Work and MNED projects.

The way ahead

As part of the project, the ILO also engages with the headquarters of Japanese MNEs since the way jobs are generated in Viet Nam are determined by HQ policies and practices. Roundtables have been organized in collaboration with the Japan Electronics and Information Technology Industries Association (JEITA) to discuss the employment and labour challenges faced by Japanese enterprises in their overseas activities and the role of their headquarters in promoting decent work throughout their global operations.

A home-host country policy dialogue forum proposed for May 2018 will discuss opportunities for collaboration between Viet Nam and Japan in maximizing the employment impact of Japanese FDI/MNEs.

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