US embassy cable - 04HANOI336

UNCLAS SECTION 01 OF 04 HANOI 000336 
 
SIPDIS 
 
STATE FOR G/TIP, DRL/IL, AND EAP/BCLTV 
STATE PASS USDOL ILAB BBUI 
STATE ALSO PASS USAID FOR ANTOINETTE FERRARA 
 
BANGKOK FOR USAID 
 
E.O. 12958: N/A 
TAGS: ELAB, ECON, VM, KTIP, TIP, LABOR 
SUBJECT: DEVELOPMENTS AND IMPROVEMENTS IN VIETNAM'S LABOR 
EXPORT SYSTEM 
 
 
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. 
 
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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. 
 
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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. 
 
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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. 
 
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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 
threatening. 
 
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Comment 
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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 
system. 
BURGHARDT