Business and intergration
New partnership agreed for more and better jobs in electronics sector
Multinational enterprises, the Vietnamese Government, employers’ and workers’ organizations have agreed to work in close partnership to create more and better jobs in the electronics sector – one of the country’s newest and biggest manufacturing industries.
The commitment was made during a policy dialogue on “More and better jobs through socially responsible labour practices in Viet Nam’s electronics industry” jointly organized by the Viet Nam Chamber of Commerce and Industry (VCCI) and the ILO in Hanoi on 29 September.
The number of jobs in this industry grew rapidly in recent years. The total of electronics employees increased by more than 7 times in 8 years, from 46,000 in 2005 to over 327,000 in 2013.
Despite the successful integration into the global electronics value chain to date, major challenges remain. According to new ILO studies these challenges include: how the country can improve working conditions in the sector, capture the world’s knowledge and technologies in the industry, improve skills for workers, and help Vietnamese enterprises enter the global market.
About four fifths of workers in the sector at the bottom of the electronics job structure are mostly young Vietnamese women doing assembly jobs that do not add extra value to products. Women tend not to hold technical or managerial positions, and top management positions are held by foreigners.
Working conditions amongst the interviewed companies were generally decent. However, compliance challenges for the sector include excessive overtime (beyond the 300 hour annual limit), gender-based discrimination (during recruitment and maternity), specific safety and health issues and social insurance contributions. Moreover, social dialogue could be strengthened.
The ILO studies also pointed out that 99 out of the 100 biggest electronics enterprises in Viet Nam are foreign direct investment (FDI) businesses. The majority of the top 20 are Japanese firms, followed by Korean. These 20 enterprises employ half of the entire industry’s workers.
“Although electronics sector is a symbol of the country’s economic integration, Vietnamese enterprises are almost left out of the supply chain,” said VCCI President Vu Tien Loc. “They probably only produce packing materials.”
Dao Thi Thu Huyen, Office Chief of Canon Viet Nam, agreed, saying that the ratio of Vietnamese suppliers among its 120 suppliers in the country is very low and they only provide simple products.
“This is the consequence of previous investment policies. Local authorities welcomed investors without considering their technology levels whereas investors only take into consideration cheap labour,” said Vice Chairman of the Viet Nam General Confederation of Labour Mai Duc Chinh.
According to the ILO, MNEs are uniquely placed to further contribute to long-term sustainability and a fairer globalization in an export-led economy, with shared benefits for their home countries and for the countries where they invest or do business.
Viet Nam’s deepening economic integration through the Trans-Pacific Partnership and other free trade agreements (FTAs) opens opportunities for more jobs in this sector but only if the country embarks on comprehensive labour law reform, institutions and practices of industrial relations in respect to the ILO Declaration on Fundamental Principles and Rights at Work.
“Building better linkages between MNEs and domestic small and medium-sized enterprises would ensure more sustainable paths of economic development and industrialization, where local companies become a productive partner of MNEs and local capacity for higher added value production is embedded in the local companies and economy,” said ILO Viet Nam Director Chang-Hee Lee.
“Such “win-win” outcomes delivering inclusive growth, sustainable development and decent jobs for workers, will become a reality when there is an appropriate legislative framework, a conducive policy environment and concerted efforts by all stakeholders.”
The new ILO studies reconfirmed how genuine competitiveness enhancing business strategies can at the same time be socially responsible and generate more and better jobs.
This process could be further promoted by the ILO MNE Declaration, which provides policy guidance on how to maximize the positive contribution of multinational enterprises to economic and social development and minimize possible negative impacts. The declaration also gives specific roles and responsibilities to governments of home and host countries, MNEs, workers’ and employers’ organizations for genuine corporate social responsibility, encouraging socially responsible labour and business practices “beyond compliance”.