Extent of implementation of labor relations criteria of the textile garment industry in hanoi, vietnam

xi Title of Research : EXTENT OF IMPLEMENTATION OF LABOR RELATIONS CRITERIA OF THE TEXTILE - GARMENT INDUSTRY IN HANOI, VIETNAM Researcher : KHUAT THI THU HIEN ROSE Degree Conferred :

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A DISSERTATION Presented to the Faculty of the Graduate School Southern Luzon State University, Lucban, Quezon, Philippines

in Collaboration with Thai Nguyen University, Socialist Republic of Vietnam

Submitted in Partial Fulfilment of the Requirements for the Degree

DOCTOR OF BUSINESS ADMINISTRATION

A program offered by Southern Luzon State University,

Republic of the Philippines in collaboration with

Thai Nguyen University, Socialist Republic of Vietnam

has been approved by Oral Examination Committee

CECILIA N GASCON, PhD

Chairman

Accepted in Partial Fulfilment of the Requirements for the Degree

Doctor of Business Administration

Date Vice President for Academic Affairs

iii

iv

Iwould like to express mysinceregratitudeandprofound appreciation to Professor Dr Tran Chi Thien, who has instructed me dedicatedly to complete this Dissertation

I would like to thank the lecturers of the Southern Luzon State University in the Philippines and Thai Nguyen University in Vietnam, and staff

of 10 textile - garment companies in Hanoi for helping her during the survey

on labor relations

Isincerelythank 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

KhuatThi Thu Hien

v

I dedicate my dissertation to my family and my friends A special feeling of gratitude to my loving mother, who words of encouragement My husband and my children have never left my side and give special support to

me Both of them have been my best cheerleaders

I also dedicate this dissertation to my close friends who have supported

me throughout the process I will always appreciate all they have done, especially Mr Ngo AnhCuong for helping me develop my technology skills, Ms.PhanThi Mai Huong, Ms Pham Kim Thoa and Ms Nguyen Minh Trang for the many hours of proofreading

KTTH

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TITLE PAGE ……… i

APPROVAL SHEET ……… ii

CERTIFICATE OF ORIGINALITY ……… iii

ACKNOWLEDGMENT ……… … iv

DEDICATION ……… v

TABLE OF CONTENTS ……… vi

LIST OF TABLES ……… viii

LIST OF FIGURES ……… ix

LIST OF APPENDICES ……… x

ABSTRACT ……… xi

CHAPTER I INTRODUCTION Introduction ……… 1

Background of the Study ……… 1

Objectives of the Study ……… 2

Significance of the Study ……… 3

Scope and Limitation of the Study ……… 3

Definition of Terms ……… 5

II REVIEW OF LITERATURE AND STUDIES Related Literature and Studies………… ……….… 8

Conceptual Framework ……… 18

III METHODOLOGY Locale of the Study ……… 39

Research Design ……… 39

Population, Sample Size and Sampling Technique…… 40

Research Instrument ……… 44

Data Gathering Procedure ……… 45

Statistical Analysis ……… 46

vii

RECOMMENDATIONS

Summary of Findings ……… 91

Conclusions ……… 92

Recommendations ……… 94

REFERENCES ……… 98

APPENDICES ……… 101

CURRICULUM VITAE ……… 115

viii

1 Strategy on Labor Relations and Corresponding Policies 16

2 The Results of the Stratified Classification of the Labor

3 Total Textile - Garment Companies in Hanoi and Number

4 Total Number of 10 Companies Employees Surveyed …… 41

5 Divide Employees Join in 10 Enterprises’ Survey ………… 43

6 The Criteria of Signing Employment Contracts ……… 49

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2 Kochan’s Strategy Selection Model in Labor Relations …… 15

3 The Interaction in Petit’sLabor Relations System ………… 17

4 Labor Relations, the Interface of the Relations ……… 19

5 Subjects of the Labor Relations ……… 24

6 Main Items of Labor Relations in Enterprise ……… 38

7 Procedure to Apply Labor Relation Criteria to Evaluate the

Harmony of the Working Environment at an Enterprise …… 62

8 Enterprises Structure of the Surveyed ……… 66

9 Age Structure of the Surveyed Employees ……… 75

10 Working Experience Structure of the Surveyed Employees 76

11 Evaluation, Synthetization of the Result of Labor Relations

Evaluation in Vietnam ………

95

x

A.1 Letter to the Manager of Small and Medium Enterprises

in Thai Nguyen Province

95

A.2 Survey of Financial Management Practices of SMEs in

Thai Nguyen City

96

xi

Title of Research : EXTENT OF IMPLEMENTATION OF LABOR

RELATIONS CRITERIA OF THE TEXTILE - GARMENT INDUSTRY IN HANOI, VIETNAM

Researcher : KHUAT THI THU HIEN (ROSE)

Degree Conferred : DOCTOR OF BUSINESS ADMINISTRATION

Name and Address

of Institution

: Southern Luzon State University Lucban, Quezon, Philippines and Thai Nguyen University,

Socialist Republic of Vietnam

Year Written : 2013

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

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

Chapter I INTRODUCTION

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 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 "Extent of Implementation of Labor Relations Criteria of the Textile - Garment Industry in Hanoi, Vietnam"

Objectives 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 introduces a procedure to apply the criteria in the reality of enterprises

Specifically, this study sought to:

1 Determine the degree of Employer’s Compliance to Labor Relations Criteria;

2 Determine the level of Employees Satisfaction on the implementation

of Labor Relations Criteria; and

3 Formulate policy recommendations on the implementation of Labor Relations Criteria to the garment industry in Hanoi, Vietnam

Significance of the Study

This study will be primarily significant to the laborers of the textile industry of Vietnam because through the result of this study, their working status and benefits may be evaluated based on certain standards

Scope and Delimitation 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 30% textile was done in garment companies in the industry in Hanoi

Hanoi & textile - garment industry was chosen in this study because 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 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 stable political platform, an opened and flexibly foreign economic co-operation policies and guaranteed political security and social order Hanoi is a place which is in 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

Textile - Garment industry is a key export industry, labor–intensive industry of Vietnam Traditionally, the 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 employment relationships An application of a good labor relation criteria will help to measure how harmonious the labor relations at the company are Which specific labor relation should be improved to satisfy the need of employees for

a better working environment?

Definition of Terms

In this study, the most frequently used terms are criterion, enterprise, labor relations, employee, employer, and extent

Criterion The standard of judgment or criticism, a rule or a principle used to

test or to evaluate an object, including requirements for the quality, level, efficiency, capacity, compliance with rules and regulations, the final results and the sustainability of these results

Enterprise An economic organization having its own name, having assets

and a stable transaction office, and having business registration in accordance with law for the purpose of conducting business

operations (Article 4, Vietnam Enterprise Code 2005)

Employee A person who works in the service of another person under an

express or implied contract of hire, under which the employer has the

right to control the details of work performance (Black's Law Dictionary)

An employee is hired for a specific job or to provide labor and who works in the service of someone else (the employer) The IRS classifies a worker as an employee as follows:

In general, anyone who performs services for an organization is

an employee if the organization can control what will be done and how

it will be done

The control question is used to determine whether a worker is

an employee or an independent contractor

The factors designating someone as an employee include: A specific wage or salary; An implied or written contract; Control of the

(http://biztaxlaw.about.com/od/glossarye/g/employeedef.htm)

“Employees mean persons whom are at least 15 years of age, having capacity to labor and work under a labor contract, getting paid

and subject to their employers’ monitoring and management." (Article

3, Vietnam Labour Code 2012)

Employer "A legal entity that controls and directs a servant or worker under

an express or implied contract of employment and pays (or is obligated

to pay) him or her salary or wages in compensation" (Read more: http://www.businessdictionary.com/definition/employer.html#ixzz25YX wJS5S)

“Employers means enterprises, agencies, organizations, operatives, households, individuals hiring, using labor under labor contracts; in case of individuals, such persons must be from full 18

co-years old and have full civil act capacity." (Article 3, Vietnam Labour

Code 2012)

Extent The degree of Employers’ Compliance and level of Employees’

Satisfaction

Labor relations: "A broad field encompassing all the myriad interchanges

between employers and employees While labor relations is most often used to discuss this exchange as it pertains to unionized employees, it may also refer to non-union employees as well Labor relations are dictated in a large part by the government of a nation and the various regulations it provides to industry regarding the treatment of

Chapter II REVIEW OF LITERATURE

Through extensive data gathering from different books and internet sites, this chapter serves as informative references of this research study particularly focusing on its objectives Different research studies have also been found which are precisely significant to the development of the study

Vietnam General Confederation of Labor and Vietnam Labor Relations

Project ILO (2010) in the article entitled "Trade Unions and labor relations in market economy situation in Vietnam" stated two main research outcomes:

Vietnam Trade Unions - the reality of organizing, practicing and revamping Law on Trade Unions; The foundation of basis trade unions and the relationship of higher - level trade unions and basis trade unions - reality, challenge and resolution

According to the author of the book, labor relations remain in trouble; many strikes take place in Vietnam This practice shows a lot of troubles in organization structure, direction as well as trade union’s capacity in representative and collective bargaining There have a number of factors impact clear labor relations, but in case of non - capacity of collective bargaining with the employers, there will definitely have many strikes Therefore, that damages national benefits

The group of authors also have given anticipation about 3 developing trends of labor relations in Vietnam, include: The role of labor relations parties, particularly, the more importance of trade unions; The nature of labor relations will change accordance with market mechanism; all of the issues,

such as: interests conflict between the employer and the employee, labor

dispute as well as strike are in trouble

In addition, Nguyen (2011) in the study entitled “Labor relations

curriculum” stated that labor relations are the system of relations between

individuals or representative organization of labors with other objects as well

as state Those relations take place around process of hiring employment (the employee and the employer) to ensure harmonious and stable benefits of the parties

According to Nguyen Tiep, there have 3 groups of labor relations objects, include: The employees and the representative organization for their interests; the employers and the representative organization for their interests; and the State In these cases, the employer and the employee have bargained to each other to achieve the goal of each party, while the State establishes legal system and application methods for effective law ( it means that the two objects – the employer and the employee have respected to law)

In process of state legal implement, the employer and the employee can discover the nonsense of law They can make reflections on those things, thus help state reconsiders and adjust

Evaluating of labor relations in Vietnam, Nguyen Tiep assists on completing legal framework of labor relations to go with market economy and international integration The mechanisms of representative labor relations parties are incomplete in Vietnam The system of making reference, opinions, negotiation as well as making - decision has been in trouble Field level and national level Collective labor agreement are yet to practice Enterprise collective agreement has not high quality, reflect the formal feature The

employees’ style is yet to set up on large scale The employee’s and the employers’ awareness of labor law is not high The negotiation skill of the parties is limited All the above problems has sided - effect to the development

of sound and stable of labor relations in enterprises

Phan Thanh Khoi (2003) in the study “Political awareness of workers in

several enterprises in Hanoi now” has evaluated workers’ political awareness

in several enterprises in Hanoi From Khoi point of view, state owned enterprises have trade unions, while foreign investing enterprises are yet to have that in Hanoi Worker’s awareness is limited To enhance workers’ political awareness, several methods need to do: resolving job, increasing income, training law and the important thing to do is connecting manpower in enterprises to build and consolidate workers ‘political awareness Thank to that, labor relations in enterprises will be better

Pham Quy Tho (2008) in the article “Labor market in Vietnam - Reality

and development resolution” contend that the labor market is one of 5

fundamental markets in Vietnam that requires studying Thus, the author has analyzed the foundation and development of labor relations in Vietnam, assessed good side and sided-effect of labor relations development process

to social economic development in Vietnam Then, Pham Quy Tho gives propose for direction and development resolution labor market in years to come

Pham Quy Tho contends that, labor relations (the employees and the employers) are one of the key issues in the foundation and the development

of labor market process in our nation Thus, developing labor market needs to

be based on harmony of the employees and the employers’ benefits as well

as limiting unemployment, ensuring social welfare step by step

The Ministry of Training and Education (2004), in a paper entitled

“Some issues of labor relations in private enterprises and an enterprise with

foreign owed capital during Vietnam transition economy period”, regards to

labor relations in two kinds of enterprises: private enterprises and an enterprise with foreign owned capital The authors of the book study about the above enterprises’ labor relations during Vietnam economy shift period In association with the authors, owing to the difference between the owner and investment sources that lead to the labor relations of private enterprise and an enterprise with foreign owned capital are different The reason is that there are the differences of cultures, languages of the labor relations’ parties Simultaneously, high working level as well as working time also leads to labor disputes

Meanwhile, the Trade Unions and worker department (2007), in the article “Reporting surveys on reality of an enterprise with foreign owned capital’s labor relations”, did a survey on labor relations in 60 FDI enterprises

in Ho Chi Minh City, Dong Nai, Binh Duong, Ba Ria - Vung Tau, Hanoi, Vinh Phuc, Bac Ninh, Hai Duong

The authors of the report mentioned that the most weakness in labor relations conflict shows it is unstable, unsympathetic towards with enterprises

in trouble

Those authors target the aim for building enterprises’ labor relations is establishing progressive, harmonious, stable labor relations as well as ensuring benefits of the employers, enterprises and society

Do Quynh Chi (2010), in the paper entitled “The role of the employers

in renewal process of labor relations system - reality, challenges and

chances” gave main issues on the general result of research in the area She

believes that mechanisms for labor relations at enterprises are ineffective in Vietnam The employers do not care and take part in process of labor relations in Vietnam From Chi’s view point, it is necessary to have new model

of labor relations in Vietnam This model need to be build based on old foundation and derived from basis experiment in enterprises and locals Therefore, Do Quynh Chi gives some of ways to do experiments She also recommends that, those experiments need to study, analyze and put in policy talks due to it is a piece of huge parts which set up new labor relations in the future

Moreover, Nguyen Van Binh (2010), in the paper “Enhancing and ensuring independence, representative of trade unions to join process of labor

relations effectively”, stated that the harmonious and stable development of

labor relations depend on many factors However, in his report, he does not refer to all factors but issues on labor relations legal frame, particular in trade unions rules in labor relations

From the above report, Nguyen Van Binh discussed issues on organizing trade unions, particular in: how the law can help trade unions become the real representative organization for the employees; from that, trade unions take part in process of labor relations really and effectively; therefore, taking part in building harmonious, stable, progressive labor relations

VCCI (2009), in the study "Labor issues from the employers'

perspective, Survey on labor in textile - garment industry in 2009" showed that

the textile - garment is one of the most labor relations strongest developing fields in recent years Owing to labor interchange, there is a rising trend of labor disputes, unprompted strikes The state has given several solutions to control labor relations, such as encouraging bargaining and signing collective labor agreement at enterprises as well as branches’ level, enhancing negotiation between the employers and the employees at the enterprises However, how the labor relations sound or not depend on each enterprise’s effort

The authors of this research analyze results of surveys on 4 aspects in enterprises’ labor relations: collective labor agreement, mechanism for dialogue, resolution to appeal, strikes and labor disputes The group has shown the connection with those 4 aspects to each other and labor relations situation at enterprises

Michael Salamon contends that labor relations embrace a series of phenomena, the inside and outside at working place, referring to confirmation and adjusting employment relationship

According to Michael Salamon, labor relation is a changeable and complicated social activity A labor relation is done by a diverse structure of relationship and impact (individuals and collectivity) inside and outside of organization, directly target to rule on employment relationship

He also recommends that it is necessary to respect labor relations in

an organization This relationship ought to consider and understand in changeable and wider social, politics, and economic situation The developing

employment relationship currently need attach to commercial and economics globalism

Chang - Hee Lee and Simon Clarke (2011), on the paper “Strikes and

labor relations in Vietnam” confirm policies can help tri-parties building new

legal frame for strikes According to them, there are 4 main items that were referred to, including: kinds of strikes and the reason for strikes, the nature of strikes in Vietnam; Law on strikes; forms of trade unions labor representative; some issues on policies for creating suitable environment aiming for stop labor disputes and building sound labor relations in enterprises

In addition, John Dunlop (1958), in his paper “Industrial Relations Systems", contend that labor relations are the system include 3 subjects:

management organizations, the employers and representative of state

Those people and their organization exist in collaboration with the outside environment (include: technology environment, labor environment, goods environment, politics environment)

Environment factors can direct and indirect affect to subjects In that environment, subjects can collaborate with each other, negotiate, and use economic, political powers to identify rules and regulations The rules and regulations are considered as the output product of labor relations process Therefore, the core of this model is the meeting to build a common value system that is basement for finding common solution and give the decision based on agreement

Figure 1 Dunlop’s Classical Labor Model

Thomas A Kochan, Robert B McKersie and Peter Cappelli (1984), think that labor relations need to be put in general production system Therefore, to target the goal, a business need build and choose suitable strategy model in labor relations for itself In that model, trade union business (basement trade union) as the center factor

Figure 2 Kochan’s Strategy Selection Model in Labor Relations

The outside factors

- Legal and political condition

- Social and economic

condition

- Trade union strength

The inside factor

1 Without trade union

2 Weaken and minimum the trade union’s strength

3 Accept and consider trade union as a positive factor of business

A business can choose one of three strategy models about trade union, that is:

- Considering trade union is the person who has the benefits closely connect to workers, finding the way of fighting to help workers have the bigger benefits Therefore, business needs try its best to maintain the status without trade union

- Trade union is the organization of worker In case of business controlling its trade union that can limit workers’ fight Therefore, strategy helps trade union exists and close control and limit the effect

of trade union on workers

- Considering trade union is good-side factor and friends of businesses and workers

A chosen strategy will have several corresponding policies in following table:

Table 1

Strategy on Labor Relations and Corresponding Policies

Accept trade

union and

consider that is

trusted partner

- Regularly and careful prepare for bargaining

- Periodical collective bargaining

- Supervising collective labour agreement together

- Setting up union two parties’ representatives

- Maintaining co-operating to find solutions whenever problem arises

Weakening

trade union

- Attack directly to lose trade union’s prestige

- Changing technology and using outside doing

- Closing factories where trade union’s successful doing

- Building factories where trade union’s dull doing

Maintaining

status without

trade union

- Investigating officers’ options regularly

- Setting up effective domestic communication

- Pay salary according to level and capacity

- Applying encourage mechanism on business management (quality group, semi – self-management group)

Labor relations is a system (Petit, 1985) He strongly commend that the corresponding affect between inside and outside environment factors of business to that system Petit (1985) describes labor relations as an active system, the employers (trade union) and the employees are two subjects have the conflict benefits and they always fight to each other to gain bigger benefits That dispute is unavoidable The labor relations in business will stable if two forces maintain balance To do that, business trade union needs

to consolidate and result of that is the solidary strong hold the employees help them to face with the employers

Figure 3: The Interaction in Petit’s Labor Relations System

Input Activities Output

- Legal regulation

- Sources and means that each party has got

- Problems need to do

- Each party’s interaction

of power

- Collective bargaining

- Self- conciliation

- Mediate conciliation

- Dispute, strike, close factory

- Conflict

- resolution

- Resolution on requirement

- Contact to the employees or trade union’s members

- Satisfied of each party

- Peaceful or intensive atmosphere

at working place

- Special working conditions

- Working effectiveness

- Doing effectiveness

Conceptual Framework

The concept of labor relation

Labor relation was formed along with the process of hiring laborers Since its establishment, it has been studied by a great deal of scientists

According to Dun lop J.T (1958), labor relation can be considered a logical system as an economic system in industrial society

According to Grant and Malette, labor relation is defined as the harmony relationship of individuals and groups in an industrial organization

According to Loic Cadin, labor relation refers to a set of rules and policies constituting to the actual relationship between employers and employees with the adjustment and legal intervention of state in a business,

an industry, a region or a country

According to the International Labor Organization, labor relation is the relationship between employers and employees in the workplace, as well as the relationship between their representatives and the state Those relationships revolve around all aspects of life, including law, economics, sociology and psychology, and relate to issues such as recruitment, hiring, work arrangements, training, discipline, promotion officials, dismissal, contract termination, overtime, bonuses, profit sharing, education, health, sanitation, recreation, accommodation, working hours, rest, the problem welfare for the unemployed, sick, accident, old age and disability

According to Nguyen Tiep, labor relation is the system of relationships between individuals or representatives of workers with representatives of employers, or between organizations representing them with the state and other entities The relationships take place in the process of hiring labor

(between employers and employees) to ensure harmony and stability in the interests of stakeholders

Although there are many different approaches to labor relation, in general all scientists agree on the following points:

- Labor relation is the system of relations between employers and employees It is quite complicated It is a component of business systems of the enterprise or socio-economic system of the country

- It is subjected to legal adjustment and the direct intervention of the state (as needed) This interference aims to reconcile the relationship between workers and employers, to protect national interests as well

as the entire society

- It takes place within an enterprise or beyond the scope of business and becomes relationships within industry sector or in society

Figure 4 Labor Relations, the Interface of the Relations

Labor Relations

Economic Relation

Society Relation

Law Relation

Labor relation is a multi-sector definition lying in the interference of various fields such as history, economics, society, politics, and law Thus, studying labor relation demands to use the comprehensive knowledge of all those scientific fields

The Properties of the Labor Relations

Labor relation involve both economic aspect and the social aspect

The economics aspect of labor relations:

First, labor relation is governed by interests, including economic benefits (wages and profits) Every worker has a purpose of getting adequate wages As for employers, profit is the fundamental motivation

Second, labor relation is the relationship between owners of labor to capital owners These are the two main factors of social production Thus, the more stable labor relation is, the higher labor productivity and economic growth are

Third, labor relation affects the production of social wealth Most of the wealth of society is made from manufacturing It is the product of the relationship between workers and employers

The social aspect of labor relation:

First, it is the relationship between people so it acquires to satisfy the needs of the human spirit

Second, workers and employers are required to meet at work Workers should be protected and respected as other members of society

Third, it involves many people in society and has indirect effects on the lives of individuals in society Employees are often key members of the family Therefore, the stability of labor relations brings joy to them and their families

Labor relations have both uniformity and contradiction

The uniformity:

Without the cooperation of one party, the other party will not achieve the objectives and their interests If the interests of workers are guaranteed, the production will be stable, labor productivity will be high and the profits of the enterprise will increase

The contradiction:

Wages expenses account for large proportion of production costs If these costs increase, the profits of the employer will reduce and vice versa

At the same time, workers and employers are different the positions so

it is difficult for both parties to share spiritual benefits This difference can lead

to conflicts and disputes

Labor relation is both equal and unequal

The equality:

The parties in the relationship participate voluntarily and no one can force them to join If both parties fail to cooperate, the employment relationship is not formed If one party is not satisfied, they may refuse or terminate the relationship

The inequality:

If labor supply is greater than labor demand, the laborers take weaker position than employers On the other hand, the employer shall have the

power to control their workers by the authority (power management, administration, arrangement, reward, discipline ) so they can apply unequal conditions Besides, state (a special subject of labor relation) has the right to impose laws forcing the parties of labor relation to implement

Labor relation reflects both individual and collective aspect

The individual aspect:

Relations between individuals in enterprises are the core of labor relations They dominate personal interests of each party The labor contract

is signed between individual workers with employers

The collective aspect:

Labor activity is usually taken by a group of labor, so the relations also deal with the collective aspect Collective labor relations have the capability of limiting inequality of individual labor relations

Principles of labor relations

Principle of respect

Respect in employment relationship is the basis for cooperation Respect will make all parties feel comfortable, confident, stimulating creative activities Where there is respect, there is the foundation of harmonious labor relations That is the key to the success of the business

The respect is demonstrated in listening, sharing information, joining, deciding together between employers and employees All parties need to behave with humility, fairness, respect and dignity with each other

When all parties, especially employer show respect with the others, they have created culture working environments and closer labor relationship

Since then, the employees will have positive attitude and responsibility towards tasks assigned Employees will be more engaged with the business

In progress society, principle of respect is considered a cultural norm of the employment relationship

- Creating favorable conditions for work; workers have a positive attitude and work with responsibility, respect labor discipline, keep business secrets, protect assets

- The parties altogether solve problems: two sides regularly exchange information to understand the difficulties and advantages of each other

Principle of negotiation

Negotiation helps the parties to balance benefits and limit dissent, making harmony labor relation Through negotiations, the parties can enhance mutual understanding and reduce conflict When there is conflict, negotiation is an important way to solve disputes quickly in peace and efficiency

Negotiation often exists in building collective labor agreements, adjustment of wages, working time, seeking to resolve disputes

Negotiation can be conducted at many levels: the enterprise level, industry level, national level

The Subjects of Labor Relations

Three (3) groups of subjects of labor relations are: the employees and organizations representing their interests, employer organizations representing their interests, the State

Figure 5 Subjects of the Labor Relations

The

employee

The employer

The State

Negotiation Labor contract, The collective labor

In this relationship, the employee and the employer shall negotiate with others to achieve goals of each party The state set legal framework and effective application of legal measures

During the implementation of state laws, workers and employers who detect unreasonable and inappropriate point can respond to state so that the authorities will review and adjust in time

The employee

Employees are those participating in the labor contract under which they must perform a certain job They are provided the necessary material means to work and receive a certain amount salary as agreed in the contract

The employees have following features:

- As sellers of labor power by a voluntary agreement between them and the buyers of labor power

- They have no means of production, instead they use the producing materials of employers

- The legal basis to determine the employee is labor contracts

Organizations representing workers

- Representatives of the employees may be individuals or organizations, may work seasonally or regularly

- Individuals: as a representative, usually under the incident, often applied to small groups of workers or in business without a union

- The authorized agency: such as consulting firms or law offices authorized by the workers to represent in a particular case

- Board of Representatives (or council employees): elected by the workers in enterprises The board will represent employees in the enterprise to settle matters with the employer

- Trade Union: a special and highly organized type of representation The structure of the union has many levels, in which the lowest level is

in entities (referred as unit trade unions)

In Vietnam, Trade Union is organized into four levels:

- National Level: Vietnam General Confederation of Labor

- Provincial level: Provincial Federation of Labor, Union of sector and union of state corporations

- District: The district labor union, the union of export processing zones

- At the enterprise: unit trade union

The employer

Employers are the ones hiring workers and do certain jobs They are responsible for providing working tools and paying adequate salary to employees under the agreement

In labor relations, the employer shall have the following rights:

- The right to recruit workers

- The right to observe and transfer employees

- The right to dismiss workers

- The right to decide the wages of workers

- The right to reward employees

- The right to discipline employees

Representative organization of Employers

The representative organizations of employers have various origins, including:

- The business associations: Those organizations were originally formed for coordination and mutual assistance in production and business Then, these organizations function as representatives of employers in labor relations

For example, in Vietnam: textile associations, associations of enterprises with foreign investment capital, seafood processing associations

- The organization of employers: these institutions do not perform the function of coordinating production and trading The function of these organizations is representatives of employers in labor relations For example, employers associations, councils of labor owners

- The representative organizations of employers established by the government: It is the Government organization established to perform functions on behalf of the employers They usually perform different functions, which mainly supports the management of the state

For example: the Vietnam Chamber of Commerce and Industry (VCCI)

- Direct intervention: to mediate the dispute or communicate directly with the parties on issues of mutual concern

State apparatus is organized into several levels (central and local level) At each level, the State has agency representatives to communicate directly with both parties

In Vietnam, the management of labor relations includes:

- National level: The Government, Ministry of Labor - Invalids and Social Affairs

- Provincial level: Provincial People's Committee, Department of Labor - Invalids and Social Affairs

- District level: District People's Committee, Department of Labor - Invalids and Social Affairs

- Commune/industrial zones level: The commune People's Committees, management boards of industrial zones

The Criteria of Labor Relations

To evaluate labor relations, the criteria of labor relations need to be built The criteria of assessing labor relations in business was built to reach the target of corresponding parties consider, assess level of labor relations in business which will be the basement to adjust labor relations better; distribute businesses which have good labor relations and give warning for businesses

to which contain risks in labor relations; Completing policies and measures; adjustment mechanism labor relations in business

Now, Vietnam has yet to have a series of criteria in evaluating labor relations in business The creativeness in building an assessment series of