Electronics business coalition kicked off to boost CSR in labour practices

The ultimate goal of the coalition is to contribute to more and better jobs while improving industrial relations in Viet Nam’s electronics sector.

News | 20 October 2017
HANOI (ILO News) – A business coalition has been launched today to promote socially responsible labour practices in Viet Nam’s electronics sector.

The ultimate goal of the coalition is to contribute to more and better jobs while improving industrial relations in Viet Nam’s largest export industry.

The coalition is expected to provide a platform for discussion among multinational enterprises (MNEs), local companies and business associations to exchange good practices in the workplace. It aims to collect and represent the voices of the sector in a broader policy dialogue with other stakeholders, and take joint actions to address challenges faced by the industry.

The coalition is an initiative by the Viet Nam Chamber of Commerce and Industry (VCCI) and the Viet Nam Electronics Industry Association (VEIA) with support from the ILO and the Japanese Government.

“Promoting corporate social responsibilities (CSR) in labour practices will not only better the reputation of businesses but also help them come up with good and sustainable experiences,” said VCCI President Vu Tien Loc. “The businesses well in line with labour laws and international labour standards will be appreciated by international buyers, which will create favourable conditions for them to enter the buyers’ global supply chains.”

Viet Nam’s electronic sector has seen a rapid expansion over the past years. It now employs around 500,000 workers, compared to 327,000 in 2013 and 6,000 in 2005.

The industry is primarily led by major MNEs from countries such as Japan and Korea whereas local companies are confined to a narrow functional scope, mainly in labour intensive assembly processes.

ILO studies pointed out that out of the largest 100 enterprises in the sector, 99 are FDI enterprises, and the remaining one, ranked 100th, is a State-owned company. The top 20 businesses account for half of the total electronics jobs.

The operations of MNEs in the electronic sector has weak backward linkages with Vietnamese domestic enterprises due to the underdevelopment of local supporting industries.

But there are success cases in which local enterprises are able to participate in MNE-led global electronics value chains.

“MNEs’ engagement with suppliers – built and maintained through regular dialogues – is one of the sources for them to increase competitiveness of the entire supply chain, demonstrating a clear business case for aligning socially responsible labour practices with company performance,” said ILO Viet Nam Director, Chang-Hee Lee. “Such harmonious business relationship between MNEs and local enterprises is essentially what we hope to see replicated in Viet Nam.”

This is in line with 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 CSR in labour and business practices.