9 - How Does Enterprise Ownership Matter? Labour Conditions in Fashion and Footwear Factories in Southern Vietnam

Summary

In Vietnam foreign-invested enterprises have experienced more strikes than their domestic counterparts. It is thus often claimed that the former have poorer labour conditions than the latter, based on the simple reasoning: the poorer the conditions, the more frequent the strikes. Comparisons between foreign and state enterprises have informed such an argument. Chan and Norlund (1998), for instance, argued that foreign enterprises, especially those funded by Hong Kong, Korean, and Taiwanese investors, are managed in authoritarian ways and often in violation of labour and safety laws. They contrasted them with state-owned enterprises (SOEs) whose socialist underpinnings infused with a paternalistic and collectivist culture help ameliorate the most adverse effects of market pressure on labour conditions in the reform era. According to this view, strikes are caused by labour conditions that are considered to differ depending on the type of enterprise ownership.

Two assumptions underlie this argument: the relative immutability of managerial culture across time and space; and the close relationship between labour conditions and worker resistance. The first assumption is challenged by evidence that firm-level managerial culture changes over time, as suggested by deteriorating conditions in SOEs under transition to a market economy (Whyte 1999). Managerial culture also changes when it crosses national borders, as is indicated by Chan and Wang's (2004) finding that Taiwanese firms in Vietnam have better labour conditions than those in China.

Clarke's (2006) research on strikes in Vietnam casts doubt on the second assumption, that of a strong correlation between labour conditions and strikes. His findings indicate that while in the past workers resorted to strikes largely to fight against abusive treatment and to ensure their legal rights, they now seek to advance their own interests above and beyond legally set minimum conditions and non-abusive treatment. If poor labour conditions per se lead to strikes, the rapid rise in the number of strikes in recent years should mean that legal violations and worker abuse have become more common or more severe. But existing evidence, at least as indicated by strikers' demands, does not support such an assumption (Clarke 2006; Lee 2006).