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The electronics industry is one of the most globally integrated industries in terms of organisation. Engaging in global electronics supply chains requires electronics companies to improve their competitiveness and ensure compliance with Vietnamese laws and international labour standards.
This was affirmed by Mr Hoang Quang Phong, Vice President of the Vietnam Chamber of Commerce and Industry (VCCI), at the Dialogue on Promoting Labour Legislation Compliance in the supply chain of electronics sector, held in Hanoi by VCCI and the International Labour Organisation (ILO).
Production processes in different countries and regions connect companies in many different stages in value chains through complicated ownership forms and inter-company relations. The development of this interconnection network is aimed to enhance performance and usually vertically structured. But, this may lead to more substantial competition among local electronics businesses.
Electronics is one of the largest forex earners in Vietnam. Specifically, in 2016, Vietnam earned US$18.96 billion from exporting computers, electronic products and components, up 21.5 per cent year on year or an addition of US$3.35 billion. Top importers of Vietnam included China, the European Union (EU), the United States and the Netherlands.
Data from the General Department of Vietnam Customs showed that these exports brought in US$8.4 billion in the year to May 15, 2015, an increase of US$2.8 billion or 50 per cent over the same period of 2016.
Therefore, joining global electronics supply chains requires electronics companies to improve their competitiveness and ensure compliance with Vietnamese laws and international labour standards.
Mr Le Huu Long, Deputy Chief Inspector of the Ministry of Labour, Invalids and Social Affairs, said the electronics sector has become the largest export-oriented industry of Vietnam. The number of electronics businesses also increased dramatically from 256 in 2005 to 1,021 in 2014. This growth has created employment in the industry.
In spite of engaging in global value chains in various industries, including electronics, most production stages are involved in low-value, labour-intensive assembly where workers are poorly paid, he added. Labourers often have their rights and interests infringed.
In fact, in Vietnam, electronics businesses largely violate regulations on work time, rest time and overtime. They fail to comply with overtime hours because they manufacture according to factory orders or pressures from stakeholders. In addition, production factories still breach labour laws in terms of wages, overtime pay, insurance premium payments, pay for working on holidays, and workplace accidents.
Ms Dao Thi Thu Huyen, Representative of the General Director Office of Canon Vietnam Co., Ltd, said that Vietnamese suppliers often face worker mobility. So, it is difficult to know whether or not they are compliant with pledged policies.
She recommended that the Government should have more support and legal consultancy to disseminate laws to enterprises. Before issuing legal documents, the Government should survey, collect and integrate opinions from enterprises. In addition, it should introduce standard compliance check-sheets for companies to follow.
Meanwhile, suppliers should develop and perfect labour compliance systems: Demonstrating social responsibility by means of law compliance; preventing non-compliance risks that may impact production performance of enterprises and supply chains such as strikes and production suspensions due to labour compliance inspections. Especially, it is necessary to plan and exchange specific topics directly or indirectly to minimise communicative misunderstandings in the company.
VCCI Vice President Hoang Quang Phong said VCCI will study the needs of electronics businesses for technical support, enabling them to build up capacity in the coming time to achieve the targets of improving labour productivity of the electronics sector by enhancing dialogues at work and strengthening cooperation between employers and employees; and minimising potential business risks such as labour disputes, strikes or compliance issues with international labour standards when joining global supply chains.
The workshop is also an opportunity to enhance the prestige and image of enterprises; strengthen cooperation within the sector, across sectors, and among multinational corporations, suppliers and authorities to speed up compliance policies and develop the electronics sector as the spearhead of Vietnam’s economy.