Vietnam’s garment-makers have been worrying that a draft revised Labour Code will reduce their competitiveness – but four months after the draft was published there remains a strong chance it will never be enshrined into law. The draft, which was officially submitted to the National Assembly in May for an envisioned passage in November, outlines a reduction of working hours from 48 hours per week to 44 hours. According to the Vietnam Textile and Apparel Association, this would reduce the industry’s export value by at least US$3bn per year, as businesses would struggle to recruit workers. The current regulation that sees businesses in the textile, garment and footwear sectors have an annual overtime cap of 300 hours, and guarantees overtime pay is the equivalent of at least 150% of the regular wage, remains in place under the draft. Notably, competing garment-manufacturing neighbours Laos, Cambodia, the Philippines and Malaysia still have 48-hour working weeks. A survey by just-style among Vietnamese-based industry observers shows a wide variation in predictions about the draft code’s future. The head of office of a Hanoi-based law firm described the draft’s fate as still being “largely unpredictable,” whereas a B?n Cát Town-based factory manager, who asked not to be named, said that it will not make it, given “there’s already too much negative feedback from all sides in Vietnam.” By contrast, Saponti Baroowa, the associate director of business intelligence at professional service firm Dezan Shira & Associates in Ho Chi Minh City, sees the proposed reduction of weekly working hours to 44 as likely to be approved. “Recently, the politburo of the central committee of the communist party of Vietnam also issued Resolution 50-NQ/TW, which noted, among other things, that the majority of FDI projects in the country are small-scale and concentrated in the labour-intensive sectors at the lower-end of the value chain,” Baroowa says. “In this context, the politburo has urged investment officials to become more selective in approving FDI applications and to give preference to projects that use high-technology and produce more value-added products, and the proposed change in the maximum permissible weekly work hours also seems to be in line with such measures to revamp the overall FDI policy.”
