The way Vietnam is managing the recruitment of foreign employees, both blue-collar and white-collar, has become unwieldy and confusing.
Thousands of foreigners flock to Vietnam every year, misusing their tourist visas - which are easily obtained - to work at construction sites. It’s not that Vietnam is facing a shortage of manual workers. Rather, as foreign contractors win bids to develop projects in the country, migrant workers lacking the proper paperwork come with them to take on low-skilled jobs. Sources from the Ministry of Labour, War Invalids and Social Affairs (MoLISA) say that as at the end of 2013 there were 77,359 foreigners working in Vietnam, of which 40,529 were doing so legally while 31,330 were without a work permit. And the Ministry acknowledges that the number of illegal foreign workers is probably a lot higher.
From low-wage workers …
In some countries, laws on the recruitment of foreigners only permit the number of foreign workers at a project to be 3 per cent of the total workforce at a maximum. The recruitment criteria are also quite strict, as foreign workers must be experts and be working in areas or in jobs that local workers are unable to do. The situation in Vietnam is completely different, however. “Foreign contractors, once they win a bid to a certain project in Vietnam, are free to decide how many foreigners they will hire by exploiting a legal loophole,” said Mr Nguyen Van Tien, Deputy Inspector at MoLISA. “One case in point is Chinese projects, as their employees are mostly Chinese, including their support staff.”
Besides misusing tourist visas, many foreigners simply cross the border and begin working illegally. Work permits are supposed to only be granted if foreign workers that meet all of the host country’s conditions, but recruiters are adept at getting around the rules. “It is difficult for authorities to take remedial measures as foreign contractors hide the fact they employ foreign workers, so it’s not simple to prove violations,” said Mr Tien. “For example, unskilled Chinese workers are given work permits because their employers state in the paperwork that they are skilled.”
Under Vietnamese law, local authorities are empowered to grant work permits to foreigners working in their locality. But many localities, in reality, fail to properly monitor the situation. Even worse, due to the policy of giving preferential treatment to foreign investors, some local authorities have turned a blind eye to foreigners working without permits in their locality. For instance, the Vung Ang Economic Zone in northern Ha Tinh province employs 3,730 foreign workers but only 1,560 have work permits, the economic zone’s management board reported in March.
When the Formosa steel complex project was carried out at Vung Ang, a number of Chinese contractors won bids and brought thousands of Chinese workers to Vietnam. Many contractors also have sub-contractors that employ foreigners. The management board, which has been authorised by Ha Tinh provincial authorities to grant work permits to foreigners working at the economic zone, said that contractors do not report the number of foreign workers they employ. Many contractors are simply unaware of what their sub-contractors do, making it difficult to identify illegal workers, the management board said.
Notably, the Chinese workers at the construction site of the Formosa project are reported to be paid three to four times more than their Vietnamese counterparts for the same work. Local authorities and experts have lamented the fact that unlicensed and unskilled foreign workers have stayed on illegally and taken jobs away from local people. The foreign contractors, however, continue to claim that they only hire foreigners because Vietnamese workers lack the necessary skills and have poor work discipline, but Mr Tien disputes this. Certain jobs, he said, that require tenacity for long periods of time are too demanding for Vietnamese workers. As regards discipline, he argued that when Vietnamese workers are properly trained they are on par with their regional peers.
… to white-collar workers
While local authorities have found it hard to crack down on low-wage migrant workers at construction sites and factories, they are also making life more difficult for foreign-invested enterprises (FIEs) seeking high quality foreign staff. The application process for foreigners to acquire a work permit is burdensome and time-consuming, requiring, among other things, a criminal background check from the applicant’s home country and another from Vietnam’s Ministry of Justice. The conditions dishearten many qualified foreign workers wanting to devote their knowledge and experience to the country.
Work experience also matters. Even as a foreigner living for more than 20 years in Vietnam, Mr Fred Burke, Managing Partner of the Baker & McKenzie Vietnam law firm, still has a tough time obtaining work permits for his foreign staff. Circular No 3 issued by MoLISA stipulates that foreigners employed as specialists must present documents proving that they have a university degree or higher, in addition to proof that they have at least five years experience working in the field in which they are employed in Vietnam. “Even Bill Gates or Facebook CEO Mark Zuckerberg don’t meet the requirements to legally work in Vietnam,” joked Mr Burke, who suggested that foreign workers should only have to meet one of these two requirements to be eligible to obtain a work permit.
Another issue that many FIEs consider as a shortcoming is that they are required to obtain work permits for foreign employees who will only stay in Vietnam for a very short period of time. Mr Yoshihira Maruta, Chairman of the Japan Business Association in Vietnam (JBAV), said that Japanese workers must present police records even if they will work in Vietnam for just one day. “Agencies sometimes refuse to grant police records to Japanese workers because of the short term of their stay,” he was quoted as saying. Meanwhile, the implementation of regulations has been extremely complex and inconsistent between cities and provinces throughout the country, said Mr Laurent Quistrebert, Hanoi Chief Representative at Resident Vietnam. “This has confused companies and provincial labour officers and delayed the work permit application process.” he said.
In a report submitted to the mid-term Vietnam Business Forum (VBF), the Investment and Trade Working Group noted that Vietnam’s work permit process has made it difficult for companies in the textile and garment industry to actually benefit from technology transfer, particularly as the signing of the Trans Pacific Partnership (TPP) approaches. In order to integrate upstream and create new sources of raw materials within Vietnam, the group suggested it is essential to allow freer access to foreign expertise, which would mean making it easier for foreign experts to arrive on temporary work assignments. Additional foreign engineers installing and then training Vietnamese workers on how to use more complex machinery, for example, would help the country develop at a faster pace. “Almost every business represented at the two most recent VBFs had complaints about the new work permit rules, and this is something that is reportedly affecting the entire textile and garment industry,” the group noted.
The China Chengda Engineering Co. Ltd, a contractor at the Duyen Hai 3 Thermo-power Plant project in the Mekong Delta’s Tra Vinh province, last month employed an additional 2,100 Chinese workers. Provincial Chairwoman Son Thi Anh Hong confirmed the figure with local media, saying that the decision to permit the additional workers was made only after relevant agencies considered the situation carefully. According to Mr Duong Quang Ngoc, Deputy Director of the Tra Vinh Provincial Labour Department, China Chengda sought local workers through the local labour department and job centres but the number of applicants was modest. But local human resources companies in the area claimed they have many qualified local workers on their books who are seeking employment but were ignored by the Chinese contractors.