Human Rights for Workers Bulletin

Vol. II, No. 14: August 25, 1997 
They're Putting the Heat on Foreign Employers

What's Going on in Vietnam Anyhow?

Unlike the People's Republic of China, the Socialist Republic of Vietnam is moving down a path of greater concern for the rights of ordinary workers, including their right to strike. At least that was the finding of comparative research conducted in the mid-1990s by Irene Norlund of the Nordic Institute of Asian Studies and Anita Chan of the Australian National University. They summarized their study in a 1995 paper titled "Vietnamese and Chinese Labor Regimes: On the Road to Divergence."

 I was among those who greeted their study with a good deal of skepticism at the time. My negative view of labor developments in Vietnam was reflected in an article I wrote two years ago for the Christian Science Monitor, titled "Vietnam: Open for Business but Keeping Grip on People," which I reproduce elsewhere in these pages. Vietnam's rulers still lock up innocent people who offend the Party's officialdom; the country is hardly on the road to freedom and democracy. And yet it now seems that Norlund and Chan were on to something.

I saw Vietnam's 1994 law recognizing the right to strike as de jure criminalizing a right that had already been outlawed de facto. Indeed, the government could have administered the law that way, but apparently it hasn't. In 1994 fewer than 3,000 workers went on strike in the whole country; four times that number walked off their jobs in Ho Chi Minh City alone during the first three months of 1997. None of these strikers, so far as we know, went to jail.

Going Public on Labor Abuses in Foreign-Owned Factories

A recent issue of the International Herald-Tribune carried this Reuters dispatch, headlined "Hanoi Blasts Foreign Employers":

While not singling out any company by name, the ministry official said that most of the recent labor conflicts broke out in enterprises with investment funds from South Korea, Taiwan, and Singapore.

 Thus Vietnam is violating an unwritten commandment of East Asian governments, both Communist and non-Communist: thou shalt not publicly criticize the labor practices of foreign companies. That's a switch. But there's more. The country's official labor organization, the Vietnamese Confederation of Labor, is violating another Communist commandment: thou shalt not defend the rights of workers, even in foreign-owned plants.

Thuyen Nguyen, a Vietnamese-American who heads Vietnam Labor Watch as a part-time activity (financial consulting is his job), has witnessed first-hand how actively union officials in Vietnam represent the interests of workers in foreign-owned plants, including five making shoes for Nike. Confederation officials supported and publicized, both in Vietnam and abroad, the complaints of workers exploited by Nike's contractors.

 Drawing the Line: No to Ms. Hoang

In the current issue of The New Republic, Hoang Thi Khanh, vice president of the Confederation, is described as "tough as nails" in negotiations with employers, including Nike contractors. While in the United States in June, she offered to present evidence about conditions at Nike plants to Andrew Young of GoodWorks International, author of a glowing report on Nike in Vietnam and two other countries.

In Vietnam, the GoodWorks team met with worker representatives identified by Nike (and interviewed them with the help of Nike translators), but not with any union representative. Nor was GoodWorks interested in meeting with Ms. Hoang in Atlanta.

Are the likes of Ms. Hoang simply reacting to rank-and-file pressures? Maybe. Who really has a grasp on all the forces at play? But something is stirring in Vietnam, and all the better if it's coming from the grass roots.

China's Reforms: Not Quite as Trumpeted

China's economic reforms are in trouble, perhaps in deep trouble. That's the message that comes through from parts of a new World Bank report.

While emphasizing some positive developments in China's massive industrial system, the report also reveals how state-owned enterprise (SOE) reform is bogged down. The first sentence of the report, "China's Management of Enterprise Assets: The State as Shareholder," reads:

"China has not yet separated government from state-owned enterprises (SOEs); and SOE reforms to date have produced new problems that threaten their objectives."
Among the new problems, "asset-stripping"--the looting of corporate assets--is one of the biggest, mentioned repeatedly in the 89-page report. Property, materials, finished products, and money, including payroll taxes and contributions to unemployment insurance and pension funds, are stolen on a large scale, according to the Bank report. The "safety net" being established for the unemployed and underemployed among the SOE's 100 million workers is being destroyed.

 Taking Advantage of a 'Governance Vacuum'

Why has this happened? The greater autonomy given to, or assumed by, local managers under economic reforms has created a "corporate governance vacuum," i.e., an elite of Party and government insiders can get away with enriching themselves at public expense.

 As one example of "the private taking of assets" by insiders, the report cites the curious fact that half of the new limited liability companies created in Sichuan and Shanghai during the past few years are in the financial sector. That, says the Bank, "suggests the widespread creation of 'shell' companies to drain assets."

 No Intention of ever Privatizing Most of State Industrial Sector

To its credit, the report clarifies much about the regime's "market socialism." A key clarification: "China's approach to reform of industrial state-owned enterprises (SOEs) is to maintain state-ownership of key enterprises...." That's contrary to the paths taken by Russia and other former Communist countries in Eastern Europe, and also contrary to a common impression that China's reformers are committed to wholesale privatization in the industrial sector.

Rather, for the great bulk of the state-owned sector, the government has the goal of taking the government's hands out of the business side of operations. But that is as easy as peeling a grape. "There has been little progress in providing for separation of the affairs of business and those of government," the report points out.

The report lays out detailed policy recommendations on genuine reforms, formulated in language meant to persuade China's leaders without offending them. Note the carefully placed "net yet" in the report's first sentence (quoted above) about the regime's failure to reach a key reform objective.  

(You can read the World Bank's press release on the report by accessing the Bank's Web site.)
Here's a Much Different Picture of China

 The World Bank analysis (and perspective) differs sharply from that of an academic, Gabriel Kolko, distinguished research professor emeritus at York University, Toronto. His article in the spring issue of World Policy Journal presents a scathing assessment of the new market economics in China as well as Russia. A short excerpt: 

"The power and privileges of those who [once] ruled these regimes remain firmly in place. The only modification has been in theoretical justification for their policies evoked by the communist and postcommunist states, with the mystifications of the inexorable laws of the 'market' replacing those of the Marxist 'laws of motion'....

 "They [the younger elite of ambitious bureaucrats who took over from the first generation] were as indifferent to the socialist they are now to capitalist doctrines, save insofar as it advances their interests. Their consuming opportunism guarantees that economies resembling the competitive market model mythologized by the International Monetary Fund have as little chance of emerging in their countries as did socialism."

The contradictions between "an especially exploitative capitalism and nominal socialism," Kolko argues, create an "endemic instability" in both countries. He sees "no coherence or rationality, whether socialist or capitalist, in the economies that are being created in China, Russia, and most of the other former communist nations." In the highly fluid context of their societies, "economic and political crises are merely a question of time."

And Then There's Henry Kissinger's Viewpoint

In making the case for "Let's Cooperate with China" in the Washington Post (July 6, p.C7), Henry Kissinger assumes a much different perspective, but agrees with Kolko's analysis on one point: the determination of Beijing's ruling elite to continue ruling. "[I]t retains its uncompromising insistence on a monopoly of power," he writes briefly in a subordinate clause that illustrates the issue's subordinate interest to Henry Kissinger.

Put Worker Rights on Fast Track: AFL-CIO

A battle is looming in Congress over "fast track" trade legislation, which would give the executive branch a virtually free hand in negotiations to create a "Free Trade Area for the Americas," or essentially an expansion of the North American Free Trade Agreement (NAFTA). In a last-minute switch, the Clinton Administration in 1993 shunted NAFTA's labor provisions into a weak side accord. This time around the AFL-CIO and its allies are insisting that "fast track" legislation must require enforceable labor and environmental standards in the core of any new agreement.

Thea Lee, assistant director for international economics in the AFL-CIO's public policy department, testified on the issue July 9 before the House subcommittee on international economic policy. Excerpts from her testimony follow.

The international trading system can and should confer broadly shared benefits. It should give the right incentives and send the right messages to corporations and to governments. Our current policies, in contrast, benefit a small corporate elite both in the United States and in our trading partners. These policies channel international competition into socially destructive areas, encouraging government to cheapen labor and sell out the environment in order to attract investment and discouraging governments from effectively enforcing existing standards.

The AFL-CIO will oppose fast-track legislation that does not require enforceable labor and environmental standards in the core of any new agreement. Limiting fast track in this way will send the clearest possible message, both to our negotiators and to our trading partners, that we are ready and willing to chart a new path in the global economy and that no country should be able to gain competitive advantage by sacrificing its environment and its work force....

We need to protect core labor rights and environmental standards right in the body of any new trade agreement, and this must be written right into fast-track legislation....We have learned from the experiences of the past 20 years that simply listing worker rights along with other negotiating objectives is not sufficient.

(Check the AFL-CIO Web site for the February 1997 AFL-CIO executive council statement favoring fast-track negotiating authority only if it includes "provisions and enforcement mechanisms for addressing worker rights, labor standards, and environmental protection.")

In Case You Didn't Happen to Notice

                     Mexico's Recovery Just Bypasses the Poor
                                 --New York Times, Tuesday, Aug. 12, 1997

                           As Peru's Economy Rises, 
                              Nation's Poor Grow Poorer
                                --Washington Post, Tuesday, Aug. 12, 1997
Sample statistic, from the Post report on Peru: "In 1994, for instance, 46.5% of Peruvians lived below the poverty level. By the end of 1996, that number had climbed to 59%, according to Agenda Peru Research in Lima."

Robert A. Senser
Editor, Human Rights for Workers
(Send e-mail to

 Bulletin No. II-14: September 8, 1997


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