US puts squeeze on Vietnamese labor
By Brendan Smith, Tim Costello and Jeremy Brecher

Surely the American Chamber of Commerce (AmCham) and the corporations they represent - including Nike, Coca-Cola, FedEx, Pfizer and Exxon - have been living up to their promises to the US Congress and the American people to raise labor standards and wages in Vietnam.

Well, not quite.

In September 2005, the Vietnamese government called on foreign companies to increase workers’ minimum wages, with the largest increases targeted toward the poorest workers in semi-rural areas and small cities.

According to Michael Karadjis, writing for the Association of Southeast Asian Nations Focus Group based at the Australian National University, “This government decision had come about due to a demand for a minimum 40% increase by the Vietnam General Confederation of Labor, the country’s main trade-union body.

“Many foreign investors asked the government to defer the wage rise until after the Tet [Lunar New Year] holiday, which began on January 28, because they ‘couldn’t afford’ to pay the wage rise and also pay the Tet bonus. The Tet bonus is the equivalent of a 13th-month salary that Vietnamese workers are legally entitled to,” he wrote.

“The government thus left it up to the bosses and workers to bargain over when it would be implemented before Tet. Feeling they had waited long enough, workers downed tools with the full knowledge that they had the law, the open sympathy of most Vietnamese, the discreet sympathy of the government and the active support of the official trade-union leadership on their side.”

As a result, from late 2005 through early January 2006, foreign enterprises in the southern industrial zones around Ho Chi Minh City were crippled by the largest wave of strikes in the country’s recent history. (There have been some 900 reported strikes in Vietnam since 1995.)

During this same period, the AmCham sent a letter to the chairman of the People’s Committee in Hanoi titled “Re: Minimum wage, and illegal strikes involving violence, January 11, 2006.” The letter opens:

We are writing to seek your urgent attention to help resolve a critical issue, one that we believe is vital to Vietnam’s continued economic and social development. As you know, one of the major attractions for manufacturing industry to come to Vietnam is the labor force. This is both the quality of the labor force, which is well educated and hard-working, and importantly, in the past, the discipline of the labor force, which rarely had taken any illegal industrial actions. However, recent mob actions in the core of the Southern Focal Economic Zone have quickly shattered this perspective.

  We would like to seek your immediate assistance to restore quickly the law-abiding quality of [the] Vietnam labor force, so we can continue to cooperate with you in attracting more manufacturing foreign direct investors to Vietnam.

AmCham goes on to describe a “number of illegal strikes involving violence, destruction of property, and bodily harm in dozens of large foreign-invested factories in the Southern Focal Economic Zone”, claiming to have “no idea” why their specific factories were targeted. Quickly shifting the blame to the Vietnamese government, AmCham insists:

We believe that one cause of these disturbances is the sudden and confusing manner in which the authorities have introduced proposed changes to the minimum-wage rules. None of our member companies were consulted before announcements started appearing in the press that workers were entitled to a 40% increase in the minimum wage.

According to Karadjis, the European Chamber of Commerce also wrote to the then prime minister, Phan Van Khai, to warn him that investors initially chose to move to Vietnam because, they imagined, “the workforce is not prone to industrial action”.

Now, AmCham is using US President George W Bush’s recent visit to Hanoi as an opportunity to continue its lobby campaign. Timed to be released as Bush met with Vietnamese leaders, the US Chamber of Commerce and American Chamber of Commerce issued a 26-page report titled “Southeast Asia: Dynamic Opportunities for US Competitiveness”.

The report is stocked with recommendations for how Vietnam and its neighbors can remain in the good graces of US corporations. One of the suggestions is for the government to “ensure appropriate public discussion of draft commercial legislation before passing laws, to create a transparent and stable investment climate”.

On the heels of the January strike wave, this might be code for “Don’t raise the minimum wage again without our prior approval and maintain ‘stability’ in the export-processing zones by aggressively stamping out strikes.”

AmCham Vietnam is composed of some of the most profitable and well-respected US corporations, including Nike, Federal Express, Coca-Cola, and Time-Warner. (For a complete list of AmCham Vietnam corporations, click here.)

These are the very companies that have promised to raise working conditions for desperate workers around the world. Yet they’ve once again been caught saying one thing to the American people while actively doing the opposite overseas. A letter recently sent to Bush signed by 27 members of the US Congress concerning AmCham’s opposition to China’s new draft labor law is apropos to AmCham’s efforts in Vietnam:

This shameful American corporate lobbying campaign is inconsistent with our country’s commitment to promote respect for fundamental worker rights everywhere ... It also discredits the long-professed claims of many US corporate leaders that US companies and investors in China de facto are leading by example, to respect the basic human rights of all Chinese workers and improve their working conditions and living standards.

US and European corporations are constantly bullying countries such as Vietnam with the threat of moving to China unless they clamp down on the labor force. But these very same corporations are using identical scare tactics in China by threatening to move to countries such as Vietnam if the government raises wages or improves working conditions.

This year, when China released the draft of its new labor law extending modest new rights to workers, Keyong Wu, an expert for the British Chambers of Commerce, told a newspaper, “Business is attracted to China not only because of its labor costs but also because of its efficiency. If regulation starts to affect that and flexibility, then companies could turn to India, Pakistan and Southeast Asia.”

In short, the strategy of the global employers is to drive down labor costs in each country and then tell other countries they must drive down their labor costs even further or their jobs will leave. AmCham’s opposition to raising wages in Vietnam and the fundamental right of workers to strike to improve their working conditions is of concern to workers in the US and throughout the world.

Indeed, as US wages stagnate, Americans increasingly worry that low wages and labor standards in Asia are driving down those in their own country. According to Congresswoman Lynn Woolsey, “It is challenging enough for hard-working Americans to compete in the new global economy without having US corporate leaders seeking to play them off against the least-protected and lowest-wage workers in the world.”

Brendan Smith, Tim Costello and Jeremy Brecher are the co-founders of Global Labor Strategies, a resource center providing research and analysis on globalization, trade and labor issues. They have also written and produced the Emmy-nominated Public Broadcasting Service documentary Global Village or Global Pillage? For more on GLS visit www.laborstrategies.blogs.com or e-mail .(JavaScript must be enabled to view this email address)

(Copyright 2006 Global Labor Strategies.)