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As part of Impactt’s launch of our Asia Pacific Network we are issuing a series of viewpoints identifying the most pressing labour standards issues in our network countries. Our first viewpoint comes from Juliet Edington our associate in Vietnam and focuses on the impacts of high inflation on workers’ livelihoods.

This year the issue of wages has been particularly problematic due to inflation which stands at approximately 30% up on last year. Furthermore analysis done at a factory in south Vietnam recently showed that the price of essential goods (e.g. rice, eggs, sugar, salt, petrol, cooking oil etc) went up an average of 47% between March and June this year alone  Petrol prices have increased by a staggering 145% in just three months. 

Despite the legal minimum wage having been raised twice in the past two years, a very conservative look at a worker’s cost of living reveals the minimum wage at a Vietnamese owned factory provides only 68%, at best, of the money that a single worker needs to survive. This is not including any money for the family, any medical expenses, education, clothes or any remittances. Workers can simply no longer live on their wages without working excessive overtime hours. 

Vietnam is starting to see a return of workers walking or cycling rather than riding motorbikes to work. The poor level of wages is resulting in chronic labour shortages in many areas which are in turn resulting in excessive overtime hours for those workers that factories can recruit and retain.

Furthermore according to a report in the International Herald Tribune, some factory workers are returning to the countryside, unable to sustain an urban life on a factory wage.

The labour shortage is resulting in some emerging cases of child labour in Vietnam. Young workers aged 13 or 14 years old are now to be found working in factories, a situation which was previously only rarely seen. Factories are finding it harder to recruit workers. They are being less rigorous in their checks of those applying to work. The low wages are also forcing parents to take their children out of school and get them into work.

The question is can the inflation and labour shortages divert Vietnam off its development trajectory, or is this a short term issue and Vietnam’s growth and economic restructuring will continue apace in the long term?