Criteria of labor relations at enterprises in hanoi, vietnam

THAI NGUYEN UNIVERSITY

Socialist Republic of Vietnam

SOUTHERN LUZON STATE UNIVERSITY

Republic of the Philippines

KHUẤT THỊ THU HIỀN

(English Name: ROSE)

CRITERIA OF LABOR RELATIONS

AT ENTERPRISES IN HANOI, VIETNAM

DOCTORAL DISSERTATION

TNU-SLSU, 2013

i

THAI NGUYEN UNIVERSITY

Socialist Republic of Vietnam

SOUTHERN LUZON STATE UNIVERSITY

Republic of the Philippines

KHUẤT THỊ THU HIỀN

(English Name: ROSE)

CRITERIA OF LABOR RELATIONS

AT ENTERPRISES IN HANOI, VIETNAM

DOCTORAL DISSERTATION

Supervisor: Associate Professor. Dr. TRẦN CHÍ THIỆN

Thainguyen University of Economics and Business Administration

(TUEBA)

TNU-SLSU, 2013

i

ACKNOWLEDGEMENT

The researcher would like to express her sincere gratitude to Assoc. Prof. Dr.

Tran Chi Thien who has instructed her dedicatedly to complete this Dissertation.

The researcher would like to thank the lecturers of the University of Southern

Luzon, Thai Nguyen University, and staff of Dong Xuan Knitting Company for

helping her during the survey on labor relations.

Other thanks go to the University of Labor and Social Affairs where the author

has been working for years, her family and all her beloved friends who have shared,

encouraged and supported her unceasingly during her DBA program, hence made her

study feasible.

The Author

Khuat Thi Thu Hien

ii

COMMITMENT

The author hereby declares that this is her own research. The information

utilized in the Dissertation is trustful. The labor relation criteria has not been

available yet in Vietnam generally, in Hanoi, particularly. In 2012, The National

Assembly already passed the Labor Code. However, the Code is just a general

guideline which needs to wait for a respective Decree of the Central government, then

respective Circulars of Ministry of Labor, Invalids and Social Affairs to be more

specified in detail and applicable. However, in Vietnam this process takes a long

time, at least 3 years normally. A pioneer research can provide the involving policy

makers with suggestions, as the food for thought, on what the labor relation criteria

should be and what the way of the criteria application should be, is really in need.

The author strongly believes that the Dissertation is the first study in Vietnam to

construct the set of labor relation criteria, and therefore also the first study to

introduce the way to apply those criteria in the reality of an example enterprise.

Hence, the findings and conclusions of the Dissertation have not been published in

any other work yet!

The Author

Khuat Thi Thu Hien

iii

TABLE OF CONTENTS

ACKNOWLEDGEMENT...............................................................................................i

COMMITMENT.............................................................................................................ii

LIST OF TABLES .........................................................................................................v

LIST OF FIGURES .......................................................................................................vi

ABSTRACT..................................................................................................................01

.CHAPTER I: INTRODUCTION.................................................................................02

1.1. BACKGROUND OF THE STUDY ......................................................................02

1.2. STATEMENT OF THE PROBLEM.....................................................................03

1.3. SIGNIFICANCE OF THE STUDY.......................................................................04

1.4. SCOPE AND LIMITATION OF THE STUDY....................................................04

1.5. DEFINITION OF TERMS ........................................................................ 06

CHAPTER II: REVIEW OF RELATED LITERATUES AND STUDIES .................09

2.1. REVIEW OF RELATED STUDIES .....................................................................09

2.2. THEORETICAL FRAMEWORK.........................................................................21

2.3. CONCEPTUAL FRAMEWORK..........................................................................40

CHAPTER III: METHODOLOGY .............................................................................41

3.1. STRATIFIED CLASSIFICATION METHOD FOR CLASSIFYING LABOR

REALTION CRITERIA ...............................................................................................41

3.2. SECONDARY INFORMATION COLLECTION METHOD.............................43

3.3. PRIMARY INFORMATION COLLECTION METHOD ....................................44

3.4. SATISFACTION RANKING METHOD.............................................................47

3.5. DISCRIPTIVE ANALYSIS METHOD ...............................................................47

3.6. STATISTICAL TABLE METHOD .....................................................................48

3.7. CHART ANF GRAPH METHOD ........................................................................49

CHAPTER IV: CRITERIA OF LABOR RELATIONS AND THEIR

APPLICATION AT ENTERPRISES IN HANOI, VIETNAM ..................................50

4.1. CRITERIA OF LABOR RELATIONS .................................................................50

4.2. PROCEDURE TO APPLY LABOR RELATION CRITERIA AT AN

ENTERPRISE IN ORDER TO EVALUATE THE HARMONY OF THE WORKING

ENVIRONMENT .........................................................................................................68

CHAPTER V: A CASE STUDY: AN EXAMPLE OF APPLICATION OF LABOR

RELATION CRITERIA AT A SPECIFIC ENTERPRISE - DONG XUAN

KNITTING COMPANY ..............................................................................................72

5.1. OVERVIEW OF THE EXAMPLE ENTERPRISE...............................................72

5.2. SURVEY RESULTS .............................................................................................78

iv

5.3. SUMMARY OF THE LABOR RELATION EVALUATION USING THE

PROPOSED CRITERIA.............................................................................................102

CHAPTER VI: CONCLUSIONS AND RECOMMENDATIONS............................106

6.1. CONCLUSIONS..................................................................................................106

6.2. RECOMMENDATIONS.....................................................................................108

REFERENCES ...........................................................................................................112

APPENDIX.................................................................................................................116

APPENDIX A. REQUEST LETTER TO CONDUCT THE SURVEY (TO

RESPONDENTS).......................................................................................................116

APPENDIX B. QUESTIONAIRRE...........................................................................117

APPENDIX C. CURRICULUM VITAE ...................................................................126

v

LIST OF TABLES

Table 2.1: Strategy on labour relations and corresponding policies............................... 20

Table 3.1: The results of the stratified classification of the labor relation criteria ......... 43

Table 4.1: The criteria of signing employment contracts ............................................... 50

Table 4.2: The criteria of Termination of employment contract .................................... 52

Table 4.3: The criteria of Working time, rest time ......................................................... 53

Table 4.4: The criteria of working environment ............................................................ 57

Table 4.5: The criteria of the position of the employee at work..................................... 61

Table 4.6: The criteria of wages of workers ................................................................... 64

Table 4.7: The criteria of Method of payment................................................................ 66

Table 5.1: Employees Distribution in Dong Xuan Knitting Company........................... 74

Table 5.2: Number of sampled employees by work departments................................... 76

Table 5.3: Number of sampled employees by education attainment ............................. 77

Table 5.4: Number of sampled employees by gender..................................................... 77

Table 5.5: Summary of sample allocation by work departments, education attainment

and gender....................................................................................................................... 78

Table 5.6: Board of Directors of DOMIMEX ............................................................... 81

Table 5.7: Implementation of criteria on labor contract at DOXIMEX ......................... 82

Table 5.8: Implementation of contract termination criteria at DOXIMEX .................... 85

Table 5.9: Implementation of criteria on working hours and rest at DOXIMEX........... 88

Table 5.10: Implementation of criteria on working environment at DOXIMEX........... 92

Table 5.11: Implementation of criteria on labor positions at DOXIMEX...................... 95

Table 5.12: Implementation of criteria on wages at DOXIMEX.................................... 98

Table 5.13: Implementation of criteria on method of payment at DOXIMEX ............ 101

Table 5.14: Score of Criteria Groups at DOXIMEX .................................................... 102

vi

LIST OF FIGURES

Figure 2.1: Dunlop‟s classical labour model .................................................................. 18

Figure 2.2: Kochan‟s Strategy selection model in labour relations................................ 19

Figure 2.3: The interaction in Petit‟s labour relations system ........................................ 21

Figure 2.4: Labor relations, the interference of the relations......................................... 23

Figure 2.5: Subjects of the labor relations...................................................................... 28

Figure 2.6: Scope and contents of labour relations at enterprises.................................. 40

Figure 4.1: Procedure to apply labor relation criteria to evaluate the ........................... 68

Figure 5.1: Age structure of the surveyed employees..................................................... 79

Figure 5.2: Working experience structure of the surveyed employees .......................... 79

Figure 5.3: Number of criteria by satisfaction level at DOXIMEX ........................... 104

Figure 5.4: Ratio of employees‟ satisfaction of 64 labor relations criteria in Dong

Xuan Knitting Company............................................................................................... 105

Figure 6.1: Evaluation, synthesization of the result of labor relations evaluation in

Vietnam......................................................................................................................... 109

1

ABSTRACT

The government and enterprises always expect to build harmonious and stable

labor relations to increase productivity and to create employee‟s commitment to

business. However, so far, in Vietnam in general and Hanoi in particular, there has

been no criteria system available as a basis for evaluating the labor relations at

enterprises since it takes a long time (many years) for a Decree of the Government,

and then Circulars of Ministry of Labor, Invalids and Social Affairs to be launched

that concretize The National Assembly‟s Labor Code 2012.

The development of criteria system for evaluating the labor relations at

enterprises is very necessary. It will serve as an important basis on which both the

employers and employees can evaluate the level of the employees‟ satisfaction, hence

they can make better employment planning which enhance both the benefits of the

employees and the efficiency of the business.

Based on studies of international labor standards and related legal document of

Vietnam, this Dissertation composes and proposes a set of criteria to evaluate the

labor relations at enterprises in Vietnam. Then, the Dissertation applies the set of

proposed criteria to evaluate the labor relations at a specified enterprise in Hanoi, as

an example case study of the way to apply the criteria in the reality of an enterprise.

Dong Xuan Knitting Company (DOXIMEX). is chosen for this purpose.

Finally, recommendations are suggested to the State, the employer, the trade

union and the empoyees to introduce and implement the Criteria of Labor Relations in

the reality of a specific enterprise. The important implication of the criteria

application is to evaluate the existing labor relations at the enterprise, and to find out

solutions to improve the labor relations to ensure the rights and responsibilities of the

relating parties so as to enhance the working environment at the company.

2

.CHAPTER I

INTRODUCTION

1.1. BACKGROUND OF THE STUDY

Labor relations at enterprises are the factor that largely influences business

operation, economic development, social safety, working environment, and

motivation for employees to enhance their labor productivity.

Since Vietnam has been shifting to market economy, labor relations have had

many significant changes. Employees have right to seek a job freely and employers

have right to choose, recruit workers to suit business requirements. Both the parties

have their own rights and interests in compliance with the provisions of the Labor

Code through labor contracts, collective labor agreements and other arrangements.

The Labor Code and other laws have played an important role in the above

mentioned changes. However, the labor relations in some regions are sometimes not

as expected as it should be. The phenomenon of contravening labor discipline which

does not guarantee the legitimate rights and interests of workers still occurs and

sometimes is very disturbing. Labor disputes, strikes adversely affect the labor

market. There are many reasons for these problems, but mostly they are the sense of

law respect not highly enough and lacks of full cooperation in goodwill from the both

sides. Only when a conflict has broken out in a labor dispute or strike, drawing

intervention of the authority, the labor relations are then put back in peace again.

Experiences of some cases prove that, if both the parties took the initiative of good

will to meet and have dialogues, negotiate each other in order to try to resolve the

dispute soon, the strike would be much likely not to happen and potential damages

would be smartly avoided. Labor disputes and strikes are a natural phenomenon of

3

employment relationship which occurs as the consequence of the adaptation of the

labor relations in a new context of such a huge range of new requirements for the

development of the country. Thus, responses to this issue, the whole society,

including the legislature, the government, concerned organizations and individuals,

are called for. Labor disputes in Vietnam often arise from the workers‟ claims for

higher wages, better working conditions while employers want to seek profits, reduce

costs and increase competition capability. In almost cases, both the sides have their

own reasons. Therefore, the problem is how to reconcile these conflicts in a

satisfactory way for them to be able to continue the work. This is a big challenge for

the employment relationship in Vietnam.

The government and enterprises always expect to build harmonious and stable

labor relations to increase productivity and create employee‟s commitment with

business. However, so far, in Vietnam in general and Hanoi in particular, there has

been no criteria system served as a basis for evaluate labor relations at enterprises.

Thus, the theme of "Criteria of Labor Relations at Enterprises in Hanoi,

Vietnam” is chosen to study.

1.2. STATEMENT OF THE PROBLEM

To implement this study, the author answered the following questions:

- Which criteria can be used to evaluate labor relation at enterprises?

- What should be the procedure to apply the labor relation criteria in the reality

of an enterprises

- How are the criteria implemented in a specific enterprise, Dong Xuan

Knitting Company, for example?

4

- What are solutions proposed to the State, the employer, the Trade Union, and

the employeess that are relating to the introduction and the implementation of the

Labor Relations Criteria in the reality?

1.3. SIGNIFICANCE OF THE STUDY

This study tries to construct a set of criteria to evaluate the labor relations at

enterprises that can be used to evaluate the level of employees‟ satisfaction of the

labor relation at enterprises. Based on that evaluation results, stakeholders would

consider, adjust, modify the existing labor relations to have better labor relations. It

also helps improve government policies and measures, mechanism relating to labor

relations.

After the formulation of the labor relation criteria, the Dissertation introduce a

procedure to apply the criteria in the reality of enterprises.

Then, the Dissertation introduce a case study as an example of how to

specifically apply the criteria in reality of a specific enterprise- Dong Xuan Knitting

Company (DOXIMEX).

1.4. SCOPE AND LIMITATION OF THE STUDY

- The related literatures on labor relations at enterprises in Hanoi in particular,

and in Vietnam in general are reviewed.

- The set of labor relation criteria and the procedure for its application are

formulated for all types of enterprises in Hanoi, Vietnam,

- An example application of the criteria in the reality of an enterprise - Dong

Xuan Knitting Company is conducted to introduce the way of criteria application.

Why are Hanoi, textile & garment industry and DOXIMEX chosen?

Hanoi is the capital of the Socialist Republic of Vietnam which is located in

the center of North Delta. Its location has many advantages, being the focal point of

5

the roads, waterways, rails and airs which connect to provinces and locality in

Vietnam and other countries. Thanks to being the national political center, Hanoi has

its stably political platform, an opened and flexibly foreign economic co-operation

policies and guaranteed political security and social order. Hanoi is a place where has

a geographically advantageous position, being the center of economic transactions

and an importantly international exchange center. Hanoi is also a city which gathers

plentiful human resources and intellectuals with high-qualified scientists and

management executives of the country. With these advantages, Hanoi is a place with a

large business community. Employment relationship in enterprises in Hanoi is diverse

and complex. The construction of harmonious, stable and advanced employment

relationship in business in Hanoi helps minimize labor disputes, strikes and has a

tremendous significance to stabilize and develop society and enterprises, diminish

conflicts, ensure the employees‟ rights and benefits. It is considered as an important

target for the employers, the employees in Hanoi to implement good labor relations in

both short term and long term.

- An enterprise chosen to be an empirical example of how to apply the

formulated labor relation criteria in the reality of a specific company is the Dong

Xuan Knitting Company (DOXIMEX) – a large in textile company .

Textile industry is a key export industry, labor–intensive industry of Vietnam

Traditionally, textile industry is still considered an area which has lots of volatility in

labor relations because of low wages and longer time of work. In many cases,

companies had the goods orders but could not produce and sell the products in time

because of lacking in labor forces. The potential risk of employment relationship is

unavoidable with a branch requiring a lot of workers and always having such

volatility in labors. Therefore, the biggest challenge is to build harmonious