Last update 5/25/2012 7:53:00 AM (GMT+7)

Labor union dues burden businesses

VietNamNet Bridge – The regulation that employers have to pay the labor union dues equal to 2 percent of the actual pay to laborers has made businesses miserable, especially in the current economic downturn.

Workers finish their production shifts in an IZ
The voice of businesses

“If the State maintains the unreasonable subscription, businesses would reach the bankruptcy sooner,” said Director of a garment company in HCM City.

The director said that his company has missed an order of exporting jackets to European markets worth one million dollars, because the company could not make payment for the materials. The company paid 60 percent of the value of the contract on material imports and asked the deferred payment for the remaining 40 percent, but the partner refused the proposal.

“If we had not had to pay the union dues of over 400 million dong, we would have had enough money to make payment for the imports,” the director complained.

As a result, the majority of the 300 workers of the company now sit idle because of the missed order.

In fact, businesses have many times complained about the unreasonable kind of dues. However, their complaint has never been replied by state management agencies, while many other problems have arisen.

“This is a kind of illegal, unreasonable and unfair dues,” said Tran Van Linh, General Director of the Thuan Phuoc Seafood and Trade Company.

Linh cited the Budget Law which stipulates that the State has to arrange budget for the operation of the state’s organizations, affirming that labor union is one of such organizations, i.e that the State needs to spend money to maintain the operation of the labor union.

In fact, the collection of union dues - two percent on the enterprises’ total wage funds – has gone beyond the control of the State budget. “Therefore, if the State does not settle the problem to every root, this would pave the way for other organizations to collect money from enterprises and workers,” Linh has warned.

Vu Duc Giang, Chair of the Vietnam Textile and Apparel Association (Vinatas), a small garment enterprise has 300-500 workers, while a medium enterprise uses 1000 workers, and big one has up to 20,000 workers. With the average wage of garment workers at 3.5 million dong, a small company would have to pay 250-450 million dong a year in labor union dues. Meanwhile, a medium company has to pay 500-850 million dong, and big enterprise 3.5 billion dong. These prove to be huge sums of money.

Linh has also pointed out a paradox that while trade union is an organization that protects the employees’ interests, it operates on the money paid by employers. “It’s really unreasonable if trade union uses the money of bosses to protect the benefits of workers,” he said.

Union dues gobble up businesses’ profit

Giang said that when paying tax, enterprises have indirectly propped up money for trade union’s operation through the state budget. Therefore, if they are forced to pay the union dues as well, they would have to pay tax twice. Meanwhile, enterprises cannot keep strict control to find out if the expenses of the labor union are reasonable and if the expenses serve the interests of workers.

The most important reason behind the businesses’ strong opposition against trade union due collection is that the dues make the production costs higher.

Experts have pointed out that the wages make up 20 percent of the production costs. When the pay for wages increases by 2 percent due to the union dues, the production cost would be 0.4 percent higher.

As for garment, seafood, agricultural and footwear enterprises, which have the labor cost accounting for 60-70 percent of the production costs, the 2 percent union dues would make the production cost increase by at least one percent.

Source: TBKTSG