Tuân thủ các tiêu chuẩn lao động quốc tế trong bối cảnh bảo hộ thương mại: Nghiên cứu về chuỗi giá trị toàn cầu của ngành may

Nội dung text: Tuân thủ các tiêu chuẩn lao động quốc tế trong bối cảnh bảo hộ thương mại: Nghiên cứu về chuỗi giá trị toàn cầu của ngành may

1. COMPLYING WITH INTERNATIONAL LABOR STANDARDS AMID TRADE PROTECTIONISM: RESEARCH ON GLOBAL VALUE CHAIN OF GARMENT INDUSTRY TUÂN THỦ CÁC TIÊU CHUẨN LAO ĐỘNG QUỐC TẾ TRONG BỐI CẢNH BẢO HỘ THƯƠNG MẠI: NGHIÊN CỨU VỀ CHUỖI GIÁ TRỊ TOÀN CẦU CỦA NGÀNH MAY Assoc. Prof. Nguyen Thi Bich Loan Assoc. Prof. Nguyen Thi Minh Nhan Thuongmai University Abstract There is a trade-labor link that takes place in the global value chain of the garment industry. Whichever method (CMT / OEM / ODM / OBM) is involved, compliance with labor standards is an inevitable trend existing in most of the international trade institutions, especially in the new-generation free trade agreements. The garment industry has gained a good growth rate with leading contribution to export turnover of Vietnam in recent years but it has not had high added value. Most Vietnamese garment enterprises have just participated in the stage with lowest added value, mainly in the form of contract manufacturing (VITAS, 2019) and commonly fail to comply with many international labor standards. Therefore, to improve the position of Vietnam's garment industry when participating in the global value chain in the coming time, garment enterprises need to approach higher production modes, along with efforts to further compliance with international labor standards. In order to achieve this goal, it is necessary to conduct empirical research to lay the foundations to make synchronous recommendations to all stakeholders with appropriate roadmaps. That is the significance of this study. Keywords: International labor standards (ILS); Global value chain of garment industry (GVCs of garment industry); Protectionism. Tóm tắt Có một mối liên kết thương mại - lao động diễn ra trong chuỗi giá trị toàn cầu ngành may đó là dù tham gia theo phương thức nào (CMT/OEM/ODM/OBM) thì việc tuân thủ các tiêu chuẩn lao động là một tất yếu khách quan, tồn tại ở hầu hết các định chế thương mại quốc tế đặc biệt được đề cao trong các Hiệp định thương mại tự do thế hệ mới. Ngành may có tốc độ tăng trưởng khá, trong những năm gần đây luôn dẫn đầu về kim ngạch xuất khẩu của Việt Nam tuy nhiên lại có giá trị gia tăng không cao, phần lớn các doanh nghiệp may Việt Nam mới chỉ tham gia vào phần thấp nhất chủ yếu dưới hình thức gia công đơn thuần (VITAS, 2019) và sự tồn tại không hiếm việc tuân thủ chưa cao các tiêu chuẩn lao động ở các doanh nghiệp này. Do đó, trong thời gian tới để vị thế của ngành may Việt Nam được cải thiện khi tham gia vào chuỗi giá trị toàn cầu, các doanh nghiệp cần tiến tới những phương thức sản xuất cao hơn, cùng với đó cũng là những nỗ lực để cải tiến việc tuân thủ các tiêu chuẩn lao động quốc tế. Để thực hiện được mục tiêu 431
2. này cần nghiên cứu một cách thực chứng tạo nền tảng để đưa ra những khuyến nghị đồng bộ đối với tất cả các bên liên quan với lộ trình phù hợp. Đó chính là ý nghĩa của nghiên cứu này. Từ khóa: Tiêu chuẩn lao động quốc tế; Chuỗi giá trị toàn cầu ngành may; Bảo hộ thương mại (Protectionism). 1.Literature review In the world, the international labor standard was firstly mentioned by the International Labor Organization (ILO) with the introduction of the International Labor Standards system (ILS), including 89 ILO conventions and 199 recommendations based on the effectiveness of tripartite mechanism. Werner, S (2005) stated that the ILO has failed to ensure the implementation of its own standards despite great efforts. The method of ensuring ILS implementation based on persuasion is not effective, especially when trade is expanding. The Fair-trade supporters assert that, in the context of globalization, international labor standards play an even more important role than ever. Gijsbert, L. (1989), proposed including ILS in trade agreements and imposing trade sanctions on countries violating international labor laws. In 1996, labor standards were included in the agenda of the WTO Ministerial Conference held in Singapore with strong consensus that ILS were necessary in the context of globalization; the conference also emphasized the need to identify the core labor standards (CLS) to apply globally and proposed the inclusion of labor standards in the WTO framework. With this proposal, there were two contradictory views: delegates from developed countries supported the proposal of bringing labor standards into the WTO framework, even suggesting imposing trade sanctions on countries violating those labor standards while those from developing countries protested and considered it a disguise of protectionism (Union Network International, 2006; Gijsbert, L. 1989). In the end, the conference rejected the proposal to integrate ILS into the WTO framework but affirmed that the ILO was an appropriate organization to address labor issues on a global scale (WTO, 1996). Supporters of that view continue to show evidence: Kimberly, A.E. & Richard, B.F (2003) from the perspective of civil society, a group of labor rights activists, claimed that besides the positive aspects, globalization also reveals its negative aspects. Jan, M.W. (2008) also pointed out the negative side of globalization in labor such as child labor, forced labor, labor discrimination, poor working conditions, etc. which are getting more common and complicated. Despite the increasing protectionism, the new 21st-century Free Trade Agreements containing high-level labor commitments are still generated. It is interesting to note that both developed and developing countries participate in these agreements (of which CPTPP is a typical example) with high consensus in terms of commitments and roadmaps determined differently depending on the conditions of each member country. That practice allows the recognition of roles and necessity of ILS and CSL in ensuring fair and sustainable trade practice. The article inherits the view of Fair-trade supporters to analyze 432
3. the situation, to learn about trends and propose solutions to increase the compliance with labor standards when participating in the global value chain of garment industry relating to the conditions of Vietnamese enterprises in the context of trade protectionism. 2. Methodology 2.1. Research data The study used a combination of primary data and secondary data collected with various methods to reflect in an aggregate, objective and multidimensional way on the situation of compliance with ILS by Vietnamese garment enterprises participating in the global value chain and the situation of trade institutions containing labor content. Secondary data was collected and aggregated from organizations and agencies such as Ministry of Labor, Invalids and Social Affairs (MOLISA); International Labor Organization (ILO) and International Finance Corporation (IFC) in Better Work Vietnam Publications - 10th Compliance Report published in 2019; Vietnam General Confederation of Labor (VGCL). Primary data was collected via the questionnaires. The survey was conducted at 48 garment enterprises of all types in Hanoi, Bac Ninh, Hai Phong, Ha Nam and Ho Chi Minh City. Participants in the survey were employees, grassroots trade union officials, employers in enterprises (according to the ratio of 3-5 questionnaires / 01 enterprise). To be suitable with the scale, time and fund, convenient sampling was applied. The total number of questionnaires collected was 196 including 148 valid ones. Although the number of questionnaires collected was modest compared to the number of garment enterprises operating in the market, through data processing, we find that the results are very consistent with the opinions of experts in labor sector. Primary data collected has been processed by descriptive statistical methods to provide assessment information. 2.2. Research methodology The paper is a combined result of the research methodology including: Data collection method (secondary data collection method, sociological survey method, expert method); Data processing methods (statistical methods, general analysis methods). 3. Theoretical framework 3.1. Global value chain of garment industry When the trend of global integration becomes deeper and wider, the value chain has crossed borders and created a potential for development into a "global value chain" not only in practice but also in academia. Many definitions have been proposed, including: Global value chain is the whole process of producing goods, from raw materials to finished products, carried out wherever skills and materials needed for production are available at competitive prices as well as ensuring the quality of the finished product (Koopman et al., 2010). The global value chain is a more comprehensive approach to international division 433
4. of labor. Any business involved in the production of an export product is considered to have participated in the global value chain. Global value chain involves dividing the production process into many stages in different countries in order to reduce production costs and prices based on the trade advantages of each country relating to production factors (labor, capital, technology, natural resources, etc.). According to Nguyen Thi Huong (2009), researchers in the world have presented the current value chain of the garment industry including 5 main links: (i) Product design; (ii) Producing raw materials; (iii) cut, make, trim (CMT); (iv) Export; (v) Marketing and distribution. Participation in the global value chain of garment industry can take place in the form of production: Original Branding Manufacture (OBM) are enterprises (usually multinational companies) own all the links in the value chain or they can only directly implement a number of links, for example implement links (i) and (v) called franchising; or directly implement the links (i); (iii); (v) and hire ODM businesses to take over the rest; or they can directly implement links (i); (ii); (v), and hire OEM enterprises to implement the rest; or just perform the links (i); (ii); (iv); (v) and hire CMT enterprises to implement the rest. Original Designing Manufacture (ODM) are businesses that directly implement some of the links in the OBM value chain such as (ii); (iii) or just implement (i); (ii). This means that they work for OBM and hire CMT to implement (iii). Original Equipment Manufacture (OEM) are businesses that directly implement some of the links in the OBM or ODM value chain, for example (ii); (iii). CMT processing (CMT - Cut, Make, Trim) include enterprises that directly implement a single link (iii) in the value chain of OBM / ODM / OEM. The benefits of garment industry when participating in the global value chain are distributed very differently: OBM businesses capture 100% of the value chain (in the case of hiring ODM, OEM, CMT, minus the value of the corresponding links); ODM enterprises can grasp about 25-30% of the value chain (in case of leasing OEM, CMT, deduct the value of the corresponding links); OEM enterprises only hold about 4 - 10% of the value chain (in case of leasing CMT, minus the value of the corresponding links); enterprises implementing CMT only grasp 1-2% of the value chain (see Figure 1). The relationship between enterprises participating in global value chains in the form of OBM, ODM, OEM, CMT is usually done in the form of agreements or business contracts. In this value chain, the most profitable areas are (i) and (v); followed by (ii) and (iv); finally, (iii) that are represented in the form of a parabola graph whose bottom point is the "May" link to form a smiling curb. 434
5. OEM + CMT + Branding Cut, make, Marketing product material (OBM) trim &distributi designing supplying (CMT) on (ODM) (OEM) 1-2% value chain OEM (FOB I) 4-10% value chain ODM (FOB II) 25-30% value chain OBM (FOB III) 100% value chain Source: Nguyen Thi Huong (2009) Figure 1: Forms of production and contribution to GVCs of garment industry On the one hand, the global value chain demonstrates the division of international labor at a high level; on the other hand, it is also an ideal space for links belonging to the member countries to practice complying with commitments in international trade. These commitments initially focused on liberalizing the trade of goods in the first generation Free Trade Agreements (FTAs), which were later expanded into some specific services in second-generation FTAs, continuing to expand the scope of investment services and non- trade issues in the third generation FTAs; and in the fourth generation FTAs, there is freedom in many areas such as tariffs, service opening, investment, intellectual property rights, epidemiological hygiene, technical barriers, public procurement competition, labor and environment. In the context of globalization, ILS play an even more important role than ever to address and minimize many pressing labor issues that still occur and tend to be more complex (Pham Trong Nghia, 2016). 3.2. International labor standards International labor standards are labor principles, standards and related issues that extend beyond the national scope. ILSs are the standards that member countries of a bilateral, multilateral or international organization and countries using labor from member countries have to refer to when making decisions on labor. International labor standards are regarded as international laws on labor. In the ILS system, there are standards implemented without incurring any costs or increasing labor costs or affecting employers which are called Core Labor Standards (CLS). For example: the standard of freedom of association, the elimination of discrimination, etc. In the 1944 Philadelphia Declaration of the International Labor Organization (ILO), the international community recognized that "Labor is not a commodity". The World Social Summit, held in Copenhagen in March 1995; Organization 435
6. for Economic Co-operation and Development - OECD 1996; The Declaration on Fundamentals and Rights at Work, in other words the 1998 Declaration adopted by the ILO on June 18, 1998, recognize four CLS groups including: (i) The rights to freedom of association and collective bargaining; (ii) Eliminating all forms of forced and compulsory labor; (iii) Abolishing child labor; (iv) Eliminating employment discrimination. The above CLS are specified in 08 basic conventions (Conventions 87, 98, 29, 105, 138, 182, 100, 111) of the 189 ILO conventions and 199 recommendations. ILO's views on CLS are accepted by the United Nations and other international organizations such as the World Bank (WB); Asian Development Bank (ADB); International Monetary Fund (IMF); OECD, etc. 3.3 International labor standards say no to trade protection in the global value chain of garment industry Core international Labor Standards have increasingly created a "fever" not only in the field of labor but also encroaching on the field of international trade. They have created added value in new generation free trade agreements. CLS, which do not discriminate the level of economic development nor change the competitive advantage of any country, are considered as a commitment to ensure fair and sustainable trade practices, but not to trade protection purposes. CLS's mission is defined as: Creating an international legal framework for equitable and stable globalization with the setting of minimum core labor standards for all players in the global value chain; ensuring an equal playing field in the global value chain helping governments and employers avoid the "temptation" of creating comparative advantage in international trade by reducing labor standards; improving economic efficiency because the good implementation of CLS on the rights to association freedom and collective bargaining can lead to better cooperation, reducing labor conflicts, contributing to social stability, etc. In the context of globalization, the issue of ensuring the rights of workers has been increasingly emphasized on the basis of treating workers as direct producers of products / services in international trade. Therefore, they must be the beneficiaries, sharing the fruits of the process; their rights, benefits and CLS must be guaranteed. This is the approach of trade agreements and has become a trend around the world in recent years. At the time of WTO establishment in 1997, there were only 4 agreements containing labor content, by 2016 there were 77 agreements covering 136 economies containing labor content with 62% motivating, 38% conditional from agreements of the US, Canada and EU (Nguyen Manh Cuong, 2019). Between 2013 and 2016, over 80% of in-effect FTAs around the world contained labor provisions (ILO, 2016). This is also one of the reasons why, after making a 1998 declaration on the basic principles and rights of workers, ILO continued to approve the statement on promoting workers' benefits in the process of fair globalization in 2008. Basically, the labor commitments under free trade agreements all reiterate the ILO's commitment and lay out the basic principles and rights at the workplace. In addition, a number of agreements have added obligations regarding acceptable employment conditions for minimum wages, working hours, health and safety at work. Accordingly, as part of the global value chain, garment businesses in member countries of the new 436
7. generation FTAs as well as the countries using the member countries’ labor must strictly comply with the committed ILS and CSL. In general, it is indispensable to have a trade-labor link that takes place in the global value chain of the garment industry. That link exists in most international trade institutions (New Generation FTA/ Code of Conduct of independent organizations or multinational companies, etc.). The scope of this study focuses on FTAs. Compliance with CLS in enterprises in the global value chain depends greatly on the capacity of entities in the labor relations. Research by ILO (2016) has shown that on average, a trade agreement with labor provisions helps increase trade value by 28%, while one without labor provisions only increases their commercial value by 26%. 4. Research findings 4.1. The position of Vietnamese enterprises in the global value chain of garment industry In 2018, Vietnam's export turnover of garment products increased by 13.85% compared to 2017, reaching $36.2 billion. In 2019, Vietnam's garment industry continued to gain impressive trade surplus, with a total export turnover of $39 billion, growing by 7.55% compared to 2018, ranking third in the world only after China and Indian. The main export markets of Vietnam garment products are the US, the EU, Japan and South Korea. The US and EU continued to lead with export turnover of the year increased by 13.7% and 10.5% respectively. Meanwhile, in Japan and South Korea, Vietnam garment products are moving to the leading position with export turnovers increasing by 24.8% and 32.6% respectively in 2018. Some other markets such as ASEAN and China are experiencing remarkable growth. Except the US, almost all of the major and potential markets for Vietnam garment exports are markets where Vietnam has FTA with. Despite impressive growth in recent years, Vietnam's garment industry has, according to experts, not developed really sustainably, Vietnamese garment enterprises have just joined link (iii) in the global value chain which is a simple processing, using the most labor, but with very low value. Prime Minister Nguyen Xuan Phuc (2019) addressed at the Vietnam Reform and Development Forum 2019 on September 19 that FTA have channeled the global supply chain value flow through Vietnam but Vietnamese enterprises can only earn a little when participating in global value chain. Or Le Tien Truong - General Director of Vietnam National Textile and Garment Group (2019) - stated that one of the sectors with the potential to participate more deeply in the global chain is the garment industry. The industry’s growth rate has always reached double digits, the annual export turnover has reached billions of dollars, but the growth rate in value is still low for the past years. The garment industry, like many others in Vietnam, remains the outsourcing industry. According to the Vietnam Textile and Apparel Association (VITAS) (2019), the proportion of garment exports by CMT outsourcing accounted for 65%, OEM export (FOB I) is only about 25%, and ODM export (FOB II) is only 09% and 01% is OBM (FOB III). Therefore, the added value of exported garment products is still low, only about 25% compared to export turnover, profit margin is only about 5-10%. The underlying reasons 437
8. include the poor development of the supporting industry, over-dependence on imported raw materials, the low level of technology development and low labor skills, etc. 4.2. International labor standards in new-generation free trade agreements to which Vietnam is a member Currently, Vietnam has 13 in-effect FTAs and is in the process of negotiating 03 other FTAs with a total of 57 trading partners in the world (WTO Research Center, 2019). The main commitment is to eliminate tariffs on most goods, of which the garment industry is one of the industries enjoying many advantages. Among the signed FTAs, Vietnam has participated in two new-generation free trade agreements whose contents include labor commitments to ensure sustainable trade development: Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP): Launched as the Trans-Pacific Partnership - TPP Agreement. After the United States officially withdrew on January 30, 2017, the remaining 11 countries have continued to promote and reached an agreement under the new name of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), officially signed on March 8, 2018. The National Assembly of the Socialist Republic of Vietnam passed a resolution approving the CPTPP on November 12, 2018 and the provisions of the Agreement took effect from January 14, 2019. The content of the CPTPP includes chapter 19 on labor regulations, including 15 articles. In particular, the CPTPP members affirmed their commitments to fulfill their obligations as a member country of the ILO, namely the basic principles and rights of labor stated in 1998 Declaration of ILO; parties must not use labor standards for trade protection. Member countries are committed to adopting and maintaining CLS in their legal systems as well as in practice, including: Implement the rights to freedom of association and collective bargaining (convention 87 and 98); Eliminate all forms of forced labor (conventions 29 and 105); Efficiently abolish child labor and prohibit the worst forms of child labor (conventions 138 and 182); Eliminate professional and employment discrimination (conventions 100 and 111). In addition, Members are obliged to ensure that laws and practices stipulate acceptable working conditions for minimum wages, working hours and occupational safety and hygiene. This chapter provides a link between the implementation of the above statements and trade conditions within a specific time, including applicable sanctions. Vietnam - EU Free Trade Agreement (EVAFTA): In October 2010, Vietnam and the EU agreed to start negotiations on a free trade agreement between Vietnam and the European Union (EVFTA). In August 2018, the EU officially announced the documents of the Trade Agreement (EVFTA) and the Agreement on Investment Protection (EVIPA). On June 30, 2019, Vietnam and the EU officially signed the agreement. February 12, 2020 marked a long-running negotiation with the results of the European Parliament voting through EVFTA and EVIPA. Labor standards are set out in Chapter 13 (Trade and Sustainable Development) of the Agreement. Although there is no commitment on specific labor standards, EVFTA sets a general principle for the issuance of relevant domestic standards and regulations, specifically: Parties must not eliminate or reduce the standards and law regulations on the labor in a way that affects trade and investment between 438
9. Vietnam and the EU; must not ignore the enforcement of labor laws due to the purpose of promoting trade and investment; must not apply labor regulations in a manner that can limit investment trade between Vietnam and the EU in a disguised manner; When drafting or enforcing regulations to protect working conditions, parties must base on existing scientific grounds and information, and refer to relevant international standards, guidelines and recommendations; The principles of transparency and full consultation must be ensured when issuing new labor regulations and standards. Article 13.4 provides labor standards and multilateral agreements. EVFTA labor commitment does not provide new labor commitments or standards but only emphasizes the fulfillment of obligations that Vietnam and the EU have committed to as members of the International Labor Organization (ILO) and labor standards in the ILO 1998 Declaration on 04 fundamental workplace principles and rights such as the CPTPP. The Agreement also recommends that the two parties recognize the importance and reaffirm their commitments to promoting bilateral trade development in a way that is conducive to full, productive and sustainable employment for all people, especially in response to globalization. At the same time, it is recognized that labor standards should not be used for trade protection purposes. Comparison of labor standards in CPTPP and EVFTA shows the similarities in content, but there are differences in the level of commitments. In EVFTA, the level of commitments is conditional, including enforcement mechanisms; In CPTPP, the level of commitments is higher and more stringent with commercial sanctions. As a member of two new generation FTAs with a commitment to high-level labor, Vietnam can be proud of its maturity but at the same time has the responsibility to internalize its labor laws approaching ILS and CSL, as well as create momentums for Vietnamese garment enterprises to participate more deeply in the global value chain, which employs nearly 2.7 million people. 4.3. Compliance with several core labor standards in the global value chain of Vietnamese garment enterprises 4.3.1. Situation of executing the right to freedom of association Association freedom is a general directive principle of modern labor regardless of economic development stage. It is the setting for labor not only in developed but also in developing countries. As specified in CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) and EVFTA (European Union-Vietnam Free Trade Agreement), the members must ensure that the laborers are free to form and enter labor organizations at basic and higher levels. Specifically, within 5 years since the agreements take effect, the members must realize terms of labor union. Accordingly, in Vietnam, laborers in enterprises can choose to join a local labor union under VGCL (Vietnam General Confederation of Labor) or register with a related government authority for the official operation of their organization with transparent procedures regulated specifically in legal documents. Laborers’ organizations have autonomy under ILO’s regulations and Vietnam’s law. Laborers’ organiazations at local level may integrate to form laborers’ organization at higher levels like industry or region. However, at present in Vietnam there are no other laborers’ organizations. The execution of 439
10. association freedom in Vietnamese enterprises is currently attached to local labor union, which is realized in the following aspects: In terms of the right to form and enter organizations representing laborers in garment enterprises: To ensure the rights of laborers’ union, Vietnam has enacted a number of legal documents including Vietnam’s Consitution 1957, 1980,1992, and 2013; Labor Law 1994 (amended and supplemented in 2002, 2006, 2012, and 2019); Union Law 1957, 1990, 2012 and others. Presumably, the system of legal documents related to the rights of laborers and unions was formed at an early stage and has been regularly amended and supplemented appropriately to serve as the legal corridor for laborers to execute their union rights in all aspects from forming and entering unions to acting in unions, thus contributing to liberalizing people and encouraging laborers to actively take part in the country’s construction and development. As for now, Chapter XIII in Vietnam’s Labor Law 2019 realizes laborers’ organizations at local level including local labor unions or other organizations of laborers which they are free to form, enter and act in under legal regulations. This is a new, outstanding point close to commitments of association freedom in CPTPP and EVFTA. Nevertheless, specific regulations on documenting, registering, operation principles, etc. of laborers’ organizations in enterprise must be issued soon so as to be active as the law takes effect on 1st January 2021. According to VGCL, 2,699 new labor unions were formed in 2017, raising the total number in the entire country to 126,516. Though the number of members and local unions has been continuously growing, the right to form laborers’ unions in several enterprises does not match commitments under VPTPP and EVFTA. A number of firm leaders do not create favourable conditions for laborers to realize their rights in forming and entering local unions in the enterprises. According to Nguyen Viet Dung, President of Labor Federation of Vung Tau city, a number of eligible enterprises do not form local labor unions; several firm leaders even discriminate against laborers who are members of unions or try and interfere with their operation especially in selecting leaders or budgeting. Experts’ views agree with the findings from the researchers’ survey (see Figure 3) in that the rights to freely form and enter labor unions are given medium low scores (from 2.47 to 3.13 points). One part of laborers are not allowed to engage in labor unions and to act in unions during and after work hours. Even worse, entering labor unions may harm laborers’ employment, and some of them are even forced to quit the organizations. The reasons for the situation are not only unmatched association rights in Vietnam’s legal regulations with commitments in the FTAs but laborers, employers, and local union staff are in lack of knowledge of the right to associations freedom as well since they are given average scores of 1.29, 1.63, and 1.35 out of 5.0 points respectively (see Figure 4). Of all, laborers have poorest knowledge of the right to association freedom with the average score of merely 1.29. Poor awareness of association freedom rights of all 3 types of labor entities leads to interferences with association rights; for example laborers do not form and enter unions to protect their legal rights and interests; local unions perform uneffectively; and employers delay the formation and operation of labor unions. 440
11. Laborers Labor users Union staff Laborers Laborers Laborers’ Laborers Laborers are are allowed employ- are not are not allowed to ment is not forced to restricted to enter participate harmed in quit their in acting Knowledge of the rights of Knowledge of acceptable working unions in union acting in unions in unions associating and collective conditions (minimum wage, activities unions after work negotiating under CPTPP working hours, work safety, and during health) under CPTPP work hours Source: Survey by researchers Source: Survey by researchers Figure 3: Assessment on the execution of Figure 4: Assessment on the laborers’ the rights to form and enter labor unions knowledge of labor commitments under in Vietnamese garment enterprises FTAs In terms of the execution of autonomy in the operation of laborers’ representative organizations in garment enterprises: As committed to CPTPP and EVFTA, laborer’s organizations are independent in protecting their legal rights and interests. In garment enterprises, the local unions have organized several activities within their rights and duty as regulated in article 20 of Vietnam’s Labor Union Regulation 2013. However, the activities are superficial and affected by employers. Enterprise owners would wish to take control of the local union in order to ensure that the employees will abide by the enterprise’s policies without resistance causing harms to the enterprise’s economic and prestigious benefits. Local union has become a unit of the enterprise delivering welfare by organizing cultural events, sport events, entertainment, or trips, not providing knowledge of the culture and unions for its members (Chang - Hee Lee, 2018). The survey results have affirmed the researchers’ judgements in that labor unions’ levels of representing, protecting, and associating are all below average. Especially, the average score of the judgement that the labor union is not controlled by the employer in making operational decisions is low at 2.31 (see Figure 5). The labor union is able The labor union is able The labor union is able The labor union is not to protect laborers to represent laborers to associate laborers controlled by the employer in making operational decisions Source: Survey by researchers Figure 5: Assessment on the performance of local unions in Vietnamese garment enterprises 441
12. In terms of the personnel independence of laborer’s representative organizations in Vietnamese garment enterprises: Recently union staff in most Vietnamese garment enterprises have been under control by the employers. They are often managers with better payment and perks than other employees. Personal interest is one of the key factors dominating the attitude and behavior of union staff in protecting laborers’ rights and benefits. The survey by the researchers shows that the judgement that the local union is not controlled by the employer in making personnel decisions and the local union’s executive committee does not have managers as members average 2.21 and 2.11 out of 5.0 points which are medium low. Besides, local union staff are mostly competent managers of departments in the enterprises, so they are busy with their professional operations and can therefore spend a little time on the union’s work. According to CIRD (2016), in a lot of Vietnamese garment enterprises, employers do not create good time-related conditions for union staff, but the unions’ executing committee do not negotiate over this with employers. One part of union staff do not have a good command of the union’s work while they do not have enough time to study related documents. As a result, they fail to implement the tasks promptly, explain the company’s policies to union members and laborers and implement the union missions, leading to the members turning their backs on the union. This means the execution of personnel independence of local unions in Vietnam is not effective, and union staff do not meet requirements of competence as committed under CPTPP and EVFTA in terms of association freedom. In terms of financial autonomy of representative organizations in garment enterprises: The union’s fund includes money transferred by the employer to the union as regulated by the government and fees paid by union members. According to CIRD (2017), several enterprises try to interfere in the union’s expenses like holidays, sport events, trips, etc. The budget for local union’s activities is limited and slowly financed; besides it is not spent appropriately on the union’s or members’ missions as it is dominated by the employer. Moreover, very few local unions spend money on educating and training union staff and members. There are hardly any facilities (working spaces, mobile phones, file cabinets, etc.) for local unions. In addition, in several enterprises, the union’s fund is limited while a number of union’s activities are funded by the enterprise. Ineffective financial autonomy leads to the fact that it is difficult for local unions to be independent in their operation, and the role of representing and protecting laborers’ legal rights and interests is not fully promoted. The researchers’ findings also agree with the above judgements in which local union’s financial autonomy is assessed to be low with the average score of 2.16 out of 5.0 points. 4.3.2. The execution of collective bargaining in labor relationship in Vietnamese garment enterprises In Vietnam, the existing law on collective bargaining is pretty comprehensive. In Labor Law 2012, collective bargaining is generalized including the aim, principle, representative, content, and procedure. Vietnam’s government encourages collective bargaining and signing collective labor agreements (CLA) with terms in favor of the laborers in order to boost the development of garment enterprises ensuring productivity, 442
13. quality, and efficiency. Recently, under the direction by VGCL, labor unions at all levels have made great efforts in collective bargaining and signing CLAs. CLAs play an important role as Labor Law specifies the general minimum framework only. As assessed by VGCL, several CLAs get at higher level than regulations. However, there are still shortcomings in negotiating and signing CLAs: The number of local unions engaged in collective bargaining and signing CLAs is still small; the quality of CLAs, despite much improvement, does not match laborers’ expectations and has not brought great benefits to the laborers. A number of CLAs are still superficial and have coping nature. That the laborers interests are not guaranteed is one of the reasons for strikes. In contrast, several enterprises have policies that are beneficial to the laborers but are not stated in CLAs to avoid liabilities. The classification of CLAs by criteria stated in VGCL’s Instruction No. 1580/HD-TLĐ on assessing the quality of collective bargaining and CLAs signing is a typical example. According to statistics by VGCL, at present in the whole country, labor union representatives have signed 27,866 CLAs equivalent to 67.96% of the enterprises with labor unions; of all, A-level CLAs account for 11.05%, level B 15.63%, level C 26.40%, and level D 21.19 %. 25.02% of the CLAs were not classified as they have expired or are not beneficial to the laborers. According to the researchers’ survey results, the awareness of the laborers, the employers, and union staff of collective bargaining right is poor with the average scores of 1.29, 1.63, and 1.35 out of 5.0 point respectively. To meet the commitments under CPTPP and EVFTA, in the coming time it is necessary for Vietnamese government to take measures to effectively implement collective bargaining in enterprises. Besides, the entities of the labor relationship also need to enhance their knowledge and awareness of collective bargaining. Table 1: The rate of non-conformers in collective dialogue and bargaining (331 factories) Percentage Number of non- No. Questions of non- conformers conformers (%) 1 Does the employer try to interfere with or take control of 4 1 the union? Do the laborers take part in making the union’s decisions, 101 31 2 establishing the union’s principles, regulations, and activities, or engaging in management, finance, or voting? 3 Does the employer consult the union about issues regulated 80 24 by the law? 4 Is the current collective bargaining accepted by over 50% 61 18 of the laborers? 5 Do the laborers realize all the terms in the current CLAs? 26 8 6 Does the employer inform the laborers of the CLAs’ 25 8 contents? 7 Do the CLAs contain better terms for the laborers than 13 4 regulated by the law? Source: ILO and IFC (2019) 443
14. A comparison of the researchers’ survey results with rates of non-conformers with the rights to association freedom and collective bargaining given by ILO and IFC (2019) reveals an ignorance of the laborers, employer, and union staff. Almost 60% of the factories do not comply with regulations on collective bargaining in that the employers do not consult the unions thoroughly; there are not enough appropriate polls to approve CLAs; CLAs are not made public to all laborers. As many as 80 out of 331 factories do not consult the laborers on the key issues regulated by the law. Regarding collective bargaining, 18% of the factories do not make sure that their CLAs are agreed by more than 50% of the laborers which is a legal regulation, and there is doubt that the polls are not made regularly. For example, several enterprises present minutes of the polls, but when they are asked to, the laborers (even personnel staff in some cases) cannot recall the facts. Regarding this aspect, one out of five factories do not make public the contents of CLAs to all laborers, leading to the fact that the laborers have little or no understanding of the commitments, rights and liabilities stated in the CLAs (see Table 1). 5. Conclusion and recommendations 5.1. Conclusion The execution of CLS in Vietnamese garment enterprises participating in the global value chains has been improved in recent years. However, under the labor commitments in CPTPP and EVFTA, there still remain quite big gaps in some aspects: Firstly, the gaps in the executing association freedom; in ensuring the rights to establish and enter laborers’ unions; in the operation autonomy, personnel independence and financial independences of local unions; Secondly, the gaps between the quality of CLAs and the real desires and expectations of laborers, collective bargaining is superficial. The execution of ISL and CLS in Vietnamese garment enterprises is attributed to the following factors: firstly, Vietnam’s labor law has been established and amended 4 times on the basis of referring to ILS and ensuring that there are specific regulations including the basic rights at workplaces; 2019 Labor Law was issued with regulations and terms about the organization of laborers but there is no specific instruction; Vietnam has joined Treaty 98 but not yet Treaty 87 of ILO. Secondly, the competence of laborers, employers, labor union staff and local labor unions remain quite poor, their awareness of ILS and CLS remains weak. 5.2. Opportunities for Vietnam garment enterprises in the global value chain and challenges in compliance with ISL 5.2.1. Opportunities for Vietnam garment enterprises in the global value chain CPTPP has come into effect, creating many opportunities for garment exports, especially when the market shares of countries participating in this Agreement account for nearly 16% of the total export values. Among 11 member countries of CPTPP, Japan is currently the biggest import market to Vietnam’s garment products with an average annual growth rate of +7% in the 2013-2017 period and is expected to increase in the coming time. The signing of CPTPP will open up an opportunity to export to this market with tariff 444
15. of 0%. Canada represents the second biggest market among CPTPP member countries although it accounts for just 2% in the total export value of Vietnam; in the 2013-2017 period, the average annual growth rate of Vietnam’s exports to Canada reached 11%. EVFTA, expected to take effect in July 2020, will create big advantages for garment industry. The EU market represents 15% of Vietnam’s total export turnovers. It is estimated that the annual growth rate of Vietnam’s garment export will increase by 17% a year when the Agreement officially comes into effect. Regional Comprehension Economic Partnership (RCEP) is an agreement with the participation of 6 countries that ASEAN has signed free trade agreements with, including Australia, China, India, Japan, South Korea and New Zealand. The total contribution of these 6 countries to Vietnam’s total garment import-export revenues in 2017 was 57%. If this partnership agreement is approved, it will not only boost exports but also create opportunities for enterprises to import raw materials at lower prices. 4.2.2. Roadmaps to implementing international labor standards under CPTPP and EVFTA for Vietnam’s garment enterprises participating in the global value chain Among FTAs with biggest impacts on the participation of Vietnam’s garment enterprises in the global value chain, there are 2 FTAs with CLS with high commitments that require appropriate roadmaps from both macro and micro economic perspectives - they are CPTPP; EVFTA and Vietnam-Japan Economic Partnership Agreement (VJEPA). Although this agreement does not refer to CLS, as Japan is a member country of CPTPP, Vietnamese enterprises participating in the global value chain still need to respect these labor standards upon the official effect of CPTPP when exporting to Japan’s market. The roadmaps to implement CLS with CPTPP countries: missions must be taken as soon as CPTPP comes into effect with Vietnam; Within 3 years since CPTPP comes into effect with Vietnam, countries are committed to not imposing trade sanctions on Vietnam if they set up a court case against Vietnam under State Dispute Settlement Mechanism in case there is violation to obligations in the Labor Chapter; Regarding obligations about free links and recognizing collective bargaining, in case there is a court case against Vietnam, countries are committed to not imposing concession-ceasing measures within 5 years and considering whether to impose trade sanctions beyond the framework within 5 to 7 years since CPTPP officially comes into effect with Vietnam. Roadmaps to implement CLS with EVFTA: Article 17.16 of EVFTA stipulates that the effect of enforcing the commitments is the first day of the second month after the two sides inform each other of the accomplishment of procedures or at another time agreed by both sides. The European Parliament needs to take the final procedure before this Agreement can be issued. On its side, Vietnamese Government has to complete procedures quickly to submit to the National Assembly for approval. According to Minister of Industry and Trade Tran Tuan Anh, the Agreement in general and CLS in particular are expected to take effect in May 2020. 5.3. Recommendations Implementing new-generation commitments to CLS requires appropriate roadmaps 445
16. and synchronous solutions from the Government, enterprises and the entities in the labor relations. The core solutions include: 5.3.1. Strengthening the compliance with labor commitments in Vietnam’s garment enterprises participating in the global value chain in the context of trade protectionism For Vietnam’s garment enterprises, it is necessary to understand the contents of the commitments in CPTPP and EVFTA related to labors so that they can proactively set up strategies to access the market, expand exports, attract investments from member countries on the following fundamental bases: Improving the compliance with the rights to association freedom including the following rights: the rights to form, enter, participate in the activities of organization presenting laborers in garment enterprises to deal with the current problems of enterprises not creating the most favorable conditions for laborers to practice their rights to association freedom and union participation; the rights to make decisions on the operation modes of the laborers’ organizations in garment enterprises to avoid the fact of activities being superficial and being controlled by employers; the rights to personnel independence of laborers’ organization in garment enterprises because leaders are the driving force in the organization - this helps to avoid the problems of labor union leaders being the managers who work under the control of the enterprise owners and to create physical and financial conditions for labor unions and labor union leaders to take control of the process to execute their rights and obligations and to facilitate local labor unions to be financial independent in garment enterprises. Improving the compliance with the rights to collective bargaining in the following main aspects: conducting social dialogues and collective bargaining by their true nature, ensuring the time and procedures; building up CLA with more specific contents than as stipulated by law such as working time, break time, guarantee of work, pay, bonus, work condition improvements, working mechanism for female laborers, shift meals, holiday, healthcare allowances, financial supports on unexpected difficulties, wedding or death incidents, birthday celebrations, travel allowances, vehicle supports, body insurance, etc. The CLA should be built up on the basis of a renewal and creative spirit on the principles of respects, cooperation, bargaining and self-decisions of employers, laborers and laborers’ organizations. 5.3.2. Amending and internalizing labor laws with approach to ILS and CLS in the context of trade protectionism Completing the system of institutions and laws is the prerequisite to raise the level of compliance with commitments to laborers. Some tasks to implement in Vietnam include: Submitting to National Assembly to approve EVFTA within the right time frame: the decisions by the European Parliament on EVFTA is an important milestone to demonstrate Vietnam’s achievements in international integration, including in labor aspects. So Vietnamese Government should quickly implement necessary procedures to submit to the National Assembly for approval. In addition to the accomplishment of 446
17. procedures for approval, preparations for the Agreement should be made quickly and actively by Ministry of Industry and Trade as the core entity in setting up and submitting to the Government the Draft Action Plans to prepare for the execution of EVFTA. The plan needs to specify goals and main tasks for relevant ministries and agencies with clear roadmaps for implementation. Issuing Decrees on instructing the implementation of 2019 amended Labor Law. The 2019 amended labor law will take effect on 1st January 2021, so it is necessary to issue decrees on instructing its regulations. Decision No. 24/QĐ-TTg dated 6th January 2020 by Prime Minister issues the List and assigns agencies in charge of drafting documents on implementing laws and resolutions approved in the 8th session of the 14th National Assembly. There will be 21 decrees on instructing the implementation of 2019 amended labor law, including some core documents related to the execution of CLS: decree on dialoging and implementing democratic principles in working place (Term 4 Article 63); decree on collective bargaining and collective labor agreement (Term 1 Article 68, Term 7 Article 76, Term 2 Article 84, Term 3 Article 85); decree stipulating the representation organization of laborers (Term 4 Article 172, Term 2 Article 174, Term 2 Article 176); decree on labor dispute settlement (Term 2 Article 184, Term 6 Article 185, Term 2 Article 210); decree specifying the list of laborers-using units not entitled to strikes and settling collective labor demand in laborers-using units not entitled to strikes (Term 2 Article 209), etc. These decrees need to be issued by the end of 2020 to lay the foundation for the application of the 2019 amended labor law in the real life. These are evidences for Vietnam’s efforts to recognize its commitments to EVFTA and CPTPP, contributing to improving labor relations, facilitating international integration and fair trade. Amending 2012 Trade Union Law to meet the demand of the new situation: 2012 Trade Union Law was issued as an important legal foundation to ensure the effective operations of Vietnam’s trade unions, contributing to the national socio-political stability. In the past time, Vietnam General Confederation of Labor has strengthened the evaluation of implementing 2012 Trade Union Law, proposed amendments and supplements to the law towards focusing on contents related to the mechanism to raise the capacity and efficiency of trade unions in order to enhance the competitiveness of the union with other laborers’ organizations which will appear in the coming time. Preparing necessary conditions to continue signing fundamental conventions at work to lay the firm foundations for Vietnam’s garment enterprises to comply with CLS on the basis of analyzing the situation. In the coming time, Vietnam, together with 165 other countries, is about to approve Convention No.87 on applying the rights to association freedom. Along with Convention No.98, these two Conventions will set up overall principles based on modern labor relations which are established in almost all member countries of ILO. Under the plan, Convention No.87 will be approved and issued by 2023; from now to that time, Vietnam can prepare necessary conditions to successfully implement this Convention. At the same time, it is necessary to research and participate in Conventions on Abolishing Forced Labor by ILO including Convention 29 and Convention 105. These conventions will create favorable conditions for Vietnam to 447
18. implement its commitments to WTO and other bilateral trade agreements. Furthermore, participating in the conventions is the legal framework to affirm the rights to speech of laborers and employers. This signifies the Government’s commitments to implementing its international obligations, which contributes to creating attractiveness for investment environment, creating opportunities and motivations for Vietnam’s garment enterprises to participate more profoundly in the global value chain. 5.3.3. Enhancing the capacities of entities participating in and directly related to the compliance with international labor standards Together with completing institution, raising the capacities of labor relation entities is the prerequisite to ensure grasping opportunities and avoiding violating labor commitments in CPTPP and EVFTA in order to raise the value in the global value chain. These can be done via the following solutions: Changing views, informing and improving knowledge of ILS and CLS in FTAs for entities of labor relations in enterprises because only by adequate knowledge and understanding can people act properly. This knowledge is about the rights, obligations, roles, responsiblities of each entity and partners in the labor relations; the significance and values of following CLS and ILS as well as the consequences of not complying with them due to disrespect, poor awareness and loose cooperation; the inevitable changes in labor standard system in trade and invariability of CLS in the context of international integration; the opportunities and challenges to each entity when Vietnam joins CPTPP, EVFTA and other new-generation free trade agreements. Enhancing bargaining skills for entities to best practice ILS and CLS in FTAs. Skills can become fluent and perfect when they are based on strong knowledge, appropriate awareness and good experience in solving problems. Bargaining skills help to create activeness for entities to deal with labor relations when they just get started, so it is necessary to improve bargaining skills to implement their tasks. Bargaining skills are actually a kind of science and art. To have effective bargaining skills, there needs to be a complete procedure with closely-linked periods and stages. Besides general skills, each entity should build their core skills to gain success in their positions as well as promote creativeness in establishing and practicing labor relations in the multi-dimensional and complicated value chains. Bettering the attitudes of entities as a catalyst to strengthen the responsibilities to follow ILS and CLS in FTAs. Laborers and employers need to raise their sense of respecting labor law, implementing labor commitments; raise responsibilities and professional ethics; respect the rights and maintain friendly relationships with employers, managers; look for supports and help froom representatives of local trade unions; express their expectations, ask for dialogues and negotiations with partners; labor union staff need to consult laborers and respond to their right demand; be willing to cooperate, hold talks and negotiate with employers; be willing to participate in settling labor disputes, lead laborers to go on strike in the legal manner. In conclusion, amid the increasing protectionism and trade tension, that Vietnam 448
19. signs and implements new-generation FTAs affirms the consistent policies of the country in economic renovation, international integration, supports to trade liberalization towards openness, transparence and legality. Among these agreements, ILS, especially CLS, are considered the key points to create attractiveness and values of the sustainable trade development prospect in the 21st century. Vietnam is an important link in the global value chain of the garment industry, therefore Vietnam’s garment enterprises participating in the global value chain need to review their operations, learn experiences and seek solutions to comply with international labor standards on the basis of raising the capacities of labor relation entities and reforming the institution of the Government. REFERENCES Vietnamese 1. Nguyễn Thị Hường and Phạm Thị Thu Thảo (2009), Global Garment Value 2. ILO and IFC (2019), Better Work Vietnam - 10th Report on Compliance. 3. Phạm Trọng Nghĩa (2016), Impacts of Basic International Labor Standards, Journal on E-Legislation 4. Phú Hưng Securities (2018), Update Business Performance 2018: Garment 5. Centre for WTO and Integration - VCCI (2020), Research on CPTPP and EVFTA (website: 6. VGCL (2018), Reports of Vietnam Trade Union 12th General Meeting English 7. Gijsbert, L. 1989, Minimum Labor Standards and International Trade: Would a Social Clause Work?, International Labor Review, vol. 128, no.4. 8. ILO, 2016, Assessment of labour provisions in trade and investment arrangements. 9. Jan, M.W. 2008, Realizing Core Labour Standards: The potential and limits of voluntary codes and social clauses: A review of the literature, GTZ, Eschborn at 16. 10. Kimberly, A.E. & Richard, B.F. 2003, Can Labour Standards Improve under Globalization? Institute for International Economics, Washington at 73. 11. Koopman, Robert; Powers, William; Wang, Zhi; Wei, Sang J. 2010. Give Credit Where Credit is Due: Tracing Value Added in Global Production Chains. NBER Working Paper (No. 16426). Cambridge: National Bureau of Economic Research. 12. Trade and Labour Standards: A Strategy for Developing Countries. Available: [2009, 1/15] and Luke, L.A. 2005, Labour and the World Trade Organization: Towards a Reconstruction of the Linkage Discourse, Deakin Law Review, vol. 10, no.1. 13. Union Network International 2006, Core Labour Standards at the WTO - What have Trade Ministers Said?. Available: [2009, 2/16]. 14. Werner, S. 2005, Globalization and Social Progress: The Role and Impact of International Labor Standards, 2nd ed, Friedrich-Ebert-Stiftung, Bonn at 7. 449