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In recent years, Vietnam has become a major player in the global garment industry, particularly for the outdoor, sports and shoe sectors. With a workforce of more than two million and over 6,000 garment and apparel firms, the garment industry is now the second largest in the country. Most of the factories are located in or around Hanoi and Ho Chi Minh City. With the recent ratification of a free trade agreement between the European Union and Vietnam, the country’s garment industry is expected to grow even more rapidly in the future.
As a result of the new free trade agreement, Vietnam is giving its labour code a major overhaul and is working to improve legislation around freedom of association and collective bargaining. In January 2019, with guidance from the country’s National Wage Council, the Vietnamese government raised the minimum wage levels. While this is a big step in the right direction, minimum wages throughout the country are still below living wage benchmarks. Excessive overtime in Vietnamese garment factories also continues to be a major problem. Workers rely heavily on wages earned during overtime hours, and they usually do not receive the correct overtime premiums. Other commonly reported issues include incomplete labour contracts, resignation policies that are not correctly implemented and low awareness among workers of their rights and responsibilities. With only one recognised union in the country, most workers are also unable to organise to change their conditions.
In 2014, we launched our Workplace Education Programme (WEP) in Vietnam, which conducts factory training sessions in factories across the country. These sessions are focused on raising awareness of workers’ rights and strengthening communication between workers and management. We also have a local audit team in Ho Chi Minh City and Hanoi and a complaints handler based in Hanoi.
Another important aspect of our work in the country lies in building relationships with local labour organisations, including the Vietnam Chamber of Commerce and Industry, the Vietnam Ministry of Labour, the Vietnam General Confederation of Labour and a number of grassroots labour NGOs in Hanoi, Ho Chi Minh City and Hai Phuong. We share what we know about international garment supply chains with these organisations so that they are better able to for issues like living wage, social dialogue and the prevention of gender-based violence.
Interested in calculating labour minute value and product costing for this country? Check out our country calculators here.