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Asia Pacific Journal of Human Resources (2013) 51, 248268

doi:10.1111/j.1744-7941.2012.00062.x

Industrial disputes in Vietnam: the tale of

the wildcat
Bernadine Van Gramberg Swinburne University of Technology, Australia
Julian Teicher Monash University, Australia
Tien Nguyen RMIT University, Vietnam

Vietnam has experienced a combination of sustained high economic growth and high inflation over
the last ten years. This has been a double-edged sword for the country as rapid price rises have also
fuelled the growth in labour conflicts and strikes, which have the potential to negatively affect Vietnams continuing economic growth. Added to this potent mix is the increasing evidence that some
employers strict use of managerial prerogative combined with poor working conditions and harsh
treatment of employees have precipitated the growth of wildcat strikes particularly in the countrys
growing export-oriented private sector. In the absence of publicly available statistics on industrial
action in Vietnam, this paper draws on an analysis of strikes reported in the nations key newspapers
and three elite interviews to explore the types of disputes and their causes as well as the industries
most affected. We find that in order to improve the management of workplace conflict, reform to the
Labour Code alone is insufficient. There is also a need to train all parties in dispute resolution and to
ensure that unions are independent of management.
Keywords: labour rights, unions, Vietnam Labour Code, Vietnam labour relations, wildcat strikes,
working conditions

Key points
1 Wildcat strikes dominate in foreign-invested enterprises where unions are usually
headed by the HR manager.
2 Lack of training of managers and a culture condoning violence toward workers precipitate industrial action.
3 The Labour Code provides an avenue to pursue worker interests but this is largely
unworkable.
4 Our study demonstrates the inadequacy of the existing mechanisms for dispute
resolution.

Correspondence: Professor Julian Teicher, Monash University, Melbourne, PO Box 197, Caulfield
East, Vic. 3145, Australia; e-mail: julian.teicher@monash.edu
Accepted for publication 28 August 2012.
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Strikes, and particularly wildcat strikes where industrial action is led by workers rather
than their unions, have become the norm in Vietnam. These are not simply walkouts led
by a few angry workers but well-orchestrated, complex and large-scale actions involving
thousands of employees. Labour disputes are recorded but statistics are not publicly available; however, various studies have commented on the growing incidence of strikes. For
instance, Clarke, Lee and Chi (2007, 546) reported that between 1995 and 2005 there were
978 recorded strikes. Nguye n, Nguye n and Tra`n (2007) noted that from 1995 to 2006,
there were 1250 strikes. More recently the number of strikes has escalated from these
figures. Ha and Pham (2011) cite evidence from the Vietnam General Confederation of
Labour (VGCL) that there were 762 strikes in 2008. In their report on the camera industry
in Vietnam, Kakuli and Schipper (2011, 4) noted that in 2010, there were 423 registered
wildcat strikes in the private sector alone. Ha and Pham (2011) added there were 336
strikes in the first four months of 2011 and predicted that the year would create a record
in industrial disputes. Another report confirms the prediction, listing 720 wildcat strikes
across the country by August 2011 (Better Work Vietnam 2011, 3). Further, this growth
has been largely in the form of wildcat strikes characterised by the lack of union involvement or even knowledge by unions that action is occurring (ILO 2011). But while there is
increasing evidence of rising strike activity in Vietnam, the extent of industrial action and
its costs are unclear.
Strikes now dominate labour relations in the developing private sector and threaten to
destabilise key export industries such as textiles, footwear and computer manufacturing.
While this disturbing trend has attracted its share of negative publicity and news coverage,
there has been only modest academic interest in the matter, perhaps because of the difficulty in obtaining data on the incidence, the numbers of workers involved, methods of
resolution and so forth. This paper is an exploratory study into the state of industrial
unrest in Vietnam and makes three contributions to the literature. First, it reviews the
sparse international and domestic academic literature on industrial disputation in
Vietnam. Second, it reports on the analysis of 30 strikes described in 61 newspaper reports
collected between January 2010 and December 2011 and on interviews with one senior
newspaper manager, a senior official of a major national labour organisation and a human
resource consultant. Third, it critically appraises the dispute resolution system in the
country through identifying the types of disputes, industries affected, and the utility of
the Labour Code in its ability to guide resolution of these conflicts. Our comments on the
Labour Code are particularly pertinent as the Code is now under review.
The paper commences with a discussion of the legal framework which regulates
labour relations in Vietnam and considers the role of unions in the dispute resolution
process. The paper then canvasses the international literature on industrial action in
Vietnam before turning to our analysis of newspaper accounts and the interviews. The
paper concludes that, while the government has implemented a procedure for dispute
resolution through the Labour Code, the lack of rigour in enforcing the Code, the absence
of independent unions and the need to train all parties in the dispute resolution process,
together with the limitations on dealing with certain types of disputes, have meant that
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wildcat strikes are now the dominant form of overt workplace conflict at a time when the
government remains reliant on attracting foreign investment.

The labour relations context

The Labour Code
In its Preamble, the Vietnam Labour Code of the Socialist Republic of Vietnam (the Code)
1994 (amended 2007) (The Socialist Republic of Vietnam 1994) is presented as an instrument to protect the rights and interests of workers and employers alike with a view to
establishing conditions conducive to:
harmonious and stable labour relations, contributing to the development of the creativity and
talents of intellectual and manual workers and of labour managers in order to achieve productivity, quality and social advancement in labour, production, and services, effective utilization
and management of labour, and contributing to industrialization and modernization of the
country, for a wealthy and strong country, and a fair and civilized society.

The Code applies to foreign and Vietnamese employers and employees together with trade
apprentices and domestic servants and, along with a number of decrees and circulars, and
the Law on Social Insurance, establishes the legal regulatory framework in the country
(Hull and Trinh 2011). By definition, the Code does not apply to the informal sector,
which is large in Vietnam. Cling, Razafindrakoto and Roubaud (2010, 6) note that in 2007,
the informal sector accounted for almost a quarter of all main jobs (24%) and most of
these were in manufacturing and construction (43% of all informal sector jobs).
The Code was established in 1994 and amended in 2002 as the government implemented a market-driven economy; reflected in the diminution of the role of the state, particularly in terms of regulating employment relationships (Li, Taylor and Frost 2003). The
Code was next amended in 2006 and 2007 and it is currently under review once again.
Chapter VII of the Code provides a detailed set of conditions of employment, even specifying the length of rest and meal breaks, maximum hours of the working week and placing
limitations on overtime.
The minimum wage in Vietnam is set for workers in four regional centres and for the
public services with the highest minimum wages payable in the key production hubs of
the country in Hanoi and Ho Chi Minh City (Kakuli and Schipper 2011). Initially,
minimum wages were also specified differently for each sector of the economy; for
instance the minimum wage expected of a foreign investment enterprise (FIE) was traditionally more than double that paid by a domestic private enterprise (DPE) (Clarke, Lee
and Chi 2007). The minimum wage is adjusted yearly but, as the ILO (2010) noted in its
Global wages report, adjustments have not kept up with the impact of inflation and real
wage growth has not been achieved since 2007. In October 2011 the government increased
minimum wages in response to rising inflation and the increasing strikes, bringing
forward its quarterly wage adjustment and for the first time equalising wage levels in FIEs
and DPEs (Duc 2011).
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The body responsible for monitoring enforcement of the Labour Code is the Ministry of Labour, Invalids and Social Affairs (MOLISA) as stipulated by chapter XVI of the
Code. However, in practice, the VGCL also undertakes monitoring which we discuss in
the next section. The Code lists a range of sanctions for those violating it including a:
warning, fine, suspension or withdrawal of licences, compulsory payment of compensation, or compulsory cessation of business operations, or criminal prosecution in accordance with the provisions of the law (The Socialist Republic of Vietnam 1994, Article
192). Clarke, Lee and Chi (2007) also note that MOLISA can refer employers who
breach the Code to the city or province Peoples Committee or the Ministry. The
authors note that, while these bodies take action by counselling employers on their obligations under the law in the first instance, the ministry is considered a more fearsome
threat to employers as it can revoke an employers investment licence. These sanctions,
however, are reported as being relatively low-level threats to employer behaviours
(Meissner and Hung 2008).
Theoretically, the Code offers workers high levels of protection. For instance, it
restricts employers ability to impose fines on employees or dismiss them. The process for
dismissal is staged, with three breaches within three months required to terminate a
worker for misconduct or poor performance. The disciplinary process requires properly
constituted hearings and workers may have representation (Article 87). Chapter XIII of
the Code gives the union rights to consultation as well as rights to collectively bargain, and
it requires employers to provide facilities and time for union representatives to conduct
their duties. In addition, the 2002 amendments required all employers to establish a union
within six months of commencing operations (Article 153). Nevertheless, these restrictions on employers and the range of benefits mandated for workers have done little to stop
the rising tide of industrial unrest in Vietnam, which appears to be largely in reaction to
employer breaches of the Code and increasingly in support of wage demands. There is
then a paradox which we explain in that while employers appear highly constrained in
their actions, the Code fails to provide workable mechanisms for managing industrial conflict, at least among the FIE companies.
Unions
The Law on Trade Unions was enacted in 1990 (The Socialist Republic of Vietnam 1990)
and grants unions some independence from the Communist Party of Vietnam. It stipulates that the union represents and protects the legal and legitimate rights and interests
of the workers; shall bear the responsibility to join with the Government to grow production, create jobs, improve material and spiritual life of employees (The Socialist
Republic of Vietnam 1990, Article 2). The national union centre, the Vietnam General
Confederation of Labour, is protected by the Law on Trade Unions which encourages
union organisation and the negotiation of legally binding collective agreements. In
effect, the VGCL is the only official union in the country and the Code requires employers to form an enterprise branch. Workers cannot legally form a union independently of
the VGCL.
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As in many other countries, union membership has fallen over time from a high of
100% when Vietnam operated as a state socialist system to about 40% of the total
employed labour force in 2003 (Clarke, Lee and Chi 2007). According to Torm (2011),
union membership rose from 45% at the end of 2007 to 50% in mid-2010. The authors
attribute the increase to rising unionisation in private firms, limited liability companies,
joint-stock firms and cooperatives. There are considerable variations between sectors
too, with state-owned enterprises (SOEs) recording around 90% unionisation rates,
while FIEs record 50% and DPEs 30% (Clarke, Lee and Chi 2007). Torm (2011)
suggested a more recent trend of declining unionisation among SOEs as a result of
the equitisation or privatisation process. What is most surprising in these figures is
the relatively large proportion of non-unionised firms despite the Code mandating
that:
The employer shall be responsible for facilitating the early establishment of trade union
organizations. Pending establishment, the local trade union or industry trade union shall
appoint a provisional executive committee of the trade union to represent and protect the
lawful rights and interests of the employees and the labour collective. (The Socialist Republic
of Vietnam 1994, Article 153(1))

These provisional unions are then converted to enterprise-level unions once elections are
held for positions. Firms operating in the country without a union are in fact in breach of
the Code. This issue is taken up in the discussion section below.
A recent union role evolved as a consequence of MOLISAs yearly inspections of
workplaces. It does not have enough inspectors to conduct regular inspections of all the
workplaces in Vietnam so in practice monitoring is also undertaken by the VGCL. In
2008 Meissner and Hung reported that MOLISA had 350 inspectors and the VGCL had
100 inspectors. In Hanoi it was reported that there are 11 MOLISA inspectors for 700
SOEs, 600 FIEs, and over 20 000 private enterprises and, at the same time the Ho Chi
Minh City Labour Department had 5 inspectors for more than 30 000 enterprises.
Both the monitoring and the employee representation roles are problematic for
unions. It is common for human resource managers to be the union president in FIEs
and this is a contentious issue within the VGCL (Clarke, Lee and Chi 2007). Given that
the VGCL is charged with monitoring breaches of the Code, arguably this represents a
conflict with union leaders managerial interest in the success of the company and their
capacity to engage in critical scrutiny of enterprise operations and, further, it makes
management union officials tacitly complicit in breaches of the Code (Clarke, Lee and
Chi 2007). A recent compliance report in the garment industry by Better Work Vietnam
(2011) found other managerial practices used to control the union. For example, in
direct breach of the Code, in the 78 garment factories investigated, union meetings
could not take place without a management representative being present in 75% of
firms. An ILO report (2011) on labour relations reform in Vietnam noted that the trend
of increasing wildcat strikes is related to the absence of an effective voice for rank-andfile workers who have little choice but to take matters into their own hands in order
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to bring attention to their grievances. The next section turns to the vexed issue of strikes
and their resolution in Vietnam.
Causes of strikes
In canvassing the causes of strikes reported in the international literature, we categorise
disputes as those driven by structural factors arising from the countrys legal, economic
and political framework as Vietnam moves towards a market-oriented economy; and
those driven by employer behaviour, including harsh treatment and even beatings. We
consider the structural issues first.
The passing of the Law on Enterprises 2001 (The Socialist Republic of Vietnam 2001)
provided citizens with the right to establish and operate private businesses and the growth
of private firms has been rapid. Between 2000 and 2008 new enterprise creation saw an
average of 610 new companies enter the market each month (Meissner and Hung 2008).
The countrys Law on Investment 2006 (The Socialist Republic of Vietnam 2006) led to an
influx of FIEs and the privatisation of some SOEs. While SOEs dominated the economy in
the 1990s, accounting for over 50% of firms in the manufacturing sector and contributing
40% of GDP, the effect of the Doi moi (reform) policy was to drive a market-based
economy through the growth of DPEs and FIEs (Jenkins 2004). A 2009 Deloitte tax report
noted that the fastest growing companies in Vietnam are the FIEs, comprising joint ventures and fully owned foreign enterprises. It is this growing sector which has contributed
to the greatest number of strikes, and the underlying cause of industrial disputes is attributed to the countrys rapid movement towards a market model without a commensurate
movement allowing stakeholder influence, participation, and control (Meissner and
Hung 2008, 267). Similarly, Better Work Vietnam (2011) added that the dominance of
management representatives in unions impedes consultation and bargaining at the workplace. In this scenario of a rapidly developing economy with resource bottlenecks, strikes
over (above minimum) wages have begun to emerge relatively recently as inflation erodes
the buying capacity of wages.
Employer behaviour is another key cause of strikes in Vietnam and includes the strict
use of managerial prerogative, the poor treatment of workers, poor conditions and
breaches of the Code. Clarke, Lee and Chi (2007) reported that an investigation of strikes
revealed serious breaches of the law by employers including delays and non-payment of
wages, illegal layoffs, failure to pay health insurance contributions, wages below the legal
minimum, and withholding agreed bonuses. Meisner and Hung (2008) confirmed these
findings, adding the non-payment of overtime, the imposition of excessive overtime and
the low quality of accommodation and food as strike issues. More recently, complaints of
excessive working hours (often associated with claims of underpayment of wages), poor
treatment, and poor conditions at work have become more common. Many of these
strikes represent worker responses to frequent employer breaches of the Code which
accumulate over time until workers walk off the job in order to force their employers to
agree to abide by the Code (Better Work Vietnam 2011). Meissner and Hung (2008)
noted that these strikes are severely underreported because employer violations happen at
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an individual or small group level leaving little recourse for the individuals affected,
except to take action without union involvement. In any case, enforcement of the Code is
weak, as will be discussed below as we consider the dispute-resolution system in the
country.
The workplace dispute-resolution system
The resolution of labour disputes is provided in chapter XIV of the Code (The Socialist
Republic of Vietnam 1994) which sets out separate processes (which include conciliation
and non-binding arbitration) for resolving individual and collective disputes. Unlike
earlier versions of the Code, the 2007 amendments allow workers to raise both rights and
interest disputes. Article 157(2) defines a rights dispute as when there has been a breach of
workers rights as set out in laws, collective agreements or internal labour rules which have
been registered with the government. Interest disputes are framed as disputes over benefits
and Article 157(3) defines these as a request of the labour collective to establish new
labour conditions. This clause in particular was inserted to deal with the growing
numbers of strikes in pursuit of pay increases above the minimum wage.
The Code also provides for the right to strike for collective disputes when dispute procedures have been exhausted and a majority vote of employees is in favour of the strike
(Article 172). This does not apply to those employees in enterprises which supply public
products and services and at enterprises essential for the national economy or for national
defence and security in accordance with the list stipulated by the Government (The
Socialist Republic of Vietnam, Article 175). Article 176 allows the prime minister to postpone or suspend a strike if it threatens the national economy, which effectively extends the
range of sectors where disputes are prohibited. Indeed, the International Trade Union
Confederation (ITUC 2011) notes that the government stipulates 54 sectors of the
economy as being essential service areas. The clause also empowers the prime minister to
assign an authorized State body or organization to resolve the dispute in these sectors.
A number of bodies are involved in the dispute-resolution process. In order to apply
the Code (The Socialist Republic of Vietnam 1994), Article 162 dictates that firms must
appoint an enterprise-level Labour Conciliation Council comprised of equal numbers of
employees and employer representatives (appointed for two years). Article 157 specifies
the range of disputes which can be heard by the enterprise Labour Conciliation Council
including individual and collective disputes over interests or rights. Another body
described in the Code is the labour conciliator who can conciliate a wider range of disputes than the enterprise Labour Conciliation Council including disputes about performance of vocational training contracts and about fees for providing vocational training
(Article 163). The chairman of the district-level Peoples Committee can be called to
resolve collective rights disputes (Article 168(2)). Next, Article 164 establishes Labour
Arbitration Councils comprised of up to seven full-time and part-time members who are
representatives of the labour body, trade union, employers and bar association or people
with experience in the labour management sector within the locality. They are able
to resolve collective disputes over benefits (interests) as outlined in Article 157 and in
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addition can be called to settle collective disputes arising in the essential service industries
(Article 175). Labour Arbitration Councils provide the parties with a settlement proposal
by majority vote (Article 164(5)). There are two Labour Arbitration Councils in Vietnam
one in Hanoi and the other in Ho Chi Minh City. Finally, the act provides for intervention by the Peoples Court as the last resort (Article 166).
The 2006 amendments to the Code provided (for the first time) a dispute-resolution
pathway for individual (as opposed to collective) workplace disputes. Section II of the
chapter XIV of the Code specifies that individual disputes may be handled either by the
enterprise Labour Conciliation Council or the Peoples Court (Article 165). Labour Conciliation Councils must settle these matters within three working days from the time the
dispute is lodged and disputants have the right to be represented (Article 165a). They
provide disputants with a settlement proposal and if disputants agree with the proposal,
they must sign the minutes of settlement together with the chair of the Labour Conciliation Council or the Labour Conciliator (Article 165a(2)). If they disagree (or if the threeday limit has been exceeded) any disputant may petition the Peoples Court to resolve the
dispute (165a (3)). But Article 166 restricts the matters which the Peoples Court can hear
to five comprising: the dismissal of an employee over a disciplinary matter (Article
166(2)(a); compensation relating to a dismissal (Article 166(2)(b)); disputes between
housemaids and employers (Article 166(2c)); disputes over social insurance (Article
166(2)(d)); and disputes over compensation between workers and employers who send
workers to work abroad under contracts (Article 166(2e)). Clearly, the process for settlement of individual disputes leaves workers largely dependent on the Local Conciliation
Councils, in effect at enterprise level.
Collective dispute resolution is covered in section III of chapter XIV and the term collective is defined as employees working together within any one enterprise or any one
section of an enterprise (Article 157(4)). Article 170 provides that all collective disputes
must first be heard by the enterprise Labour Conciliation Council. Thereafter, the Code
provides different procedures for the resolution of rights and interest disputes. For rights
disputes, if the parties cannot agree on the settlement proposal provided by the Labour
Conciliation Council, Article 170(2) allows disputants to request the chairman of the
district-level Peoples Committee to settle the matter. Rights disputes must be settled
within five working days from the time of lodgement. Article 170a(b) stipulates that all
parties must be represented and if necessary, the chairman will involve individuals from
higher levels of the union and and representatives of other bodies and organizations concerned to attend the session. In resolving the dispute, the chairman shall rely on the law
on labour, the collective labour agreement and internal labour rules which have been registered and on other legal regulations and agreements in order to consider and deal with
conduct in breach of the law by the parties. Failing settlement or in the event that the
chairman exceeded the five-day time limit, parties may lodge their dispute with the Peoples Court which will deal with the matter in accordance with the Civil Proceedings Code
(Article 170a(2) and Article 170(b) described above). Alternatively the labour collective
shall have the right to conduct procedures in order to strike (Article 170(2)).
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In the case of collective interest disputes, disputants can request the Labour Arbitration Council to settle the dispute. Arbitration Councils have a time limit of seven working
days from receipt of the dispute (Article 171(1)). Parties are required to be represented
and the Arbitration Council may request the participation of higher levels of the union as
well as other organisations and bodies (Article 171(2)). The role of the Labour Arbitration
Council is to offer a settlement proposal which, if not accepted by the labour collective, or
which exceeds the seven-day time limit, can lead to industrial action provided a number of
steps (outlined in section IV of the Code) are taken by the labour collective (Article
171(3)).
Section IV of chapter XIV describes the process for taking industrial action and Article
172 defines a strike as a temporary and voluntary cessation of work organized by the
labour collective in order to resolve a collective labour dispute. Article 172a describes the
parties who may legally lead a strike including: the executive committee of the trade union
at the enterprise or where there is no enterprise union, the collective labour representative appointed by the labour collective provided that representative has been announced
in advance to the labour union of the district, town or provincial city or its equivalent. In
other words, to comply with the Code, all strikes by must be conducted with the support
of either the enterprise or district-level union.
Moreover, in order to strike there are stringent requirements imposed on unions; they
are required to conduct a ballot or collect signatures of employees prior to the strike
(Article 174a). A range of other opinions must be sought including from the executive
committee of the enterprise union, the leader of the union group, the leader of the
manufacturing group where the firm has over 300 employees, or the leader and deputy
leader of the manufacturing group in a case where there is no trade union. The voting
provisions are specified in Article 174b which prescribes that at least 50% of employees in
workplaces with fewer than 300 workers and 75% of employees in workplaces with over
300 employees must be in favour of the strike. The ITUC has noted that the voting thresholds are unrealistically high, which is an impediment for workers to hold a legal strike
(ITUC 2011). Unions must also provide detailed written notice to employers of the strike
containing the official trade union seal (Article 174b). In summary, legal strikes must be in
relation to collective disputes and must have union involvement. These requirements fail
to take into account that most strikes in Vietnam are wildcat strikes; thus the bulk of
strikes in the country are illegal. We consider the legality of strikes next.
Article 173 of the Code provides seven circumstances in which a strike is illegal.
First, Article 173(1) stipulates that strikes which do not arise from a collective labour
dispute are illegal. Strikes are also illegal if they are organised by workers in more than
one enterprise which means that workers wishing to take sector-wide activity cannot do
so legally (Article 173(2)). The Code states that no strike is legal while the dispute is
being conciliated by the various Councils or Courts (Article 173(3)). Article 173(4)
stipulates that strikes will be illegal if workers are not consulted or if there is a violation
of the strike voting provisions. Strikes are also illegal if they occur without the authorisation of the enterprise trade union executive or without notification of the strike
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leaders to the VGCL (Article 173(5)). Clearly, most wildcat strikes would fall into this
category. Contravention of Article 175(5) which pertains to industrial action in the large
number of declared areas of essential services is illegal. Finally, continuing a strike
despite a prime ministerial intervention to suspend the strike will also render the strike
illegal (Article 175(6)).
Over time the Code has shifted in the way it defines and manages illegal strikes. Prior
to 2006 only rights-related strikes were legal but, in response to the growing numbers of
interest disputes, the Code was amended in 2006 specifically to deal with interest disputes.
The 2006 amendments declared that legal strikes must be those over workers interests,
but in making this change the Code then rendered strikes over workers rights illegal. The
amendment received its share of criticisms. For instance, as noted by Human Rights Watch
(2009): For disputes over rights, if conciliation fails either party can take the case to court,
thereby outlawing rights related strikes. The 2007 amendments provide distinct paths for
dealing with rights and interest disputes and provide a mechanism (albeit complicated
and highly restrictive) for when rights and interest disputes can give rise to a legal strike.
While the Code specifies the course of action to be taken once a strike occurs, there are
also a number of avenues for the parties to take which are not specified by the Code. For
instance Clarke, Lee and Chi (2007) note that local government can be notified and it will
despatch an official from the provincial Labour Department who acts as a mediator.
Nguye n, Nguye n and Tra`n (2007) reported that these mediators are highly successful in
resolving disputes. Another avenue for resolution is via a special task force established by
the Peoples Committee comprising a local government representative, the union and a
member from the Chamber of Commerce and Industry of Vietnam (VCCI). In these cases
of intervention by MOLISA, the VGCL or local government, the actual process of resolution is unclear.
As an avenue to bring a strike to a close, Article 176a of the Code provides that the
parties shall have the right to petition a court to consider the legality of a strike and
Article 177 vests this jurisdiction in the Provincial Peoples Court in the relevant location.
Article 179(1) prescribes that workers who refuse to call off the strike shall be subject to a
labour disciplinary penalty and where the illegal stoppage causes loss or damage to the
employer, the organisation or individuals concerned shall be required to pay compensation. That this jurisdiction is exercisable by a court without any particular expertise in
labour relations matters is a matter of concern. A new clause (Article 174d inserted in the
2006 amendments of the Code) provides a work stoppage wage to be paid to those
employees who do not participate in a strike and who cannot continue work as a result of
the strike. The ITUC (2011) has criticised the clause as an opportunity for employers and
the government to influence workers strike voting intentions.
Research into workplace dispute resolution in Vietnam
There has been little research into the practice of workplace dispute resolution in Vietnam.
The Ho Chi Minh City Labour Arbitration Council conducted a survey of the conciliation
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process at enterprise and district level in 2003 and reported that some 84 collective disputes and 1118 individual cases had been sent to conciliation since 1995, and 823 of these
were successfully resolved. However others have reported less success (e.g. Zhu and Fahey
2000). Nguye n, Nguye n and Tra`n (2007) found that the Labour Arbitration Council in
Hanoi had settled only two cases since its establishment in 1997, while the Labour Arbitration Council in Ho Chi Minh City had settled only one case since 1998. Nor is there any
evidence as to the outcomes of industrial disputes following unsuccessful resolution at this
level. Because so few collective disputes are heard by enterprise Labour Conciliation
Councils, virtually no collective disputes reach the Arbitration Councils.
In theory the workplace dispute-resolution system in Vietnam provides multiple
avenues for redress and determination; however, the reality is that many of these procedures are overly complicated and time-consuming, and limited because they apply to situations where unions supervise the process (Nguye n, Nguye n and Tra`n 2007). Often the
procedures are not used at all (Human Rights Watch 2009). Nguye n, Nguye n and Tra`n
(2007) observed that at the enterprise Labour Conciliation Council (then termed Grassroots Local Labour Conciliation Council), negotiations rarely ended with a solution to the
dispute; Labour Arbitration Councils do not have power to enforce their decisions; and
the head of the union is usually the enterprise human resources manager who sides with
the employer. Clarke, Lee and Chi (2007) add to this the lack of state supervision of
employers to ensure they comply with the laws, and note the failure of the VGCL to
adequately represent workers at the workplace. So while on the face of it Vietnam has a
highly regulated dispute-resolution system, this applies to only a small part of the workforce, but even here the efficacy of the system is limited and highly variable. By far the
dominant approach taken to resolving workplace disputes is the wildcat strike, and this
reflects the general failure of the existing formal dispute-resolution system despite the
2006 and 2007 amendments to the Code which sought to cover both interest and rights
disputes. In light of this background we now turn to our study.
The exploratory study
In view of the exploratory nature of this project, we report here on two sources of data: a
newspaper search, and three elite interviews, respectively with a senior official from a
national employer organisation, a prominent human resources consultant and a senior
manager of a newspaper. An elite interview is a form of non-probability sampling where
informants are selected for their salience to the topic under investigation; for example,
expertise (Hochschild 2009). To search for newspaper articles reporting the industrial disputes we used a range of online search engines through various browsers (Internet
Explorer, Mozilla Firefox and Google Chrome). The terms we used to search comprised:
strikes, workplace conflicts, labour disputes, industrial disputes, wildcat strikes and
work stoppages. The equivalents of these terms in Vietnamese were also used to search for
Vietnamese language news articles. In many cases, the online articles suggested other
related articles; these related articles were also analysed. The search was conducted for
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Table 1

Reasons and industry location for the reported disputes in 30 reported cases in 2011

Industry

No. of
disputes
N = 30

No. of
workers
involved

Salary or
allowances

Apparel
Fisheries
Footwear
Motor production
Petroleum
Rattan products
Rubber plantation
Taxi
Wood products
for export
Other
Total

5
2
11
2
1
1
1
1
1

4000
1350
31650
3600
18
100
67
20
3000

4
2
10
2

5
30

5270
47725

5
27

1
1
1
1

Managers
behaviours,
cultural
difference
issues

3
1

Long hours,
extra hours
without pay

Poor
workplace
conditions

Contract
issues

1
1
5

1
1
1

Other
rights
issues

Other
interest
issues

1
2

1
2

1
1

1
1

1
3

1
1

Source: Authors newspaper analysis of strikes 201011.

articles published from January 2010 to December 2011, and was limited to those sources
reporting industrial disputes in Vietnam. We also accessed the hard copy newspaper Lao
Dong which reported 20 strikes in 2011 (it was not available for 2010).
We consolidated the articles describing the same cases and, of the 61 articles collected
over the two-year period, we obtained 30 cases which allowed us to identify the region,
industry and cause of the strike. As will be evident from the discussion above, this is not
an iteration of all industrial disputes but reflects those cases which newspapers chose to
report; however, in view of the absence of published data on the causes, nature and incidence of industrial disputes our cases provide insights which are otherwise unavailable.
These findings are contained in Table 1. We also conducted a thematic review of the
articles identifying two broad themes based on rights disputes and interest disputes which
are described in the next section.
In order to gain a deeper understanding of the issues behind labour disputes in
Vietnam, we conducted interviews with three experts. The interviews were around 90
minutes duration and consisted of open discussions based on four broad semi-structured
areas: causes of strikes, factors contributing to the rise in strikes, the industries and companies associated with the strikes, and the behaviour and roles of the parties (employers,
unions and employees) in workplace disputes.
Reasons for strikes
From our interview with the newspaper manager, we confirmed our expectation that the
reporting of strikes is necessarily selective, partly due to editorial decisions about what is
newsworthy but also due to the nature of political processes in Vietnam. Reports of strikes
are generally confined to the first quarter of the year, finishing before the national holiday
celebrating the reunification of Vietnam on 30 April. The newspaper manager also stated
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that reporting on strikes has the effect of stimulating even more strikes (because of the
level of worker success) and this makes it a politically sensitive issue for newspapers,
which also limits the number of public reports each year. The human resources consultant
went further, stating that the reporters sometimes see their role as reporting strikes in the
heroic light of worker success. In 2008, however, the Party Congress apparently instructed
reporters to be responsible and for some time after that reporting was subdued.
In the study period, the combined online and hardcopy search identified 30 separate
strike incidents, of which 16 were located in industrial parks (zoned areas of land for commercial purposes) while the other case locations were not reported. In this data, disputes
over salary and allowance demands (27 reports) dominated the reasons for taking industrial action. Other reasons included long hours and unpaid hours (9 reports); negative
management behaviours and cultural insensitivity (5 reports); and poor workplace conditions (3 reports). There were 4 rights-based issues including dismissal of workers without
reasons, non-payment of maternity leave and denial of annual leave. Additionally, we
noted four employment contract issues including lower than agreed bonuses, disputes
over the Tet bonus (normally an additionally months pay for the lunar New Year holiday),
and lower than agreed piecework rates. The data reported here also reveal that in most
strikes, multiple causes were reported in Table 1 representing a combination of rights and
interest disputes.
The rise of the wildcat strike
The newspaper reports confirmed the growing strike figures reported in the wider literature. Ta Lam (2011) wrote that, of 175 strikes in Ho Chi Minh City reported in the first six
months of 2011, at least 70 occurred in industrial parks and export processing zones. This
is described as a seven-fold increase compared to the same period in 2010.The increase is
attributed to demands for salary and allowance increases; benefits such as meal quality;
and disputes over long working hours (Ta Lam 2011). In Binh Duong province, one of the
provinces with the highest economic growth in the south of the country, there were 150
strikes reported in the first six months of 2011 involving almost 80 000 workers, a 50%
increase compared to the same time period in 2010 (Ngoc Quy 2011).
The main driver for the disputes reported in the newspapers and confirmed by our
informants is inflationary pressures on both employees and employers. Rising inflation
reaching 19.8% in the year to May 2011 (Economist Intelligence Report 2011) has
placed workers under increasing financial pressures due to continuous increases in home
rents, utilities and prices of goods without commensurate salary increases (Thuy Hiep
and Trong Binh 2010). Importantly, this has given rise to a range of strikes over workers
interests rather than rights as in earlier times, and because the bulk of these disputes are
conducted by unauthorised labour collectives (without union sanction or involvement as
required by the Code) they are illegal (wildcat) strikes. Inflation has also had its effects
on the quality of meals which are provided by employers and form part of the working
conditions of most workers. Decreased meal quality is driven by employers not increasing their budgets for meal provision in the face of falling profit margins caused by infla260

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tion of input prices and the continuing devaluation of the currency. Additionally, two of
our informants commented that most employers now contract out their meal services,
adding to the difficulty of ensuring good meal quality. According to Dang Ngoc Tung,
the chairman of VGCL (cited in Duong Minh Duc 2011a), workers rely on the meals
provided by employers because, typically, low wages and long working hours limit their
ability to prepare adequate meals at home. Consequently, the meal provided at work is
the workers main meal of the day and as meal quality drops workers complaints have
increased. Technically, employers have fulfilled their legal obligation to provide the meal
and so these strikes represent interest disputes which are considered legal under the
Code but only if the labour collective is supported by the union as required under
Article 172a.
Strikes are also focused on wage and bonus demands. One example provided by Tam
Thien (2011) reported that many companies have set a combination of high production
targets and low piecework rates which results in workers not being able to meet their production targets and being denied the expected bonuses which would apply at the end of
the production cycle. Strikes in these companies occur when the workers complain to no
avail about the unrealistic targets. This problem is interwoven with another issue identified by some writers that the minimum wage is too low in Vietnam to adequately provide
for adequate living conditions, leading to ongoing tensions in the employment relationship. In other words, as the level of the minimum wage does not enable an adequate living
standard, workers are reliant on their bonuses for their survival. For instance, Tam Thien
(2011) reported that in the manufacturing industry the minimum wage covers only 60%
of average living costs.
While interest disputes are increasing, rights disputes continue as many employers,
particularly in FIEs, breach the set of workers rights guaranteed by the Code or the collective agreement. The newspaper articles canvassed here focused on issues of lower bonuses
than agreed, unpaid hours, unpaid maternity leave, denial of annual leave and excessive
overtime. For example, the Code provides a maximum of 200 overtime hours a year for
workers (Article 69) but many enterprises require their workers to work in excess of this
(Ta Lam 2011). Nam Anh (2011) reports that some companies assign work to their
employees not in accord with their labour contracts and there are many instances of
workers being dismissed without the employer following the procedure prescribed by the
Code.
Foreign investment enterprises
There were 424 reported strike cases in 2010 of which 80% occurred in FIEs, 20% in
domestic private enterprises, and only 0.25% in government companies (Nam Anh 2011).
FIEs incur massive economic losses from these disputes. For instance, in a strike at a footwear company in Hai Phong in April 2011 which lasted for 9 days, the company reported a
loss of around US$40 million (Tam Thien 2011). Given the significant economic costs for
FIEs it is surprising that they do not manage industrial relations more proactively and
consider the business case for adopting good dispute-resolution practices and trained
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human resources staff. This is particularly relevant when considering the low unionisation
levels in these firms and, consequentially, the greater potential for wildcat strikes to occur.
From our interviews several factors contribute to explaining the higher incidence of
strikes in FIEs. First, most of the strikes occur in the labour-intensive FIEs typically
employing thousands of low-skilled and low-wage workers on assembly lines. These
workers are reportedly less likely to join a union as they resent paying the union fees
(Employer association interview). As most of these mass production companies mostly
operate on low profit margins, they rely on generating high volumes of production. When
inflation is high, workers demand salary rises and these demands threaten profit margins
which are continually being eroded by both domestic price inflation and devaluation of
the currency, particularly as most non-labour inputs are imported. Employers who are
subject to these pressures have an incentive to resist wage rises and to cut costs by denying
worker demands. The employer association official we interviewed noted that it is quite a
different scenario from those FIEs specialising in the high-tech sector which employ
highly skilled staff, as disputes in those companies are more likely to be individualised and
are likely to result in unhappy staff quitting for another better paying employer.
Cultural differences (and intolerance) between employers and their employees in FIEs
have been important factors in wildcat strike activities. Many FIEs in the manufacturing
sector are multinational enterprises which employ Korean or Taiwanese managers who
reportedly have little knowledge in managing human resources and a military disposition
that sometimes manifests itself in physical violence toward workers (interview with Newspaper manager). Meanwhile, due to tight labour market conditions, most of the available
workers lack education (few have completed high school) nor have industrial training.
Typically, these workers previous experience will have been in farming or small family
businesses in the informal sector and consequently they are not well socialised for industrial work. In some cases harsh treatment by managers provides a trigger for a wildcat
strike where accumulated complaints about low wages and poor conditions surface as the
public face of the strike, whereas its root cause is in the mistreatment, both physical and
mental of the workers concerned (Employer association interview).
The inadequacies of government inspection bodies and apparent ineffectiveness of
sanctions for breaching the Code have also been reported as reasons for increasing strikes
(Hai Van 2011; Le Thanh Ha 2011). For instance, Ta Lam (2011) notes that in the auditing
of 968 enterprises in Ho Chi Minh City in the first half of 2011, the Department of
Labour, Invalids and Social Affairs (DOLISA) (the provincial and city offices of MOLISA)
issued fines totalling some VND 2.75 billion. This equates to each enterprise paying about
US$150 (some VND 3 million) for their violations. According to Ta Lam (2011), Nguyen
Thi Dan, manager of the Salary Department of DOLISA (Ho Chi Minh City), stated that
the penalty levied on companies that violate the Code is too low and is not effective in
preventing breaches of the Code. Chan (2010, 46) describes the situation differently,
arguing that Vietnam has a system of harsh laws, soft implementation and that it is not
the lack of effective sanctions which is the issue but rather, that the role of the state in
dispute resolution is often to negotiate with employers to grant workers demands so they
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will return to work: in Vietnam, the workers go on strike in order to get the local state to
negotiate on their behalf (Chan 2010, 48). While there is merit in Chans point, it remains
that the poorly crafted regime of sanctions and dispute settlement procedures does little to
encourage compliance with the Code.
Dispute resolution in the press
It is not possible to identify the outcome of the 30 strikes reported here, although we were
informed that such disputes are generally resolved by payment to the workers, often
including for the time taken on strike. Indeed, we were advised that if employers do not
compensate workers for time on strike, they may refuse to return to work and even take
jobs with other employers (Employer association interview). It was further explained that
family and friendship networks based on place of origin operate to spread information
about the most lucrative job opportunities. In this relation, we note that newspapers do
not reveal the outcomes of strikes due to concerns that this might encourage workers in
other companies to also go on strike for the sort of extra pay and conditions granted in
other companies (Newspaper manager interview).
In all 30 cases, the newspapers reported the involvement of representatives from the
VGCL, DOLISA and police. Their initial role was to attend the scene of the strike and
these officials were reported to calm the situation and prevent outbreaks of violence. As
the strikes progressed, these parties commonly acted as mediators between company managers and striking workers. One commentator noted that unions in many enterprises are
weak and play an insufficient role in conflict management to prevent strike action, exacerbated by the fact that most union leaders are managers employed by the company (Ngoc
Quy 2011). As a result, when a dispute occurs, the union leader remains very close to the
management point of view in the negotiation process. In some cases, workers undertake
wildcat action in defiance of their elected union representative because that person lacks
the training and independence to adequately represent their interests. Such a situation is
in the interests of neither management nor labour (Employer association interview). The
lack of union leadership is a key reason why workers interests fail to be reconciled with
those of their management. It is also a key reason why there has been such a growth in
wildcat strikes, particularly in the more sparsely unionised FIEs.
As noted earlier in this paper, the Code specifies a process for dispute resolution
which culminates in the right to strike, provided that all steps have been exhausted. In a
workshop on Promoting the improvement of the labour dispute resolution system outof-court held in Hanoi in April 2011, Pham Minh Huan, deputy minister of MOLISA,
stated that most labour disputes skipped the negotiation steps (conducted by enterprise
Conciliation Councils) in the Code, with workers instead filing complaints to the relevant
government office (such as the District Peoples Committee). It has been argued that
when the enterprise Conciliation Councils are bypassed, subsequent dispute resolution is
more complicated (Kim Thanh 2011). In a similar vein, Mai Duc Thien, deputy head of
the Legal Affairs Department, MOLISA (cited in P Thanh 2011), observed that the role of
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the enterprise Conciliation Councils is vague. In 2009, while 80% of Vietnamese enterprises were unionised, only 67% had formed an enterprise Conciliation Council as
required under the Code. The lack of training and skills for Conciliation Council
members has been argued to be another key reason for the councils being either unsuccessful in resolving disputes or bypassed entirely (Kim Thanh 2011). The gridlock in the
system is seen as a weakness of the current Code and there have been discussions on
revising it to add several sections on dispute resolution (Duong Minh Duc 2011b). This
has proven to be a major task. Several drafts of the new sections have been proposed and
discussed by various interest groups and the National Assembly but plans to enact the
changes did not come to fruition in 2011.
Discussion
The rising tide of industrial conflict in Vietnam is an important issue for policy-makers
and businesses but our capacity to analyse this issue is hampered by a dearth of publicly
available information. In undertaking a careful study of newspaper coverage over almost
two years, we utilised the available information to shed light on this important issue and
to highlight the problem posed by the governments failure to facilitate the provision of
publicly available data related to industrial disputes. The major limitations that we discovered were that the nature, extent, and industry location of strikes are not well known nor
are the causes, methods of resolution or outcomes well understood. Clearly, greater
knowledge and public debate on these issues is important to policy-makers and industry
participants in both improving the operation of the existing system of dispute resolution
and in creating a better system.
While the data are inadequate, an examination of existing publications and laws pertaining to labour relations demonstrates that the Code is both flawed and incompletely
specified. The emphasis in recent revisions of the Code has shifted from the protection of
workers rights to providing workers with an avenue to pursue their interests is an attempt
to put the reins on the increasing number of interest disputes in the country. However, on
its own this is insufficient to deal with the growing number of FIEs with their low unionisation rates in which labour collectives are less likely to rely on their enterprise union,
often headed by their human resources manager, to voice their concerns. While workers
lack confidence in unions, dispute-resolution processes which ultimately require the
involvement of unions will continue to be ignored and the wildcat strike is likely to
remain commonplace in Vietnam. Recognising that the government is unlikely to legislate
to provide workers with choice of union in the foreseeable future (as it has not ratified
ILO Convention 98 on the Right to Organise), workers collectives need to be able to be
full participants in the dispute-resolution processes of the Code.
Two other problems in managing strikes are also highlighted by this study. First,
bodies such as DOLISA, the VGCL and VCCI are seen to play an important role in
dispute resolution, but the adequacy of these resources remains uncertain and the nature
or efficacy of their interventions is not well understood. Second, the processes of dispute
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resolution under the Code have been criticised for reasons including that there are too
many steps, that the processes of resolution are not clearly specified and there is a dearth
of appropriately trained officials. In practical terms our study has highlighted other
shortcomings in dispute resolution. A key problem is that the requirement to form
enterprise unions as branches of the VGCL is frequently ignored. Even when it is not
ignored, union officials are typically ill-prepared for their tasks and there is a lack of
clear delineation of management and unions, and this is something which is not just the
subject matter of ILO conventions, such as Article 2 of Convention 98 on the Right to
Organise and Collective Bargaining; rather it highlights the inadequate protection of
workers rights and interests despite the expressed intent of the Code. This problem is
exacerbated by a dearth of training of the participants in the system at all levels, but
especially at the workplace. Worker representatives are often hampered by a lack of basic
education and then by specific training in relation to dispute resolution. The lack of
training of management representatives is perhaps more profound, particularly in
labour-intensive FIEs where managers lack training in both dispute resolution and the
broader human resources management function. An important and related issue is the
problem with management cultures which condone violence toward workers, even
though such acts may precipitate industrial action.
Notwithstanding the limitations of this exploratory study, the discussion would not be
complete without a plea for research on the extent, causes and resolution of disputes but
also of the differences between state-owned enterprises, domestic enterprises and FIEs.
The present dearth of information sometimes leads to an unsubstantiated belief that conflict is confined to the FIE sector of the economy.
Conclusions
This paper critically examines and extends the existing research on strikes and the disputeresolution system in Vietnam. In doing so it also utilises an analysis of almost two years of
newspaper reporting of industrial disputes, a move which was necessary in light of the
absence of any publicly available data on industrial disputes or their resolution. This information was supplemented by three elite interviews. From this research it is clear that the
incidence of strikes is increasing and that, unlike in the past, disputes are increasingly
interest based, particularly in FIEs and comprised almost entirely of illegal, wildcat strikes.
This strike activity has been driven by a combination of structural changes to the economy
and poor managerial behaviour. Thus, rising inflation; a low minimum wage structure;
the expansion of mass manufacturing with its tight profit margins; and shortcomings
in the system of industrial regulation have played their part in fuelling strikes. Particular
concerns are the lack of training of participants at all levels, lack of independent union
representation at the workplace levels and insufficient articulation of all available disputeresolution processes in the Code. In addition it is clear that in labour-intensive exportoriented industries the lack of appropriately qualified human resources professionals is a
major drawback. While the Code is currently under review, we argue that although good
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dispute-resolution processes are important, they cannot succeed in the absence of identifying the structural and behavioural drivers of strike activity, particularly in understanding that employees need independent representation in order for them to effectively voice
their concerns and participate in the dispute-resolution process.
Bernadine Van Gramberg (PhD, Monash) is deputy dean, Faculty of Business and Enterprise at
Swinburne University of Technology. Bernadines teaching, research and consulting are in the fields
of dispute resolution and public sector management.
Julian Teicher (PhD, Melb.) is professor of industrial relations in the Faculty of Business and Economics at Monash University. His research and publication spans workplace relations and public
management and governance. He has a particular interest in developing countries.
Tien Nguyen (PhD, MIT) is a senior lecturer and head of Graduate Studies at RMIT University,
Vietnam where he teaches MBA human resources and management decision making subjects. He
has extensive experience working in corporate industrial relations in Vietnam.

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