Vietnam’s First Provincial Labour Arbitration Council: A Solid First Step

Twenty-first century labour relations in Vietnam can be characterised by huge numbers of wildcat strikes demanding better pay and conditions. These have always been by workers without the involvement of the state-led union federation, the Vietnam General Confederation of Labour (VGCL). Quite often, the union stepped in quickly to negotiate an agreement with the employer. 

On a national level, politicians, union officials, and other labour practitioners have been aiming to reduce the incidence of strikes and create “harmonious labour relations” (quan hệ lao động hài hoà) through developing and improving various labour relations structures and mechanisms. This effort took on a particular urgency after 2011, a year in which nearly 1,000 strikes were recorded. Over the past decade, considerable amounts of time and money have been invested into initiatives such as trade union and legal reforms, collective bargaining, and tripartite social dialogue. These efforts have succeeded in substantially reducing the number of strikes, with only 105 recorded in 2021. Nevertheless, strikes remain a significant force in Vietnamese labour politics, and efforts to reform labour relations institutions in order to reduce strikes continue. The latest iteration of this is an important advance in labour arbitration procedures.

Labour arbitration is a widespread form of dispute resolution practised in many countries around the world. When a workplace dispute between unions and management cannot be resolved, there is an initial bipartite dialogue between the two parties. This may then proceed to formal conciliation and mediation procedures. If these fail, the next step is often arbitration, defined by the International Labour Organization as “a procedure whereby a third party […] not acting as a court of law, is empowered to take a decision which disposes of the dispute”. In a number of countries, an arbitration council is the body which makes those decisions.

Vietnam’s labour arbitration procedures, in contrast, have been haphazard. Theoretically, the 2012 Labour Code legislates that labour disputes should go through arbitration procedures. But in practice, such arbitration procedures are almost impossible to undertake. A 2019 report for the ILO found that arbitration had not been used at all since the 2012 Labour Code came into effect. This is due to a number of reasons. First, arbitration has many regulatory limitations, meaning that their role was already limited. For example, arbitration councils are only supposed to deal with interest-based disputes (those demanding more than the minimum prescribed by law), not rights-based disputes (those demanding things to which workers are entitled in law). In practice, however, these are hard to distinguish as disputes contain a mix of rights- and interest-based demands. Second, the system of disputes tends to ignore legal procedures, including arbitration entirely. In fact, the system is characterised by wildcat strikes that do not follow any formal regulatory procedures. Third, arbitration councils did not have specialised places of business, do not have easily accessible contact numbers or websites, and do not have full-time staff.

Despite the challenges, however, there has been some change for the better. The revised 2019 Labour Code, which came into force in January 2021, caters for a clearer role for provincial arbitration councils. Since then, with assistance from the ILO, the Ministry of Labour, Invalids and Social Affairs (MOLISA) has been working on developing a pilot project in Dong Nai. The southern province is known for its industrial factories producing for export, high levels of self-organised worker activism, and, in labour circles, for having a fairly progressive provincial union federation. The pilot project has now been formally launched, with the provincial arbitration council being the first to successfully arbitrate a case in the country.

If efforts to reduce strike numbers, such as through the creation of an arbitration council, continue to be successful, eventually this primary pressure for pro-labour reforms — workers’ strikes — will be lost.

The Dong Nai provincial labour arbitration council heard its first case on 7 November, and held an official launch event four days later. The council consists of 15 members, representing unions, employers, and the state. The launch has been greeted positively. It is seen as a major step forward in Vietnam’s efforts to reform industrial relations mechanisms and develop effective tripartite systems, one that can assist with collective bargaining, dispute resolution, and secure benefits for workers and employers alike. At the launch event, Nguyen Thi Thu Hien, the director of Dong Nai’s provincial Department of Labour, Invalids and Social Affairs (under MOLISA), spoke of how labour disputes impact economic development, the investment environment, and social order. She hoped that the council could contribute to efficiently resolving disputes objectively and ensuring harmony of interests between different parties.

There is, however, another perspective. An arbitration council which can make judgments and awards on disputes in a disinterested manner, and is able to gain the trust of all parties, is a welcome development. And with the involvement of well-known and widely respected progressive labour lawyers such as Vu Ngoc Ha, the Dong Nai council looks like it will be able to do that. But framing the launch of the council explicitly in terms of wanting to reduce strikes and create harmony between employers and workers may actually serve to disempower workers. 

In reality, strikes have been the single most important driving force for improving the lot of the Vietnamese working class. They have been successful in achieving pay rises and better conditions at the workplace level, and have also led to broader changes, such as trade union and legal reforms, as mentioned above. If efforts to reduce strike numbers, such as through the creation of an arbitration council, continue to be successful, eventually this primary pressure for pro-labour reforms — workers’ strikes — will be lost. One may argue that this is not necessarily bad; if strikes highlight grievances among workers, which are adequately addressed through arbitration, then this could actually represent workers’ empowerment. From a broader and medium-term perspective, however, without the threat of strikes, such arbitration procedures may lose their effectiveness —employers would no longer feel any compulsion to take part in such initiatives in good faith, or to respond to the demands of workers. Far from ensuring harmony of interests between different parties, an arbitration council, absent of grassroots pressure, may well end up leading to labour submitting to the domination of capital. 

Either way, the launch of the Dong Nai provincial arbitration council could signal a new epoch of Vietnamese labour relations. Its rulings and impacts should be followed closely.

2023/01