Happy Meals, Unhappy Workers

It's nearly five p.m. and factory workers at one of Vietnam's largest industrial parks flood into the streets of Ho Chi Minh City's sprawling outskirts. Some of the workers are clocking out, others signing in. Those who are done for the day cross the busy highway to buy groceries from vendors camped along the dusty street. Among them are employees of Danu Vina Corporation, who earn less than $2 for a hard day making stuffed animals that will be sold in the U.S. by Hallmark, Disney, and Starbucks.

A few weeks ago, many of them had joined with ten of thousands of workers to form a massive wave of wildcat strikes protesting low pay and poor working conditions at southern Vietnam's growing export processing zones and industrial parks.

These foreign owned factories have helped boost the country's economy. But at the same time, the cost of living has risen, as have the expectations of workers who want to share in the boom.

"In everyday life all things go up in price," says Minh, who has packaged toys at Danu Vina for two years. Like other workers, he refused to give his full name for fear of company reprisal. ''Everything that you use, food and drink become more expensive and we find that we're struggling to live. We're protesting to have a better quality of life."

Increasingly, that protest is taking the form of wildcat strikes demanding that the government increase the minimum wage in the export processing zones. Before late December and January, when some 40,000 workers walked off the job, the federally set minimum wage had been stagnant for six years while Vietnam's currency, the dong, lost almost 15 percent of its value against the U.S. dollar, and inflation reached 28 percent. Few foreign companies pay workers more than the law requires.

"The government was caught by surprise at how angry the employees were over their low wages," says Thuyen Nguyen, who directs Vietnam Labor Watch, a San Francisco-based activist group. "But these are people who will not stand for exploitation."

After the strikes, the government increased the minimum wage in foreign invested factories by nearly 40 percent. Monthly earnings went from less than $40 a month to a minimum of $55 in Vietnam's two biggest cities in Hanoi and Ho Chi Minh City, to $50 in mid-sized cities, and $45 dollars in the rest of the country. The increase will become effective on April 1.

"The Government directly sets the minimum wage with the aim of ensuring social security in conformity with international practices," Vietnam's Minister for Labor Nguyen Thi Hang told a January 7 press conference heralding the increase.

But the announcement did little to dampen protest. Workers have launched new strikes nearly every day in the export factories that surround Ho Chi Minh City. Workers across the country are demanding that the wage increase take effect immediately. At other shops where employers have already given a pay hike, workers say they are no better off than before, since some companies cut stipends and bonuses at the same time they raised salaries.

Labor activist Thuyen Nguyen says the underlying conditions that lead to the strikes remain unresolved asthe government juggles the competing demands of workers and foreign investors.

"Unemployment is a big problem, so the government wants to create jobs. The government tries to placate the companies. Then the workers get upset because their wages are so low. It's all short-term thinking. They don't have any long-term plan."

Nguyen says the government's balancing act is becoming less and less successful as workers get more and more angry. Six months before the eruption of mass strikes in Ho Chi Minh City, for example, 10,000 workers staged an illegal strike at Hong Kong-owned KeyHinge toys in the Central Vietnamese city, Danang. The workers, who manufactured plastic toys given away in McDonalds Happy Meals, told Lao Dong newspaper that unless they worked 12 hours a day without overtime they would be fired.

The workers also complained they were only allowed two bathroom breaks a day and that the factory only had one cup for drinking water. They told Lao Dong they were treated like "animals," not allowed sick days, and fined for any mistakes.

Almost immediately, the local Communist Party People's Committee intervened, brokered a "compromise" and ordered workers to return to their jobs with the promise of an 8 to 10 hour day and an hourly wage increase of 1.5 to 17.5 cents an hour.

At McDonald's corporate headquarters in Oak Brook, Illinois, Anna Rozenich told the Associated Press at the time. "All the issues have been resolved, whatever they are."

Thuyen Nguyen was less sanguine. "The government will try to continue to placate everyone," he says, "but I don't know how well it will work."

Race to the Bottom

All involved know that if the needs of foreign companies for the cheap labor and low production costs are not met, they will leave Vietnam. And indeed some factories impacted by the unrest and higher pay have already made that threat.

Vietnam must not only keep existing jobs but attract new ones to its export sector. The government is "trying to balance the interests of their citizens who work in the factories and the standard of living of the workers against that of foreign investors who they need to attract to create jobs and develop the country," says Carey Zesiger, who monitors labor conditions in Vietnam's export factories for the consulting firm Global Standard.

"China has low wages; Vietnam has to keep wages at a similar level in order to be competitive," says Zesiger. But, the minimum wage in China is $63 a month, 13 percent higher than Vietnam's new level and low wages are a major draw for international investors.

Hedging their bets, many companies maintain large factories in both in Vietnam and China so they can continue production as the political winds change.

Key Hinge, the company that makes Happy Meals toys for McDonald's, maintains two factories in Southern China in addition to its Vietnam facility, as does Danu Corporation, whose Ho Chi Minh City toy factory was struck by workers in January.

"You never know if China will lose it's MFN (most favored nation) trade status," says Gordon Tucker, the President of the Danu Corporation. The company already had two factories in China when the European Union imposed sanctions on the country after the massacre at Tiananmen Square 17 years ago.

"That's why we opened the factory in Vietnam," he tells Corpwatch, "to spread the risk. The government of Vietnam is no worse than in any other country."

So far, Vietnam has remained competitive and since 1989, only China and oil-rich Equatorial Guinea have grown faster. In 2005 alone, Vietnam's economy rose by 8.4 percent. In the past decade, incomes have almost doubled and poverty rates have fallen below 20 percent.

According to Vietnam's Ministry of Trade, two-way trade with the United States rose to $7.6 billion in 2005 from $5.9 billion in 2003.

But to remain attractive to foreign investment, government officials argue, Vietnam must provide the kind of cheap, docile labor force that foreign investors demand. But on paper, at least, Vietnam's workers are supported by has some of the strongest labor laws in the world. Under the Communist system, workers in every factory are required to be represented by the official government union within a few months of opening.

''When foreign investors enter Vietnam, they must follow the country's labor rules," says security manager Long Nguyen. ''If they don't, the Vietnamese government has the responsibility to enforce the law or expel the company. The government has to protect the worker. The unions that represent workers in factories of foreign and joint-stock companies are weak. They don't have the strength to stand up to the management."

Since the influx of private companies started a few years ago, however, enforcement of policy has been lax. According to the International Labor Organization, only 10 percent of workers in the export sector are represented by a trade union and observers can't remember a single case when a company has been forced out for breaking the law. So, most expect continued low wages and increasing numbers of wildcat strikes.

Leaving Danu Vina Corporation after a long day, the young women who make up most of the workforce carry plastic bags filled with vegetables, fruit, and a little meat they'll cook for dinner. The men may stop for a beer before heading to cramped living quarters. The standard of living they and their children will have rests on national investment strategies beyond their control and the labor struggles that are their investment in the future.

• 104 Globalization