Draft revised Labour Code: Enterprises still want to increase working overtime

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Barrier for enterprises

The Labour Code is a Code that has a large governance scope and strongly affects the business environment in Vietnam, the competitiveness of the economy as well as Vietnam's economic integration process with the world. Currently, the draft is being consulted and reviewed by affected organizations and individuals. In this draft, many regulations have been proposed to be amended and supplemented to protect the rights of employees. This shows the efforts of the Drafting Committee in building a civilized, progressive and integrated society with Vietnam's international development trend and this is an appropriate need.

However, objectively, it is necessary to consider thoroughly Vietnam’s economic position or competitiveness compared to countries inthe region and around the world, thereby proposing appropriate changes to ensure the sustainable growth of the economy. Because when the economy is affected, the Labour Code can become a "barrier" for production growth, reducing export turnover and badly affecting the life of employees.

From the perspective of an enterprise using a large volume of employees, Bui Duc Thinh, President of the Board of Directors of Song Hong Garment Joint Stock Company, said that no enterprise wants to work overtime because in the garment industry, wages for working overtime is not only higher than normalbut also excluded from the costsand is deducted from the enterprise’s profits. The proposal to increaseovertime to 400 or 500 hours per year has three main purposes: employees have a moderate time to work on the basis of existing machinery, equipment and goods of the enterprise to earn an additional legitimateincome so that they do not have need to look for a part-time job after finishing their work at the enterprise. The enterprise has time to handle abnormal situations while still ensuring the law. Because the working overtime costs for wages and energy are very high, the enterprise does not consider working overtime to earn more profits as long as it is understood. Many enterprises have suffered heavy losses because of the strict regulation on working overtime in Vietnam, thousands of employees in those enterprises have lost their jobs. Therefore, the proposal on working overtime for businesses of about 450-500 hours per year is reasonable and safe.

VCCI recommends not limitingovertime by week ormonth but only by year. Photo: XT

Working overtime is still a problem

Among the new provisions in the draft, there are some regulations that, if they are applied, will have significant impacts on the economy in general as well as the interests of workers and enterprises in particular. These include no changes in working overtime ceiling, progressive wagefor working overtime and reduction of standard working hours.

For example, Samsung Group in Vietnam managing hundreds of thousands of employees, but with the tendency to reduce regular working hours, limit working overtime and increase progressive salary for working overtime, Samsung may lose another US$ 2 million a month and lose more than US$ 20 million a year, causing great losses to the enterprise as well as instability for production activities. Ifsuch regulations putgreat pressure on the business, the enterprise will possibly move its factories to other countries, reducing the country's total export turnover, affectingsuppliers for Samsung in Vietnamand mean they areunable to maintain their operations.

Therefore, stemming from "national interests" with the most important goals of increasing export turnover, GDP and the competitiveness of Vietnamese enterprises in the global market, some experts said some of the provisions in the draft need to be reviewed and considered carefully and reasonably before being officially presented to the National Assembly and approved by the deputies in October, 2019.

According to Tran Thi Lan Anh, Deputy General Secretary of VCCI, Director General of the Bureau for Employer’s Activities, also raised that one of the major issues that needs to be revised and supplemented in the draft are working overtimeand calculation method of working overtime and wage.

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“The current Labour Code currently stipulates that Vietnam's maximum hours of working overtime in a year is limited to 200 hours per year. This level is much lower than other countries competing in labour with Vietnam. In terms of industries, this regulation is not suitable for direct manufacturing industries, thus restricting the competitiveness of enterprises. In addition, because labour productivity of Vietnamese employees is still low, the proportion of labour-intensive industries with a low added value is still high, the demand for expanding the working overtime framework is necessary to contribute to increasing income for employees. Therefore, VCCI recommends not to limit working overtime by week ormonth, but only by year. Woking overtime must not exceed 500 hours per year, except for some industries, working overtime must not exceed 600 hours per year,”Tran Thi Lan Anh suggested.