Cablegate: Developments and Improvements in Vietnam's Labor

This record is a partial extract of the original cable. The full text of the original cable is not available.





E.O. 12958: N/A

1. SUMMARY: With approximately 340,000 Vietnamese currently
working overseas, Vietnam looks to labor exports as a means
to expand opportunities for its growing labor force while
generating foreign exchange. In order to address the
challenges created by the increase in labor exports, Vietnam
included updated legislation on overseas workers in its 2002
amendments to the Labor Code and implementing regulations.
These documents attempt to rectify some of the problems in
the labor export system by clarifying the rights and
obligations of Vietnamese workers, enterprises, and
government agencies involved in this arena, and providing a
mechanism for the Ministry of Labor to revoke licenses of
labor export companies (including state-owned enterprises)
that violate worker rights. The recent regulatory changes
are real advances in what is a relatively new labor export
system. Both the GVN and enterprises appear to be trying to
ensure workers are protected abroad, but they will not be
fully successful until Vietnam develops the oversight
capacity necessary to deal with the growing system.
Nevertheless, the GVN is actively engaged in improving
conditions for its overseas workers and the system that
places and monitors them. END SUMMARY.

Seeking More Jobs and Income Overseas

2. With over 40 million workers and more than 1 million new
entrants to the labor market every year, Vietnam has been
searching for ways to employ its growing labor force.
Towards this end, it has been reforming its economy and
increasing the role of private enterprise in a marketplace
previously controlled entirely by the State. In addition,
the GVN has looked to labor markets in other countries,
placing interested job seekers overseas. While exporting
labor is not new to Vietnam (the Vietnamese started sending
workers to the former Soviet Union and socialist Eastern
European countries in 1980, and Vietnam has in the past used
exported labor as a way to pay foreign debts) the current
free-market system of labor export companies securing
contracts with overseas employers is new for Vietnam. In
recent years, an increasing number of workers and
destination markets have become involved. According to the
Vietnamese Ministry of Labor, Invalids, and Social Affairs
(MOLISA), approximately 75,000 workers went abroad in 2003
compared with 21,000 in 1999. As of December 2003, around
340,000 Vietnamese were working overseas under official
labor export programs, with this number expected to grow in
coming years. The current top destinations for workers are
Malaysia, Taiwan, Laos, Japan, and South Korea, and
Vietnamese workers generally work in factories,
construction, fishing, and marine transport.

3. This development is being driven both by GVN policies
aimed at increasing the competitiveness of those sent abroad
and by worker demand. For the workers themselves, not only
does working overseas provide a job, but it also offers an
opportunity to earn hard currency and training. With the
average annual per capita income at around 450 USD and the
average rural per capita income as low as 170 USD, the
possibility of earning hundreds of dollars per month to send
home to their families is tempting for Vietnamese laborers.
By 2005, remittances from this overseas population are
expected to reach 2-2.5 billion USD. Before departing,
workers receive training in a wide range of subjects geared
toward their destination, including the language, culture,
and basic legal system of both Vietnam and the destination
country. Labor export companies, provinces, and employment
service centers run courses to train many laborers in the
specific skills necessary for their overseas jobs because
very few are qualified for the work that they seek.
Additionally, the GVN requires all overseas workers to
attend orientation classes during which they learn about
their rights and obligations.

Positive Changes to the Labor Code

4. The Labor Code and a number of implementing Decrees and
Circulars govern Vietnam's labor export system. Effective
January 2003, amendments to the Labor Code added a section
on "Vietnamese working abroad." Included in this section's
articles is a stipulation that only "Vietnamese citizens who
are 18 years of age in full or over, who have the ability to
work, who are voluntary and satisfy all other standards and
conditions in accordance with Vietnamese laws and the laws
and requirements of the foreign party may work in a foreign
country." The amendments also include the requirement that
enterprises have a permit to send workers abroad, thus
ensuring some measure of government control over the system.
The changes more clearly detail the rights and obligations
of both the workers and the enterprises, including the
enterprise's obligation "to manage and protect the interests
of laborers during the period of working abroad under their
contracts in accordance with the law of Vietnam and the law
of the foreign country;" "to pay compensation for damage to
the laborer caused by the breach of the contract by the
enterprise;" and "to complain to the authorized State body
against breaches of the laws in the field of labor export."

5. In July 2003, the GVN promulgated an updated Decree to
implement these provisions. This regulation more
specifically outlines the rights and duties of the GVN,
enterprises, and workers. It requires that companies
"monitor, manage, and protect the legal rights of labor
during their time of working abroad" and "have cadres for
the management of the labor depending upon the foreign
market." The enterprises are thus required to regularly
inspect overseas workplaces both before and after signing
labor contracts. The information from the pre-inspection
must be included in the registration of a labor export
contract submitted to MOLISA. According to one labor export
company, MOLISA carries out both scheduled and surprise
inspections of labor export companies.

6. Specifically, the Decree names MOLISA as the entity
responsible for the state management of Vietnamese working
overseas and assigns them responsibility for organizing
labor management sections (similar to a labor attache
office) in Vietnamese representative missions in countries
where a large number of Vietnamese work. MOLISA presently
has representatives stationed in Korea, Taiwan, Malaysia,
the Czech Republic, Germany, and Russia. Although the GVN
requires that the labor export company first attempt to
resolve any issues that arise, the Embassy has the
responsibility to assist workers if the enterprise does not
react in a timely manner. In addition, the new Decree has
established a "fund" for labor export to, among other
things, support workers and enterprises during their time
abroad. In a meeting with G/TIP officer Gregory Holliday
February 2, Deputy Director General for the Department of
Overseas Labor Nguyen Ngoc Quynh said that one specific use
for that fund would be to help defray costs should workers
need to return to Vietnam due to employer abuses.

7. The new Decree highlights the conditions for granting
and revoking licenses for labor export. Presently, Vietnam
has 154 licensed labor export companies. 150 of these are
state-owned enterprises "owned" by a wide range of
Ministries and provinces while the remaining four are
private companies operating under a pilot program.
According to MOLISA's Department of Overseas Labor, the GVN
will reissue licenses to labor export enterprises one year
after the implementation of this new Decree (i.e. August
2004). MOLISA will use this opportunity to reconsider all
licenses, not granting new ones to those who do not meet the
necessary conditions. MOLISA has already used its power to
revoke the licenses of "irresponsible" labor export
companies ten times between 2001 and 2003. It also
temporarily suspended eight licenses. For more serious
abuses of worker's rights, MOLISA coordinates with the
Ministry of Public Security to prosecute violators under
criminal statutes.

More Accountability by Labor Export Companies

8. To increase accountability and clarify the
responsibilities of the Ministries and provinces that "own"
labor export enterprises, the Decree requires the former to
"manage the activities" of these companies and instruct them
on their rights and obligations. In addition, the
Ministries and provinces must "inspect and examine labor
export activities carried out by enterprises under their
respective management" and "identify and timely deal with
violations related to labor export." As in many other areas
of Vietnamese law and regulation, weaknesses in enforcement
and implementation reduce the effectiveness of the new
decree. Labor export companies report that ministries and
provinces are actually minimally involved in the daily
activities of their enterprises. According to one company,
it must report periodically to its Ministry, but the
Ministry itself only intervenes if it hears about problems.
Even in these cases, it generally allows the enterprise to
attempt to find resolutions on its own.

9. The GVN strictly limits the fees that labor export
companies may charge and requires that this information be
clearly explained to prospective workers. Enterprises may
demand workers pay a service charge; but, according to DDG
Quynh, the maximum amount of this charge is one month's
wages, and that maximum is only applicable if the worker
obtains at least a one-year contract. For workers on
shipping vessels, the maximum is the wage of 1.5 months.
Additionally, companies can charge workers for passport,
visa, and health exam fees, as well as the cost of air
travel to their final destination. Finally, they can
require that workers pay a deposit.

Local Media Focuses on Problems and Abuses

10. The state-controlled Vietnamese media has focused its
attention recently on abuses and problems within the labor
export system. In the past few months, Vietnamese
newspapers have reported a number of cases in which
companies either failed to protect their workers or cheated
potential recruits through false advertisements. In the
case of the former, the GVN consistently stepped in to
protect the workers and assist them in returning to Vietnam.
The GVN has addressed the false advertising question, which
is much more common, in a couple of ways. First, it has
widely publicizing these cases in order to raise awareness
of potential scams. Second, it is prosecuting those
responsible for such incidents. In one of the biggest cases
to go to trial, the Hanoi People's Court sentenced a
recruiter to life in prison for cheating prospective
overseas workers in February 2003.

11. Other countries have different concerns and see the
breaking of labor contracts by workers to be the most
significant issue in this arena. The governments of Japan,
South Korea, and Taiwan have all complained to the GVN about
the tens of thousands of Vietnamese that have traveled to
their countries on labor contracts and quit their jobs to
work there illegally. Labor export companies and the GVN,
therefore, find themselves under pressure not only to
protect workers abroad but also to ensure that they do not
undertake illegal employment.

12. For this reason, contracts between workers and labor
export companies often include contact details for the
workers' families so that firms can communicate with
families should problems arise. Although not specifically
permitted or prohibited by the law, the GVN does not
consider such contact to be coercion. The GVN has
downplayed U.S. concerns about potential abuses of this
system by labor export companies, because it views such
interaction as necessary in cases where workers cannot be
reached otherwise. MOLISA and MPS representatives
characterize the contacts with workers' families as
"requests for assistance" rather than coercive or


13. The recent regulatory changes in Vietnam are real
advances in what is a relatively new labor export system.
According to the labor export companies, these amendments
have clarified both their and workers' rights and
obligations in this field, thus reducing the likelihood of
future abuses. Against this positive assessment is the fact
that Vietnam is struggling to balance the sometimes-
contradicting requirements of worker protection and labor
export promotion. In addition, labor export is on the long
list of issues on which the GVN would benefit from improved
interagency cooperation to address problems and abuses.

14. Most companies seem to understand the need to ensure
that workers are not abused, carrying out workplace
inspections and maintaining contact with those abroad.
Still, the enterprises themselves, regardless of whether or
not they are "owned" by the State, continue to act as profit-
seeking businesses, and conflicts of interest between worker
protections and the companies' bottom lines do exist. The
International Organization for Migration (IOM) and the
International Labor Organization (ILO) remain focused on
this subject and are developing proposals to assist the GVN.
As part of its overall effort to combat labor abuses and
trafficking in persons, the Mission recommends that the USG
assist these organizations to improve Vietnam's labor export

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