25.04.2017

The race to the bottom in Vietnam

International brands and competition on foreign direct investment are pushing labour standards to the bottom, a new study by FES Vietnam shows

Photo: The cost of sports shoes where SG&A stands for selling, general and administrative expenses, by FES / Kawin Tadtiam

In Vietnam, suppliers are sandwiched between the price pressure from the big multinational brands, mainly from the United States and Europe, and the need for compliance with national labour laws.

This struggle is fought on the backs of the workers who suffer from a deterioration of their wages and safety standards.

Since most suppliers in Vietnam depend on one specific brand as single buyer, their situation is even worsened by the fact that employers and employees are rendered into a situation of “take it or leave it”, thus as well aggravating bargaining power of employees.

What solutions, then, exist to buck this vicious circle of dropping production costs and questionable safety practices due to competition on production prices?

To make recommendation in response to this question, Dr. Do Quynh Chi with support of Friedrich-Ebert-Stiftung in Vietnam, undertook an empirical study to delve into the role of brands, suppliers and national policies and their effects on the workers’ situation in the garment, footwear and electronics industry.

As fruit of that undertaking, we introduce The missing link in the chain? Trade Regimes and Labour Standards in the Garments, Footwear and Electronics Supply Chains in Vietnam.

Read and download for free the whole study here.

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