Vietnam likely to reform trade unions, risking investors
Vietnam will likely ratify the UN treaty for free trade unions this year, say UN officials and diplomats. This move aims to avoid trade disputes, but it may worry some foreign companies, Reuters reported on Tuesday.
Long-delayed, this measure would mark a significant official shift in a country governed by a single party and trade union, yet the functionality and implementation timeline of the treaty remain unclear post-approval.
The Southeast Asian manufacturing hub, a base for global giants like Samsung Electronics, Intel, Foxconn, and Canon, depends heavily on international trade.
Last year, this trade volume was more than one and a half times the size of the entire $415 billion domestic economy.
The head of the UN labour agency in Vietnam, Ingrid Christensen, said they believe Vietnam will soon ratify Convention 87, a key international agreement protecting worker rights to freely join and form unions.
During a December meeting, Vietnam’s labour ministry announced to foreign experts that they anticipate the convention to be ratified by October 2024, as reported by a diplomat in Hanoi. This plan for ratification within the year was also confirmed by other diplomats.
Nguyen Hung, a specialist in supply chains at RMIT University Vietnam, warns that the ratification could empower trade unions, potentially upsetting companies and affecting foreign investment.
Furthermore, Samsung has stated its commitment to the ILO fundamental conventions and prioritises the protection of its employees’ rights. Meanwhile, Vietnam plans to increase the minimum wage in the business sector by 6 per cent in July and will also start imposing higher taxes on large multinational companies this year under a new global tax agreement.
Vivie Wei, the leader of Dezan Shira & Associates in Vietnam, stated that the strengthening of union rights and wage increases are not significantly affecting the interests of foreign investors.
Despite not being the most affordable option and recent salary hikes, Vietnam continues to draw investments, she added.
