In the context of the Covid-19 crisis and the threat of economic crisis, participation in New-Generation Free Trade Agreements (NGFTA) may bring hope to Vietnam’s economic growth.
The most remarkable agreements are the CPTPP, which Vietnam entered on the 14th of January 2019, (other members include: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, and Singapore) and the EVFTA (of which members are the EU and Vietnam; entered in August 2020).
The comprehensive rules on trade liberalisation and foreign investment protection in the new trade agreements bring about many business and investment opportunities for entrepreneurs. However, these agreements are not only about trade. They also contain rules concerning non-trade issues, such as those related to labour rights protection, which have positive impacts on the well-being of millions of employees in Vietnam as well as their families.
A Strong Framework for Worker’s Rights
Labour rights protection rules are prescribed by CPTPP Chapter 19 (Labor) and EVFTA Chapter 13 (Trade and Sustainable Development). Generally speaking, these rules are largely inspired by the principles of The International Labor Organization (ILO). They mainly reaffirm parties’ commitments to their membership in the ILO and the ILO Declaration on Fundamental Principles and Rights at Work. This latter specifies four fundamental rights at work, which are reiterated by the CPTPP and the EVFTA:
- The freedom of association and the effective recognition of the right to collective bargaining;
- The elimination of all forms of forced or compulsory labour;
- The effective abolition of child labour;
- The elimination of discrimination with respect to employment and occupation.
Besides, the parties reaffirm the “standstill clauses”, committing to avoid a “race to the bottom” for more comparative advantages in trade and investment. However, it is stated that labour standards should not be used for protectionist trade purposes.
Labour provisions in the EVFTA and the CPTPP are, therefore, basically a reaffirmation of existing rules of ILO, of which Vietnam has been a member since 1992. One can argue that most of them are by nature not new nor concrete or binding enough to have big impacts on labour legal framework in member countries, including Vietnam.
However, in reality, the need to implement the EVFTA and the CPTPP labour provisions triggered major changes to Vietnam’s labour legal framework. In particular, a new 2019 Labor Code entered into force in 2021, replacing the 2012 Labor Code, in order to pave the way to implement labour commitments under the CPTPP and the EVFTA.
Vietnam’s Updated Labour Code
In comparison to the old Labour Code, the new one contains new or more detailed provisions related to (i) the enhancement of the freedom of association and collective bargaining; (ii) the guarantee of equality and non-discrimination at work; (iii) the abolition of child labour; (iv) the elimination of forced or compulsory labour. For instance, it is stated that workers have the right to establish, join and participate in workers’ representative organisations of their own choosing, without being affiliated with the General Confederation of Labor.
An improved definition of non-discrimination at work is prescribed, while a specific focus is accorded to ensuring gender equality and preventing sexual harassment in the workplace. Minor workers are classified into three age groups, who benefit from different and special working conditions (related to types of work, workplace, working time and other differential treatments).
Increased Provisions to Regulate Employment Contracts
In comparison to the 2012 Labor Code, the 2019 Labor Code includes new or more detailed provisions related to employment contracts, termination of employment contract, working time, rest time, remuneration regime, retirement age and more.
While these amendments are not specifically required by the NGFTA, they contribute to enhancing employees’ rights. For example, the new Labor Code specifies rules on grounds for labour discipline in the form of dismissal. It requires that the employer must issue internal rules on the assessment of the work completion level, after consulting with the employees’ representative organisations when they exist. Only based on these rules can the employer unilaterally terminate the employment contract in case the employee repeatedly fails to fulfil their work under the employment contract as determined by the work performance criteria.
One may think that the implementation of labour commitments under the NGFTA and of the new Labor Code may increase the production cost, therefore reducing the benefits of entrepreneurs. However, it is necessary to note that in exchange for this “sacrifice”, their products will enjoy wider access to important markets, such as the EU, Canada, Japan or Australia.
Besides, not only States but also companies need and can benefit from sustainable development. The protection of employees’ rights is an important part of the journey towards this objective.
