Vietnam plans union reform to avert trade woes, risking foreign firms' unease

CANON

27/02/2024 03:58

* 
      Vietnam may ratify ILO Convention 87 on workers rights
this year
    

        * 
      Required under EU, Pacific trade deals, may hit
competitiveness
    

        * 
      Samsung ex-deputy Vietnam head criticised multi-union
system in
2016 speech notes
    

  
    By Francesco Guarascio
       HANOI, Feb 27 (Reuters) - Communist-ruled Vietnam is
expected to ratify this year the UN convention for the free
establishment of trade unions, UN officials and diplomats said,
in a move meant to cut risks of trade disputes but likely
leaving some foreign companies uneasy.
    The long-delayed measure would be a major formal step in the
tightly controlled one-party nation where the only existing
national trade union operates within the Communist Party
structure, although it is unclear how and when the convention,
once ratified, would be actually applied.
    The Southeast Asian manufacturing hub, which is home to
factories of international companies including Samsung
Electronics  005930.KS , Intel  INTC.O , Foxconn  2317.TW  and
Canon  7751.T , is highly reliant on commerce, which last year
exceeded 160% of the $415 billion domestic economy.
    It is required to apply UN standards on workers rights to
avoid disputes over 'social dumping', which refers to the
practice of countries competing unfairly with others over labour
costs, under its multi-billion-dollar trade deals with the
European Union and Pacific partners.   
    "We are confident Vietnam is committed to ratifying
Convention 87 as early as possible," Ingrid Christensen, the
head in Vietnam of the International Labour Organization, the UN
agency responsible for labour rights, told Reuters.
    Convention 87 on the "freedom of association and protection
of the right to organise" was adopted in 1948 and is one of the
fundamental texts protecting labour rights worldwide.
    In a meeting in December with foreign experts, Vietnam's
labour ministry officials said the ratification of the
convention was expected in October 2024, according to a
Hanoi-based diplomat. Other diplomats confirmed plans to ratify
this year.
    The Vietnamese Prime Minister's office, the labour ministry
and Vietnam General Confederation of Labour, the country's only
national union, did not reply to requests for comment.
    After a decade of talks, parliament was expected to ratify
the convention last year, just before the expiry of a January
deadline agreed with Canada. With the deadline missed, Ottawa
has in theory an additional argument to seek sanctions under the
Comprehensive and Progressive Agreement for Trans-Pacific
Partnership (CPTPP).
    Canada, whose trade with Vietnam is worth over $10 billion,
is reviewing a complaint about whether Vietnamese labour laws
are in compliance with CPTPP's obligations on workers' rights, a
Canadian government spokesperson said.
    The EU, which had bilateral trade with Hanoi amounting to
nearly $65 billion in 2022, sees the ratification of Convention
87 and amendments of relevant laws as "crucial" to comply with
the existing agreements, EU Ambassador to Vietnam Julien
Guerrier said.      
     
    SOME COMPANIES UNHAPPY?
    However, "if the ratification leads to more real power for
trade unions, some companies may be unhappy," said Nguyen Hung,
a specialist in supply chains at RMIT University Vietnam,
warning that could impact foreign investment, including from
Samsung, the largest investor in the country.
    Freedom of establishment would "result in a disorderly
proliferation of unions" and deterioration of industrial
relations, according to notes seen by Reuters for a 2016 speech
by Samsung's former deputy head in Vietnam, Bang Hyun Woo. The
notes said Bang's views did not reflect Samsung's.
    Samsung declined to comment about Vietnam's possible
ratification and whether that could change its investment plans.
    Vietnam will also raise by 6% the minimum wage in the
business sector in July, following other hikes in the past. It
will also increase from this year levies on large multinationals
under a new global tax deal.
    Vivie Wei, who leads investment consultancy Dezan Shira &
Associates in Vietnam, said she saw no significant impact on
foreign investors' interest from enhanced unions rights or wage
hikes.
    Vietnam "does not position itself as the cheapest option"
but has still been able to attract investments even after recent
increases in salaries, she said.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
ILO Convention 87 on labour rights    https://reut.rs/3uEhwT0
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Francesco Guarascio @fraguarascio; Additional
reporting by Phuong Nguyen and Khanh Vu in Hanoi, Ju-min Park
and Joyce Lee in Seoul; Editing by Muralikumar Anantharaman)
 ((mailto:Francesco.Guarascio@thomsonreuters.com;))