VZCZCXRO0268
OO RUEHDT RUEHPB
DE RUEHHM #1105/01 2991221
ZNR UUUUU ZZH
O P 261221Z OCT 07
FM AMCONSUL HO CHI MINH CITY
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3285
INFO RUEHHI/AMEMBASSY HANOI PRIORITY 2265
RUCPDOC/USDOC WASHDC 0043
RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE
RUEHHM/AMCONSUL HO CHI MINH CITY 3498

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 001105 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS AND DRL/IL MARK MITTELHAUSER 
COMMERCE FOR 4431/MAC/AP/OPB/VLC/HPPHO 
STATE PASS USDOL ILAB 
 
E.O. 12958: N/A 
TAGS: ELAB ECON PREL PGOV OTRA OVIP VM
SUBJECT: DUS PONTICELLI HCMC VISIT - PUBLIC SECTOR LAPSES AND 
EMERGING CIVIL SOCIETY IN HCMC 
 
 
HO CHI MIN 00001105  001.2 OF 002 
 
 
¶1. (U) Summary:  Deputy Undersecretary of Labor for 
International Affairs Charlotte Ponticelli and Department of 
Labor Senior Advisor for EAP Affairs Zhao Li stopped in Ho Chi 
Minh City (HCMC) on October 20 to observe and discuss HCMC labor 
issues en route to the 2007 U.S. - Vietnam Labor Dialogue in 
Hanoi.  NGOs, U.S. garment/footwear manufacturers and labor 
market experts described the strain that HCMC's rapid economic 
growth has placed on the public sector mechanisms for preventing 
and resolving labor disputes.  At the same time, interlocutors 
demonstrated that this pressure creates opportunities for civil 
society to develop, including the increasingly entrepreneurial 
HCMC Women's Union.  End summary. 
 
Not Your Mother's Women's Union 
------------------------------- 
¶2.  (SBU) In a meeting room packed with bouquets and placards 
commemorating the 77th anniversary of the national 
organization's founding, Vice-President of the Women's Union of 
HCMC Ms. Nguyen Ngoc Hanh described their efforts to enhance 
women's economic role in Vietnam's ongoing economic boom. 
(Note:  The 12 million member Women's Union is closely connected 
to the Communist Party under the umbrella of the Fatherland 
Front.  Although its activities were purely political in the 
pre-reform era, it has since expanded to broad based social 
welfare programs, in cooperation with numerous foreign donors 
and NGOs.  End note.)  Hanh explained that the Women's Union's 
Culture House concentrates a broad range of services at one 
location:  three to four thousand women per day participate in 
vocational training (e.g. cosmetology, hair styling, sewing, 
etc.); marriage and health counseling; calisthenics and 
exercise; personal hygiene counseling; and cultural 
performances.  The Center also works to address and prevent 
child labor problems and houses women's vocational, 
professional, and student clubs, as well as an association and 
management training program for women entrepreneurs. 
 
¶3.  (SBU) Hanh described micro-lending projects aiming to double 
the income of the more than 10,000 HCMC households surviving on 
one USD per person per day.  To date, the 4,500 micro-lending 
groups organized by the Union (totaling 27,000 participants) 
have a repayment rate of 98 percent. 
 
¶4.  (SBU) DUS Ponticelli relayed USG priorities for job creation 
as the best way to tackle poverty and promote economic growth, 
and commended the Union's efforts to combat this problem. 
Regarding child labor, Hanh said that an ILO-funded project 
established that hawking newspapers and lottery tickets, shining 
shoes, and working as housekeepers or in family shops were the 
most typical forms of child labor in the three city districts 
surveyed. Women's Union remediation efforts include educating 
parents as to the importance of education, offering scholarships 
or night classes, or vocational training to the children 
involved. 
 
Improvements in Working Conditions Don't Deter Strikers 
--------------------------------------------- ---------- 
¶5.  (SBU) The delegation toured the Chang Shin footwear factory, 
a Nike Inc. sub-contractor facility in Dong Nai province with 
20,000 workers. Chief Nike representative Shirley Justice 
described Nike's global and Vietnam presence, its extensive 
corporate social responsibility efforts (e.g., scholarships, 
Habitat for Humanity projects, a micro-loan program with the 
Women's Union), and current challenges.  Nike's relationship 
with its subcontractors has evolved from an auditing/monitoring 
function to a consultation, where Nike works together with its 
partners to improve working conditions and enhance human 
resources.  Despite these efforts, Ms. Justice reported 
low-level but chronic labor unrest, with 38 strikes across the 
industry in the last two weeks, including incidents at several 
Nike facilities. 
 
Fighting Turnover:  "Deskilling" vs. Movie Night 
--------------------------------------------- --- 
¶6.  (SBU) Representatives from foreign-invested footwear (Nike 
and Adidas), Vietnamese garment manufacturers, the corporate 
social responsibility NGOs Company Stakeholder Responsibility 
(CSR) and Global Standards, and the Chamber of Commerce and 
Industry of Vietnam raised worker shortages and labor code 
issues during a roundtable discussion with the DOL delegation. 
Manufacturers described a temporary, migrant work force intent 
on maximizing income for several years before returning to their 
home regions, and willing to switch factory jobs for a 20,000 
VND (USD 1.25) bonus.  Having found on-site amenities such as 
kindergartens, movie nights, and even wedding services 
ineffective in retaining workers, Adidas has 'de-skilled' 
 
HO CHI MIN 00001105  002.2 OF 002 
 
 
factory operations, maximizing automation to minimize the labor 
force and training.  At Nike, however, human resource capacity 
building remains a top priority and together with the social 
amenities provided has kept turnover rate there at 10 percent, 
significantly below the industry average. 
 
Coping with Labor Unrest in a Public Sector Vacuum 
--------------------------------------------- ----- 
¶7.  (SBU) All participants agreed that educating the work force 
in labor law was the best way to prevent strikes, but that this 
was an unfulfilled GVN responsibility.  Participants also 
criticized the GVN's inaction in the face of labor unrest, as 
well as the lack of regular communication between the GVN and 
industry, but agreed with VCCI's observation that the GVN has 
recently begun to solicit industry input. 
 
Comment 
------- 
¶8. (SBU) The GVN's lack of an effective communications strategy 
and weak execution hampers effective labor relations in HCMC. 
This inertia contrasts sharply with the dynamic, multi-faceted 
training and educational programs of the increasingly autonomous 
Women's Union.  Although leaders at various levels receive 
modest salaries, much of the Women's Union activity is 
volunteer-based or supported by membership fees.  Its 
metamorphosis from a communist party tool to an increasingly 
self-funded volunteer-driven agent of social change marks the 
Women's Union's as a leading indicator of HCMC's emerging civil 
society.  End comment. 
 
¶9. This cable was coordinated with Embassy Hanoi and cleared by 
the delegation. 
FAIRFAX