Better Work Vietnam: Garment Industry

1st Compliance Synthesis Report

Produced on 20 August 2010

Reporting period:
December 2009 – June 2010
Number of factory assessments in this report: 32
Country: Vietnam
ISIC: C-14

Page 1 of 23
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ILO Cataloguing in Publication Data

Better work Vietnam : garment industry : 1st compliance synthesis report / International Labour Office ;
International Finance Corporation. - Geneva: ILO, 2010
1 v.

ISBN: 9789221240969 (web pdf)

International Labour Office; International Finance Corporation

clothing industry / working conditions / workers rights / freedom of association / forced labour / child labour /
discrimination / minimum wage / labour standards / ILO standards / application / rapid assessment / Viet Nam

08.09.3

The designations employed in this, which are in conformity with United Nations practice, and the presentation
of material therein do not imply the expression of any opinion whatsoever on the part of the IFC or ILO
concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation
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 Table of Contents

Executive Summary ................................................................................................................................. 3

Section I: Introduction and Methodology ............................................................................................... 5
Introduction......................................................................................................................................... 5
Institutional Context............................................................................................................................ 5
Better Work Methodology .................................................................................................................. 7
Calculating Non-Compliance ............................................................................................................... 8
Limitations in the Assessment Process ............................................................................................. 10
Section II: Findings................................................................................................................................. 11
Non-Compliance Rates ...................................................................................................................... 11
Non-Compliance Checklist Rates....................................................................................................... 13
1. Core Labour Standards .......................................................................................................... 13
2. Working Conditions ............................................................................................................... 16
Section III: Conclusions .......................................................................................................................... 20
Conclusions and Next Steps .............................................................................................................. 20
Annexes ................................................................................................................................................. 21
Annex A: Factories covered in this report ......................................................................................... 21
Annex B: Buyers participating in Better Work Vietnam (this reporting period) ............................... 22

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 Executive Summary

The Better Work Vietnam program, a partnership of the International Labour Organization and the
International Finance Corporation, began conducting independent assessments of working
conditions in apparel factories in Vietnam in December 2009. Each of assessment consists of four on-
site person days and includes management interviews, union and worker interviews, document
reviews, and factory observation.

The goal of the factory assessments is to establish a baseline of performance against which
participating factories can work with Better Work Vietnam as a partner to make improvements.

This first public synthesis report covers all of the first 32 factories assessed by the program between
December 2009 and June 2010. As this is the first report, it is only an initial baseline and does not
show any change over time of participating factories. Subsequent reports will indicate the degree to
which participating factories have made improvements or faced additional challenges since this first
report.

Assessment results show the following:

- Child/Young Labor: The program did not find any cases of child labor during the reporting
period. Findings in this area relate to lack of adequate procedures for checking
documentation and some cases of lack of proper protection for young workers (age 15-18).

- Forced Labor: The program reported only one finding in this area. In one factory, the
employer did not have evidence to show that they ensured their private employment agency
does not use bonded labour. This is not a finding of confirmed bonded labor but rather lack
of evidence of a proper procedure for ensuring proper employment practices of the
contracted employment agency.

- Discrimination: Discrimination findings relate to gender discrimination against males in

hiring and the hiring of adequate numbers of disabled workers. There were no other
assessment findings based on discrimination on any other grounds.

- Freedom of Association and Collective Bargaining: Factories monitored failed to comply

with core labour standards on freedom of association and collective bargaining. The lack of
compliance is partially rooted in Vietnamese legislation, which does recognize the right to
organize and the right to strike of workers, but does not permit them to establish or join
organizations of their own choice: Enterprise-level unions must be approved by and affiliated
with the Vietnamese General Confederation of Labour (VGCL). Factories are, therefore,
bound to fail the “freedom of association” compliance test.

VGCL itself is a major socio-political organization, representing working class, intellectuals

and workers in Vietnam. All workers and employees who act voluntarily in an enterprise
trade union and contribute regulated union fees can join the union. The union is formed
based on the voluntary will of workers and is the only legal representative of the working
class in Vietnam

Core labour standards require that employers do not interfere with the functioning and
activities of trade unions, and in particular do not discriminate against workers or job
applicants for their membership or activities with trade unions. In the factories monitored,
the majority of enterprise-level trade union officials belong to the company management,
causing the factories to fail the non-interference test. The Labour Code prohibits acts of anti-

3
 union discrimination by the employer. Guidelines on the VGCL Statutes (adopted on 6 May
2009) prohibit management staff serving on the company’s board of directors to stand for
office at enterprise-level trade union elections (although the trade union may accept them as
honorary member without decision-making powers). Given that management interference is
thus a key area of concern of the VGCL itself, it will be a focus of the program in working with
factories in the advisory stage.

- Compensation: Assessments did not show issues of non-compliance with regular payment of
wages or payment of at least the minimum wage. All findings related to proper payment of
leave entitlements.

- Contracts and Human Resources: The most common findings relate to development and
implementation of grievance processes and failure to establish a functioning Labor
Conciliation Council.

- Occupational Health and Safety: This is one of the largest areas of non-compliance for
participating factories. Key issues include lack of proper labeling, storage and employee
training around chemicals and hazardous substances, worker protection, and welfare
facilities. Most factories do not have developed systems for managing Health and Safety.
Enterprise Advisors will focus significant attention on this issue with participating factories.

- Working Hours: Almost all factories exceed the total number of legal overtime hours and
many do not give workers four days of rest per month. There are also a fair number of cases
in which workers did not feel they could refuse this overtime. However, assessments
showed that workers almost always receive appropriate wages for this overtime.

4
 Section I: Introduction and Methodology
Introduction

The Better Work Vietnam program, a partnership between the International Labour Organization
(ILO) and the International Finance Corporation (IFC), was launched in July 2009. The program aims
to improve competitiveness in the apparel industry by enhancing economic performance at the
enterprise level and by improving compliance with Vietnamese labor law and the principles of the
ILO Declaration on Fundamental Principles and Rights at Work.

The initial focus of the program is the apparel industry in Ho Chi Minh City and surrounding
provinces. The garment sector is among the top two largest export earners for Vietnam. In 2009,
total exports earnings derived from textile and garment industry reached US$9.1 billion, making
Vietnam amongst the top ten apparel exporters worldwide. The sector is also the largest formal
employer in Vietnam, providing jobs for more than 2 million people. Most of the workers are young
women migrating from rural areas, who in turn support a number of extended family members
through remittances. Over the next five years, Better Work Vietnam will work with roughly 700,000
workers in the Vietnamese apparel industry.

The program engages with participating factories by conducting independent assessments and
offering advisory and training services. This report is an overview of findings from the assessments,
which in turn form the basis for the individualized advisory work.

As part of its mandate of sharing information with all program stakeholders, and encouraging
continuous improvement, Better Work Vietnam will produce two public synthesis reports per year
aggregating information on the performance of all participating factories. This first report is an initial
baseline and therefore does not yet show change over time of the participating factories.

This first synthesis report provides an overview of the working conditions of 32 factories over the
period December 2009- June 2010. These factories employ a total of 61,388 workers, of which more
than 84% are women workers. In average, each factory employs 1,918 workers. The vast majority of
workers (94%) are regular workers.

Institutional Context

Vietnam has experienced impressive growth within the last decade. The real annual GDP growth has
averaged around 7.5% and the rate of poverty has fallen from around 70% to below 20%.1 The
country is successfully transitioning from a centrally-planned to a market economy, and joined the
World Trade Organization (WTO) in 2007.

This economic transition is exposing Vietnam to increased competition at the same time it is opening
new opportunities for growth. Both the private and public sector are looking for ways to enhance
productivity and increase access to international markets. One result – as in many other countries
around the world -- is increased pressure for factories to increase their quality while also decreasing
costs and improving their turn-around times. This confluence of pressures often leads to increased
worker vulnerability.

This transition has in turn led to an increased level of industrial disputation, including strikes.

1
World Bank, Vietnam Country Partnership Strategy, February 20, 2007.

5
The National Assembly is currently in the process of discussing revisions to the National Labor Code,
in part meant to address these industrial disputes. At the same time, the Vietnamese General
Confederation of Labor (VCCL) is debating revisions to the Trade Union Code. Final decisions on both
the Labor Code as well as Trade Union Law are expected in 2011.

In the meantime, enterprises are still struggling with how to implement effective workplace
cooperation and meaningful worker representation. One of the cornerstones of the Better Work
Vietnam program is the establishment of Performance Improvement Consultative Committees
(PICCs) at each factory, composed of an equal number of management and union representatives. It
is these committees who review the program’s assessment reports and work collaboratively to
develop a factory improvement plan, timeline, and implementation steps.

At the program level, Better Work Vietnam has a Project Advisory Committee (PAC) that advises and
monitors the development and progress of program operations. The PAC consists of representatives
from the Ministry of Labor, Invalids and Social Affairs (MOLISA), The Vietnam Chamber of Commerce
and Industry (VCCI) and The Vietnam General Confederation of Labor (VGCL). Each of these project
partners helps Better Work Vietnam to ensure its mandate and operations continue to address the
concerns of the program’s local social partners.

The program also works closely with international buyers sourcing apparel from Vietnam. The
primary mechanism for interaction with the buyers is through international forums at the
headquarters levels, two regional buyers forums per year, and regular forums for local
representatives of international buyers based in Vietnam.

6
Better Work Methodology

Better Work carries out factory assessments to monitor compliance with international labour
standards and national labour law. In its factory and industry-level reports, the program highlights
non-compliance findings. Better Work reports these findings to help factories identify areas in need
of improvement. Collecting and reporting this data over time will help factories demonstrate their
commitment to improving working conditions.

Better Work organizes reporting into eight areas, or clusters, of labour standards. Four of the clusters
are based on fundamental rights at work. Adopted in 1998, the ILO Declaration on Fundamental
Principles and Rights at Work commits Member States to respect and promote principles and rights
in these four categories, whether or not they have ratified the relevant Conventions.

The four categories of fundamental rights include: (1) freedom of association and the effective
recognition of the right to collective bargaining, (2) the elimination of forced or compulsory labour,
(3) the abolition of child labour and (4) the elimination of discrimination in respect of employment
and occupation.

In particular, the ILO Conventions 29, 87, 98, 105, 100, 111, 138, and 182 provide the framework for
compliance with the fundamental rights clusters across all Better Work country programmes.

The four other clusters monitor compliance with standards primarily set by national law, so they vary
from country to country. The four areas of national labor law include: (1) compensation, (2) contracts
and human resources, (3) occupational safety and health, and (4) working time.

Each of the eight clusters is divided into sub-categories. These sub-categories are known as
compliance points [CP]. The detailed list of CPs within each cluster, and the number of questions in
each CP, are indicated in the table below.

Compliance Clusters Compliance Points

1 Child Labour 1. Child Labourers
2. Worst Forms
3. Hazardous Work
4. Documentation
Core Labour Standards

2 Discrimination 5. Race and Origin

6. Religion and Political Opinion
7. Gender
8. Other Grounds
3 Forced Labour 9. Coercion
10. Bonded Labour
11. Forced Labour and Overtime
12. Prison Labour
4 Freedom of Association and 13. Union Operations
Collective Bargaining 14. Interference and Discrimination
15. Collective Bargaining
16. Strikes
5 Compensation 17. Minimum wages
18. Overtime wages
Working Conditions

19. Premium Pay

20. Method of Payment
21. Wage Information, Use and Deduction
22. Paid Leave
23. Social Security and Other Benefits
6 Contracts and Human 24. Employment Contracts
Resources 25. Contracting Procedures
26. Termination
27. Discipline and Disputes

7
 7 Occupational Safety and 28. OSH Management Systems
Health 29. Chemicals and Hazardous Substances
30. Worker Protection
31. Working Environment
32. Health Services and First Aid
33. Welfare Facilities
34. Worker Accommodation
35. Emergency Preparedness
8 Working Time 36. Regular Hours
37. Overtime
38. Leave

Calculating Non-Compliance
There are two factory-level rates that are used to measure findings collected by Better Work
enterprise advisors during their factory assessments:

1) The “non-compliance rate,” which is reported in factory-specific assessment reports, shows

how a factory has performed in each cluster. It does this by indicating the percentage of sub-
categories ( Compliance Points) that are non-compliant within each of the eight clusters.

A compliance point is found to be violated if even one question is found in non-compliance.

The non-compliance rate is useful for Better Work to aggregate and compare data across
countries, since it is not tied to country-specific questions. The non-compliance rate pertains
only to individual factory assessment reports and is not presented in this aggregated report.

The chart on page 13 displays the number of factories with non-compliance findings within
each compliance point. This non-compliance rate is a strict indicator. It is useful, however, in
that findings can be compared across countries.

2) The second rate, referred to as the “non-compliance checklist rate”, provides the number of
specific questions found to be violated by a factory at a given time, as a percentage of the
total number of questions within a compliance point. These figures are presented in Section
II: Non-Compliance Checklist Rates.

Because it is based on the individual questions, the checklist rate provides a finer level of
detail. It is important to note that the Better Work questionnaires vary across countries as
they are fully adapted to the national labour law. The total number of questions within each
compliance point will likewise be different for each country. Therefore, unlike the non-
compliance rate, the non-compliance checklist rate is not comparable across countries.

The following table provides an example of how both the non-compliance rate and non-compliance
checklist rate are calculated for a particular compliance point.

8
Q# Chemicals and Hazardous Substances Compliance Point
Question Compliant?
159 Are chemicals and hazardous substances properly labeled? Yes
160 Are chemicals and hazardous substances properly stored? No
161 Does the employer have chemical safety data sheets for the hazardous No
chemicals used in the workplace?
162 Does the employer keep an inventory of chemicals and hazardous Yes
substances used in the workplace?
163 Does the employer provide adequate washing facilities and cleansing No
materials in the event of exposure to hazardous chemicals?
164 Has the employer effectively trained workers who work with chemicals No
and hazardous substances?
165 Has the employer taken action to assess, monitor, prevent and limit No
workers' exposure to chemicals and hazardous substances?
Checklist Non-Compliance Rate 5/7 = 71%
Non-Compliance Rate 100% (the CP is
automatically 100%
out of compliance if
even 1 question is N)

9
Limitations in the Assessment Process

The assessments carried out by Better Work follow a thorough checklist covering the above-
mentioned labour standards. The detailed factory assessment reports are based solely on what was
observed, investigated and analyzed during the performance of the actual assessment. Before the
reports become official, factories are given seven days to provide feedback that may in some cases
impact the final report language.

As this is the first Better Work Vietnam Public Synthesis Report, it covers the first set of factories
assessed by the program. Over this period, the program made some minor changes to its
assessment methodology as well as to its classifications of non-compliance. These changes were
made in consultation with the Program Advisory Committee and in particular, with MoLISA who
offered additional clarifications on areas of the law needing further interpretation. These changes
may have minor implications for levels of compliance with specific questions or compliance points in
the report.

Moreover, some of the areas covered by the Better Work Vietnam program may be either new or
more detailed than the typical social compliance audits that factories may have experienced in the
past.

Some issues are also difficult to assess and report on at the factory level. In particular, certain
aspects of Freedom of Association in Vietnam are national-level versus industry or enterprise level
issues. According to Vietnamese law, there is only one legal trade union, the VGCL. As such, every
factory will be out of compliance with related questions on freedom of association. However, the
report shows variety between enterprises on other aspects of Freedom of Association and Collective
Bargaining, such as the degree to which the existing trade union is able to operate independently
from management (see Section 2 below for additional details). Better Work Vietnam advisors will
work with factories during advisory work on those areas of non-compliance that can be improved
within the parameters of Vietnamese law.

In addition, the issue of excessive overtime relates both to factory-level procedures as well as to a
more general industry-level challenge for apparel factories in Vietnam and more globally. Almost all
factories covered in this report exceed the national yearly overtime limit of 300 hours and the
majority also exceeds either daily or weekly overtime. Factories face stiff competition on price, along
with the expectation of fast turnaround times, factors which lead most to exceed overtime limits
and/or use unreported subcontractors. In many cases, factories try to conceal these excessive hours
through keeping more than one set of hours records, an issue which again is more broad than the
factories covered in this report.

10
 Section II: Findings
Non-Compliance Rates

NB: The individual factories’ non-compliance rates, described above in the Methodology section,
were used to develop the chart on the following page. Better Work recognizes that this is a severe
calculation, and derives it solely for the purpose of cross-country comparison. Chart 1 is the only use
of this indicator in the report. The non-compliance checklist rate is used for all other tables in this
section. Chart 1 does not present, nor is it intended to present, a complete picture of labour
standards compliance at participating factories in Vietnam.

Chart 1 indicates the following:

In the areas of Core Labour Standards:

- Child and Young Labour: Seven factories are non-compliant in Documentation of Child
Labour, and two are non-compliant with Hazardous Work for Young Labourers
- Forced Labour: One factory is non-compliant with the Bonded Labour CP.
- Discrimination: All factories are in non-compliance with the Other Grounds CP, which refers
mainly to legal requirements for disabled workers. Seven factories are in non-compliance
with the gender discrimination section, in particular for discrimination against potential male
applicants.
- Freedom of Association and Collective Bargaining: All factories are non-compliant with
Union Operations as per national law restricting freedom of association; 31 out of 32
factories have non-compliance findings in Interference and Discrimination, and 21 are non-
compliant in Collective Bargaining.

In the areas of Working Conditions (national law):

- Compensation: 25 factories are found to be non-compliant with Paid Leave

- Contracts and Human Resources: 14 factories are non-compliant with Discipline and
Disputes, primarily around proper grievance handling mechanisms
- Occupational Safety and Health: Most of non-compliance is concentrated in this cluster. All
factories are non-compliant with Worker Protection, Chemicals and Hazardous Substances
and Welfare Facilities. A large number of factories are non-compliant with OSH Management
Systems (29), Health Services and First Aid (26) and Emergency Preparedness (23).
- Working Time: 31 out of 32 factories are non-compliant on Overtime.

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 Unconditional Worst Forms

Labour
Hazardous Work 2

Child
Documentation 7
Child Labourers
Prison Labour
Labour
Forced
Forced Labour and Overtime
Coercion
Bonded Labour 1
Collective Discriminati

Other Grounds 32
Religion and Political Opinion
on

Race and Origin

Gender 7
Freedom of

Union Operations
Association

32
Bargaining

Strikes 3
and

Interference and Discrimination 31

Collective Bargaining 21
Wage Information, Use and Deduction 8
Social Security and Other Benefits
Compensation

1
Premium Pay 1
Paid Leave 25
Overtime Wages 3
Minimum Wages 4
Method of Payment 1
Working Occupational Safety and and Human

Termination 4
Resources
Contracts

Employment Contracts 8
Discipline and Disputes 14
Contracting Procedures 6
Working Environment 7
Worker Protection 32
Worker Accommodation 3
Health

Welfare Facilities 32
OSH Management Systems 29
Health Services and First Aid 26
Emergency Preparedness 23
Chemicals and Hazardous Substances 32
Regular Hours 15
Time

Overtime 31
Leave 4

not in compliance

12
Non-Compliance Checklist Rates

This section describes the level of compliance across participating factories for each sub-section
(Compliance Point) within each of the eight categories covered by the Better Work Vietnam
assessments. Percentages indicate the number of questions within each sub-section that were out of
compliance. Note that the percentages relate only to the 32 factories covered during this period.

1. Core Labour Standards

Participating Industry average
Child/Young Labour non-compliance checklist rate
Child Labourers 0%
Documentation 19%
Hazardous Work 6%
Unconditional Worst Forms 0%

As the area of documentation emerges as an area of concern, it is explored in greater detail in the
table below:

In focus: Documentation
Checklist questions Percentages of factories out of compliance:
Does the employer keep a record of workers under 18 years of age as 16%
specified in national law?
Does the employer use reliable documents to verify the age of workers 22%
prior to hiring?
Participating industry average 19%

Concerning Hazardous Work, in two factories there were findings of workers under age 18 who are
doing hazardous work, including handling of chemicals, working more than 7 hours per day and
working overtime.

Participating Industry average

Forced Labour non-compliance checklist rate
Bonded Labour 1%
Coercion 0%
Forced Labour and Overtime 0%
Prison Labour 0%

The non-compliance findings in the Bonded Labour CP concern one factory in which the employer did
not have evidence to show that they ensured their private employment agency does not use bonded
labour. This is not a finding of confirmed bonded labor but rather lack of evidence of a proper
procedure for ensuring proper employment practices of the contracted employment agency.

13
 Participating Industry average
Discrimination Non-compliance checklist rate
Gender 3%
Other Grounds 9%
Race and Origin 0%
Religion and Political Opinion 0%

Gender discrimination refers to recruitment materials such as job announcements or job application
forms making reference to the applicant's gender (13% of factories) and to an applicant's gender
being a factor in hiring decisions (9% of factories). All of these cases involved discrimination against
male candidates. In one factory, the employer required pregnancy tests or use of contraceptives as a
condition of employment. In one factory, the gender of a worker constitutes a factor in decisions
regarding conditions of work.

Within the Other Grounds CP, employers did not comply with regulations regarding the hiring of
disabled workers, which may be due to inconsistencies between the law and other legal
requirements related to recruiting disabled workers and contributing to the disabled fund.

Participating Industry average

Freedom of Association and Collective Bargaining Non-compliance checklist rate
Collective Bargaining 12%
Interference and Discrimination 18%
Strikes 2%
Union Operations 43%

All factories assessed during this period have an enterprise-level trade union affiliated with VGCL.
VGCL is a major socio-political organization, representing working class, intellectuals and workers in
Vietnam. All workers and employees who act voluntarily in an enterprise trade union and contribute
regulated union fees can join the union. The union is formed based on the voluntary will of workers
and is the only legal representative of the working class in Vietnam

In addition, all factories that have signed Collective Bargaining Agreements (CBAs) comply with the
legal regulation that their provisions be at least as favorable as the law.

The main areas of non-compliance are Interference and Discrimination and Union Operations,
explored in further detail in the tables below.

In focus: Interference and Discrimination

Checklist questions Percentages of factories out of compliance:
Are workers free to meet without management present? 94%
Does the employer consider a job applicant's union membership or union 3%
activities when hiring?
Does the employer provides incentives to workers to keep them from joining 0%
a union or engaging in union activities?
Does the employer punish workers for joining a union or engaging in union 0%
activities?
Does the employer threaten, intimidate, or harass workers who join a union 0%
or engage in union activities?
Does the employer use blacklists to ensure that union members or union 0%
officials are not employed?
Has the employer not renewed a worker's employment contract due to the 0%

14
worker's union membership or activities?
Has the employer terminated a union official without consulting the union 9%
board or the higher-level union?
Has the employer terminated workers for joining a union or engaging in 0%
union activities?
Has the employer tried to interfere with, manipulate, or control the union(s)? 97%
Has the employer tried to promote the formation of a union to compete 0%
against existing union(s)?
Participating industry average 18%

Non-compliance is concentrated in the checklist questions concerning employers meeting without

management presence, and the employer trying to interfere with, manipulate or control the
union(s). These findings stem from the historical issue that most union officials at the enterprise
level in Vietnam are also part of the management of the enterprise.

However, guidelines on the VGCL Statutes adopted on 6 May 2009 prohibit management staff
serving on the company’s board of directors to stand for office at enterprise-level trade union
elections (although the trade union may accept them as honorary member without decision-making
powers).This is one of the key areas that Better Work Vietnam is working on in its Performance
Improvement Consultative Committees at the factory level.

In focus: Union Operations

Checklist questions Percentages of factories out of compliance:
Can the union(s) freely form and join federations and confederations of their 100%
choice?
Can workers freely form or join the union of their choice? 100%
Do union representatives have access to the workers in the workplace? 0%
Does the employer contribute 2% (in case of a domestic enterprise) or 1% (in 44%
case of a foreign-invested company) of the members' payroll to the union fund?
Does the employer provide the trade union with the necessary facilities and 6%
time to enable it to carry out its activities?
Does the employer require workers to join a union? 9%
Participating industry average 43%

According to Vietnamese law, there is only one legal trade union. As such, all enterprises will be out
of compliance with the first two questions above regarding whether they are free to form and join
federations or confederations of their choice or form or join the union of their choice.

In 44% of factories, employers did not contribute 2% (domestic enterprises) or 1% (foreign-invested

enterprises) of the members’ payroll to the union fund.

15
2. Working Conditions
Participating Industry average
Compensation non-compliance checklist rate
Method of Payment 1%
Minimum Wages 7%
Overtime Wages 3%
Paid Leave 9%
Premium Pay 3%
Social Security and Other Benefits 1%
Wage Information, Use and Deduction 7%

The Paid Leave area is explored in further detail below:

In focus: Paid Leave

Checklist questions Percentages of factories out of compliance:
Do workers receive maternity-related medical benefits? 3%
Does the employer correctly pay workers during sick leave? 0%
Does the employer pay for other types of leave when required? 3%
Does the employer pay for paternity leave when required? 0%
Does the employer pay full average monthly wages and maternity 3%
allowance of two month's minimum wage to entitled workers?
Does the employer pay women workers for 30 minutes rest per day during 78%
their periods?
Does the employer pay workers correctly for legally required annual leave? 3%
Does the employer pay workers correctly for personal leave? 0%
Does the employer pay workers during work stoppages caused by the 6%
employer or by force majeure?
Does the employer pay workers for legally mandated paid public holidays? 0%
Does the employer pay workers for one hour breastfeeding break per day? 0%
Participating industry average 9%

Non-compliance is concentrated in the checklist question concerning the employer paying women
workers for 30 minutes rest per day during their periods (in 78% of the factories). While some
factories may have documented policies around this issue, almost none implement it in practice, in
large part because workers are also hesitant to ask for this rest period.

16
 Participating Industry average
Contracts and Human Resources non-compliance checklist rate
Contracting Procedures 7%
Discipline and Disputes 14%
Employment Contracts 6%
Termination 2%

Given the 14% non compliance rate, the issue of Discipline and Disputes is explored further below:

In focus: Discipline and Disputes

Checklist questions Percentages of factories out of compliance:
Did the employer resolve grievances and disputes in compliance with legal 13%
requirements?
Do disciplinary measures comply with legal requirements? 13%
Have any workers been bullied or harassed for any other reason? 3%
Have any workers been disciplined using physical punishment or humiliating 6%
treatment?
Is there a Labour Conciliation Council in the factory? 34%
Participating industry average 14%

As the table shows, the areas of non-compliance center on lack of proper procedures for and
implementation of grievance and dispute resolution. In particular, roughly a third of all factories do
not have a functioning Labour Conciliation Council, which is intended to be the primary vehicle for
addressing issues of labour disputes in the enterprise.

Participating Industry average

Occupational Safety and Health non-compliance checklist rate
Chemicals and Hazardous Substances 68%
Emergency Preparedness 13%
Health Services and First Aid 21%
OSH Management Systems 42%
Welfare Facilities 30%
Worker Accommodation 1%
Worker Protection 41%
Working Environment 5%

The three highest non-compliance areas around Occupational Health and Safety are explored in the
tables below:

In focus: Chemicals and Hazardous Substances

Checklist questions Percentages of factories out of compliance:
Are chemicals and hazardous substances properly labelled? 72%
Are chemicals and hazardous substances properly stored? 78%
Does the employer keep an inventory of chemicals and hazardous 69%
substances used in the workplace?
Does the employer keep chemical safety records for the hazardous 59%
chemicals used in the workplace?
Does the employer provide adequate washing facilities and cleansing 47%
materials in the event of exposure to hazardous chemicals?
Has the employer effectively trained workers who work with 69%
chemicals and hazardous substances?

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 Has the employer taken action to assess, monitor, prevent and/or 81%
limit workers' exposure to chemicals and hazardous substances?
Participating industry average 68%

In focus: OSH Management Systems

Checklist questions Percentages of factories out of compliance:
Does the employer inspect and measure the environmental conditions in the 6%
workplace on an annual basis?
Does the employer keep updated records of work-related accidents and 16%
diseases?
Does the employer require workers to comply with OSH requirements? 34%
Does the factory have an approved OSH feasibility study? 81%
Has the employer performed an assessment of general occupational safety 66%
and health issues in the factory?
Has the employer set up a labour protection council and agreed with the 50%
union on a network of OSH collaborators?
Participating industry average 42%

In focus: Worker Protection

Checklist questions Percentages of factories out of compliance:
Are chairs for seated workers adjustable and provide adequate lower back 97%
support?
Are electrical wires, switches or plugs properly installed, grounded, and 22%
maintained?
Are materials, tools, switches, and controls within easy reach of workers? 0%
Are proper guards installed and maintained on all dangerous moving parts of 72%
machines and equipment?
Are standing workers properly accommodated? 34%
Are there appropriate safety warnings posted in the workplace? 13%
Are there sufficient measures in place to avoid heavy lifting by workers? 38%
Are workers effectively trained and encouraged to use the personal 63%
protective equipment that is provided?
Are workers effectively trained to use machines and equipment safely? 72%
Does the employer force workers to continue working when they have 0%
refused to work due to clear imminent and serious danger to their life or
health?
Does the employer provide employees with all necessary personal 38%
protective clothing and equipment?
Participating industry average 41%

In addition to these widespread non-compliance findings, there are additional OHS checklist
questions with high non-compliance findings:
 In 66% of the factories, emergency exits were found to be inaccessible, obstructed, or locked
during working hours, including overtime.
 In 75% of the factories, workers who are exposed to work-related hazards did not receive
free pre-assignment and periodical health checks every 6 months.
 In 88% of the factories, the workplace did not have other legally-required welfare facilities.

In the area of Health and Safety non compliance, Better Work Vietnam is working with all factories
on a systems approach. The issues cannot be addressed by the simple development of a policy or
one-time trainings, but rather must be understood by factory management within the larger context
of how to enhance overall factory performance. This foundational work is the emphasis of Better
Work Vietnam Enterprise Advisors, who in most cases have begun their advisory work with factories
with a focus on Occupational Health and Safety.

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 Participating Industry average
Working Time non-compliance checklist rate
Leave 2%
Overtime 36%
Regular Hours 10%

In focus: Overtime
Checklist questions Percentages of factories out of compliance:
Does the employer comply with limits on overtime hours worked? 97%
Does the employer comply with notice requirements regarding overtime? 16%
Does the employer ensure that workers have on average at least 4 rest days 41%
per month when weekly rest is not possible?
Does the employer work overtime only for reasons allowed by law? 3%
Is overtime work voluntary? 22%
Participating industry average 36%

Almost all factories in this report do not comply with limits on legal overtime and 41% of factories do
not provide workers with at least 4 days rest per month. Moreover, in over a fifth of the factories
overtime is not voluntary.

Issues of excessive working hours are widespread across apparel factories worldwide. As part of its
advisory work, Better Work Vietnam is focused on identifying ways in which factories can make
improvements to their systems in order to enhance their productivity and enable them to decrease
overtime hours. In addition, Enterprise Advisors are working with Performance Improvement
Consultative Committees to explore other scheduling and shift arrangements that could help
factories come into working hours compliance.

In cases were overtime is not voluntary, the program is working on this issue with factories as a
priority issue needing immediate attention.

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 Section III: Conclusions
Conclusions and Next Steps

Better Work Vietnam has begun advisory services in 28 of the factories covered in this report. The
goal of the advisory work, as well as the program’s stand-alone training services, are to work with
factories to assist them in proactively closing the areas of non-compliance as mentioned in this
report.

All Better Work Vietnam advisory processes are led by an enterprise-level Performance Improvement
Consultative Committee (PICC), comprised of an equal number of management and union
representatives. During the first year of advisory work, the program places a heavy emphasis on
helping the PICC develop the ability to jointly identify and address issues in the factory. Enterprise
Advisors lead the group through problem solving training, applying easy-to-use tools to help
participants collaborate and trust one another as the basis for making change. Over time, Enterprise
Advisors gradually pass facilitation of the PICCs over to the factory itself, with program staff acting as
a coach and content expert in the process.

After roughly six months of advisory work, the program has already seen a measurable change in the
attitudes of many factories around this collaborative approach and can show considerable and
documented improvements in these factories on the key non-compliance issues.

On the primary areas of non-compliance, key focus areas of the program include the following:

- Discrimination: Better Work Vietnam is actively working with factories to revise their
recruitment materials and procedures to help prevent gender discrimination against men or
women who may be pregnant in hiring.

Freedom of Association and Collective Bargaining: The primary focus of the program in this
cluster is to improve the collective representation of workers’ interests as a prerequisite for
effective labour dispute settlement and meaningful collective bargaining. The separation of
functions of factory management and worker representation is an important aspect of
strengthening the trust of workers in trade unions.

- Occupational Health and Safety: Most Enterprise Advisors are beginning their factory
advisory work with a focus on OSH issues. Some issues are easy to solve and present good
opportunities for quick progress by the factory. Discussing OSH issues is also a good way to
start to develop an understanding of the importance of systems level changes.

- Working Hours: Excessive overtime is a problem at almost all factories in Vietnam and more
globally in the apparel industry. This issue is not one that can be immediately solved.
Instead, the program is working with factories to ensure they are transparent regarding true
hours of work. From there, the program is starting to work at various strategies with each
enterprise to improve productivity and explore other strategies of coming into compliance
on hours.

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 Annexes
Annex A: Factories covered in this report

Protrade
United Sweetheart
Shinsung Vina
NB Blue
Saitex International Vietnam
Hamlin Vietnam
Hansae Vietnam
Hansae TN
Tri Dat Garment Co. Ltd.
L&S Vina
Lotus Textile & Garment
Panko Vina Corporation
Sae Hwa Vina
SS Vina
King Star Garment
Saigon 3 Garment
Hansoll Vina
Ocean Sky Apparel
Chutex International
Nobland Vietnam 2
Nobland Vietnam
Sarah
Poong In Vina
Domex Vietnam
Jiangsu Jing Meng Vietnam
Sundia Binh Duong
T&T Co. Ltd.
Dae Kwang -Maika Co. Ltd
O-Sung Vina Co. Ltd
Cao Hoa Co.
Shillabags International Co.
King Hung Garments Industrial Co.

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Annex B: Buyers participating in Better Work Vietnam (this reporting period)

During the first year of operations, many buyers began to encourage or require the factories in
Vietnam to join the Better Work Vietnam program. The following buyers formally registered for the
program and received reports during the reporting period:

Abercrombie & Fitch

American Eagle Outfitters
Ann Taylor
Brooks Sports
Gap, Inc.
G-Star International
Pentland
Target

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