Industrial relations

Viet Nam ready to develop new industrial relations framework for market economy

The framework will help the country address its industrial relations challenges and comply with its labour commitments in free trade deals.

News | 09 November 2018
HANOI (ILO News) – It’s time for Viet Nam to develop a new industrial relations framework to boost economic growth and enterprise productivity, and ensure that workers receive a fair share of the gains produced through their labour.

The new framework will help the country address its industrial relations challenges, shown through wildcat strikes since the mid-1990s, and comply with its labour commitments in the new generation of FTAs – the EU-Viet Nam FTA and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

As it moves towards a market economy, Viet Nam needs modern labour laws, stronger industrial relations institutions and representative organizations, and better enforcement capacity, to reap the rewards of international trade and investment.

“Viet Nam is on a pathway to reform through both international integration and the increasing application of modern market economy principles,” said the head of ILO Viet Nam Director Chang-Hee Lee.

Party Resolution No 6 in November 2016 and Party Resolution No 27 in May 2018, made clear the State’s intention to intervene less in the labour relationship and to promote collective bargaining and dialogue as the key means of settling terms and conditions of work.

To support the country in this labour reform, the Project on Promoting the development of a new industrial relations framework in respect of the ILO Declaration on Fundamental Principles and Rights at Work (NIRF project) was launched on 9 November by the Ministry of Labour, Invalids and Social Affairs (MoLISA) and ILO.

The US$4.3 million project is financially supported by the US Department of Labor and the Japan’s Ministry of Health, Labour and Welfare in the form of official development assistance.

Its implementing partners also include Viet Nam Chamber of Commerce and Industry and Viet Nam General Confederation of Labour.

NIRF’s project goal is to lay the legal and institutional foundations for a new industrial relations framework based on the 1998 ILO Declaration on Fundamental Principles and Rights at Work in full consideration of Viet Nam’s context.

By the end of the project, Viet Nam should have its national labour laws and legal instruments consistent with the 1998 ILO Declaration. It should also have a better-functioning labour administration system for that new industrial relations framework, a more effective labour inspectorate to enforce and promote law compliance, and enhanced representative functions of workers’ and employers’ organizations.

“As an ILO Member State, Viet Nam, is committed to respecting and implementing the principles in the 1998 Declaration,” said the head of ILO Viet Nam. “These principles include providing the right for freedom of association and promoting collective bargaining to all workers and employers, so that they can negotiate fair terms and conditions of employment and balance the interests of the two sides.”

The elimination of forced labour, child labour and discrimination at work also makes up other cornerstones of the 1998 Declaration – the central pillar upon which labour requirements of the new generation of FTAs are built.

Currently about one in three regional trade agreements globally include such labour considerations. An ILO research released in 2016 shows that a trade agreement which includes labour provisions increases the value of trade by 28 per cent on average, against 26 per cent for an agreement without labour provisions.

To give effect to these principles, the revision of the Labour Code is the first and most important step in this process in Viet Nam. The country’s plan is to bring the revised Labour Code to the National Assembly for approval by the end of 2019.

According to MoLISA Vice Minister Doan Mau Diep, the NIRF project “plays an important role in addressing the existing gaps in the industrial relations system, thus helping to build harmonious industrial relations at grassroots level in line with Party Direction No 22-CT/TW in June 2008”.

He listed the gaps as labour laws not yet in line with ILO standards, and limited State management capacity in industrial relations including law dissemination and labour inspection. He also pointed out that trade unions have not yet effectively represented workers in protecting their rights and benefits whereas employers’ organizations are facing challenges in modernizing activities to better support members.

In that context, he expects the NIRF project to support Viet Nam to advance its labour law reform in line with international labour standards and in consideration of the country’s socio-economic development in order to reach its international integration goal.

* Funding for the New Industrial Relations Framework project is provided by the United States Department of Labor under cooperative agreement number IL- 29690-16-75-K-11. This material does not necessarily reflect the views or policies of the United States Department of Labor, nor does mention of trade names, commercial products, or organizations imply endorsement by the United States Government. One hundred percentage of the total costs of the project or program is financed with Federal funds, for a total of 4 million dollars.