Research project:  Industrial Relations Practices of Employers in the North of Vietnam Researcher:                 Dr. Do Quynh Chi (Research Center for Labour Relations)

Research sponsors:     Vietnam Chamber of Commerce and Industry (VCCI)

                                     International Labour Organization (ILO)

Research time:             December, 2010

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Research summary:

This paper was undertaken within the research programme on employers’ best practices in industrial relations (IRs). It aimed to assess strategies and measures for harmonizing IRs taken by labour intensive enterprises from the manufacturing industry. The study explored four issues: communication between employers and workers, negotiation on pays and employment conditions, labour dispute prevention and settlement, and coordination mechanisms among enterprises.


The study found that there were currently three models of IRs in Northern enterprises. First, a low-pay model mainly included export processing enterprises (EPEs). Due to a cost-based competition, low profit margin, requirement for low-skilled labor, the enterprises would pay low wages, have an ineffective communication system (neither formal nor informal system), and adjust salary rate only when the State regulates the minimum wage rise, or under the strike’s pressure. They always faced labor disputes, high labour turnover, and serious lack of workforce. The second model of low-pay and human resource (HR) management software comprised of small sized EPEs. Those enterprises, despite their low profit margin, offered high requirements for labor of experiences, as it took skills and efforts to process their commodities. Their market was small but pretty stable.  Although being unable to afford higher pays for labor than the common wage rate, they always boosted labor’s morale and partly met their wishes by raising wages based on labor’s capability, skills and attitudes to work. Employers were also active in formal and informal communication with employees, creating friendly and warm-hearted working atmosphere just like a family. Yet, seldom were there negotiation and consultation on salary and working conditions. Generally, IRs in the enterprises were of relative stability, mitigating labor disputes although they still faced high labour turnover and labor shortage. The third was a model of HR management software, adopted by high-profile enterprises and component supply companies. They had high profit margin, stable business situation, high reputation in the market, large size, and strong business culture. Then they all employed standardized procedures of dialog and grievance-handling. Those enterprises also offered better pays by at least 5% compared to the common rate, therein requiring no negotiation and consultation.

Additionally, in the Northern enterprises, collective bargaining and consultancy between employers and employees in terms of wages and working conditions have become popular yet, as compared to enterprises of the South. Initial signs of IRs coordination between enterprises were also seen in the research.

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