Andrew Connor

Last week in Hanoi, more than 1,000 workers at one of Panasonic Vietnam's four assembly facilities initiated a labor strike. The workers are demanding a 25% pay increase up from the current average of 1.05 million Vietnamese dong (about US$65) per month. The minimum wage currently required by the Hanoi government for employees of foreign firms is only 1 million dong (about US$62) per month.<br />



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The recent strike at Panasonic is one of a growing number of labor actions against both local and foreign companies in Vietnam this year. During the first quarter of 2008, 295 strikes were reported in Vietnam. There were just 540 strikes reported during the entire year of 2007 and 390 in 2006. This year's largest strike involved more than 20,000 workers, who demanded higher wages from their employer, a Taiwanese-owned shoe factory. The workers were ultimately awarded a wage increase of 10%.<br />



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According to Vietnam's General Confederation of Labor, many of the recent labor strikes were technically illegal. Under Vietnamese labor law, strikes are legal only when organized at the grassroots level by registered trade unions. In theory, employers can hold workers liable for lost business revenues as a result of illegal strikes. In reality, however, the strikes are likely to continue pushing up compensation costs for multinational companies in Vietnam.<br />



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The recent labor unrest in Vietnam is being fueled by heavy inflation. According to the Vietnamese government, consumer prices have risen by more than 25% during the past 12 months. The influx of foreign firms into the Vietnamese market over the past two years has caused a significant rise in the cost of real estate. Many foreign firms have begun to shift Asian production to the Southeast Asian country in an attempt to avoid rising labor costs and tightening regulations in China. In 2007 alone, more than $20 billion of foreign capital was registered to be invested in Vietnam. <br />