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Vietnam aims to calm worried workers

GRAY MATTER:South Korea, Australia and Germany have sought to raise retirement ages as nations wrestle with graying workforces and shrinking social security funds


Workers of Pou Yuen Vietnam, a Pou Chen Corp subsidiary, gather at their factory on the fifth day of a strike in Ho Chi Minh City, Vietnam, on March 31.

Photo: Reuters

Vietnam could be forced to water down a new law designed to shore up its pension system after tens of thousands of workers protested against the changes in a strike that lasted nearly a week.

Four factories employing more than 90,000 people — owned by subsidiaries of Taiwanese footwear manufacturer Pou Chen Group (寶成集團) — halted production late last month as workers protested new pension rules that go into effect next year aimed at boosting the retirement program. The affected factories resumed production yesterday.

The changed law would prevent workers from receiving lump-sum social insurance payments when they leave companies.

To end the strike, Vietnamese Prime Minister Nguyen Tan Dung’s government is to propose amendments to the law to meet workers’ expectations of payouts when they quit a job.

The protests underscore Vietnam’s challenges in revamping its pension system. The nation’s social security fund is forecast to have deficits beginning in 2021 and risks being depleted by 2034, according to the UN’s International Labour Organization (ILO).

“The challenge is the government cannot bear a sustainable pension system if there are no contributions,” ILO Vietnam director Gyorgy Sziraczki said by telephone. “It is a very, very hard dilemma.”

All striking workers at Pou Chen’s factories in Vietnam have returned to work, spokesman Amos Ho (何明坤) said by telephone.

The work stoppage had little financial impact, Ho added.

Pou Chen’s seven factories in Vietnam make shoes for Nike Inc, Adidas AG and others, he said, without elaborating.

Adidas confirmed that one factory where workers went on strike makes apparel for it and that the company monitored the strike, according to a statement e-mailed last week. Nike said that it does not source from the factories affected by the work stoppage and that there has been no impact on Nike or Converse production in Vietnam, according to an e-mailed statement on Wednesday last week.

Pou Chen climbed 3.4 percent to NT$46.65 in Taipei trading on Thursday last week. Taiwanese financial markets were closed yesterday.


The change in the law that workers protested is designed to encourage them to save more money for retirement, Vietnamese Deputy Labor Minister Doan Mau Diep said by telephone.

Under current law, employees are permitted to withdraw money from their pensions with a penalty that reduces future government retirement payments, he said.

“What we were trying to do is to offer workers a more secure life at their retirement ages,” Vietnamese National Assembly social affairs committee vice chairman Bui Sy Loi said by telephone. “However, if workers do not want that change, we can roll it back and add that as one of the options in the new law.”

About 500,000 workers take lump sums from the social security fund every year, Loi said, adding that more increasing numbers take their savings before retirement.

Many factory workers view their jobs as temporary and plan to use pension savings created by mandatory paycheck deductions to start a business or help their families when they return to their villages, Sziraczki said, adding that there are relatively few microfinance programs available to help them.

In reforming the system, Vietnamese leaders must grapple with workers who distrust government institutions, Dane Chamorro, managing director for Southeast Asia at global business risk consultant Control Risks, said by telephone.

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