Vietnam Tackling Abusive Export Labor Firms

UNCLAS SECTION 01 OF 06 HANOI 000833

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STATE FOR EAP/MLS; G/TIP; INL/AAE
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STATE PASS TO DOL FOR ILAB/JLAI AND CHELM

E.O. 12958: N/A
TAGS: ELAB PGOV PHUM KCRM PINS VM TIP
SUBJECT: Vietnam Tackling Abusive Export Labor Firms

Ref: A. Hanoi 801 B. 05 Hanoi 841

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1. (SBU) Summary: Confronted with problems related to
a burgeoning export labor industry, the Government of
Vietnam (GVN) is taking action to regulate the industry
and protect workers from potential abuse.
In an effort to mitigate unemployment and develop its
pool of skilled workers, the Government of Vietnam aims
to send 80,000-90,000 additional Vietnamese citizens
overseas each year from 2006 to 2010. Most of 400,000
workers now overseas are employed in Taiwan, Korea and
Malaysia, but the Vietnamese Government is increasingly
targeting wealthier countries such as Saudi Arabia,
Japan, Canada and the United States. Alarmed at
reports of export labor firms, employers abroad and
domestic criminals exploiting and/or defrauding
workers, the GVN has stepped up efforts to protect its
citizens. Central to this effort will be to replace
past export labor regulations with an actual labor
export law to regulate the industry, facilitate export
labor and provide better protection to workers. A
draft export labor law is due to be debated in the
National Assembly's May session, with passage expected
in November 2006. Post believes the current draft
provisions for worker protection are an improvement
over existing laws but still inadequate. Post is
encouraged that GVN and National Assembly officials are
working to improve it in coordination with
international community experts. Other GVN measures
include increasing prosecutions related to illegal
export labor activities, investigating export labor
firms, and holding off on new license approvals for
firms seeking to send workers to the United States.
End Summary.

GVN Promoting Export Labor
--------------

2. (SBU) The GVN is promoting export labor in an effort
to mitigate unemployment, reduce social services costs,
earn foreign exchange, and develop the country's pool
of skilled workers. According to the Ministry of
Labor, Invalids and Social Affairs (MOLISA),
approximately 400,000 Vietnamese citizens were working
abroad as of late 2005. The GVN plans to boost this
number to as many as 500,000 by 2010 by increasing to
80,000-90,000 the number of additional workers sent
abroad each year between 2006 and 2010. In 2005,
Vietnam sent 71,000 workers abroad. (Note: the actual
numbers of Vietnamese export laborers are far smaller
than those being thrown around by labor export
boosters; the "100,000 per year" to Saudi Arabia and
the "200,000 per year" to Malaysia significantly
overstate likely short-term or even medium-term
prospects. End note.) The largest markets for
Vietnamese workers abroad are Taiwan, Malaysia, Korea
and Japan, with smaller numbers in Eastern Europe and
some Gulf States. The GVN is also actively exploring
higher wage countries as markets for Vietnamese labor
exports, particularly Japan, Saudi Arabia, Canada, and
the United States.


3. (SBU) In January 2006, the Minister of Labor,
Invalids and Social Affairs visited Saudi Arabia to
explore the possibility of sending Vietnamese workers
there. Though the Vietnamese press triumphantly
announced the possibility of "100,000 jobs per year for
Vietnamese workers in Saudi Arabia," experts at
MOLISA's Department of Overseas Labor told Emboffs and
visiting EAP and G/TIP officers that the Saudi program
is in its infancy, that the initial numbers will be
very low, and that Vietnamese labor export will be
limited to skilled, male construction workers to avoid
problems that have plagued foreign female domestic
workers in Saudi Arabia.

They Want to Be in America
--------------


4. (SBU) Likewise, Vietnamese officials have been
actively exploring U.S. markets. Officers from MOLISA,
the Ministry of Foreign Affairs (MFA) and the Office of
the Government (OOG) all confirmed to Emboffs that
Vietnam wants to establish a labor export relationship
with the United States. The primary obstacle to
Vietnamese export labor, these experts say, is the fact
that U.S. agricultural worker visas are only valid for
one year, which limits the length of an export

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laborer's contract to one year. Because the fees a
labor export company can charge a worker are capped and
are dependent on the length of the contract the worker
is able to obtain (with the maximum being one month
salary per contract year),a one-year contract is not
cost effective for the labor export companies, and
consequently many concentrate on other labor-receiving
countries where the profit per worker contract will be
much larger. Nguyen Xuan Vui, the director of
VinaSerCo, the second-largest labor export company in
Vietnam, told Poloff in March 2006: "We would be happy
to do business with the United States, but we cannot
make a profit with only one-year contracts. Please
change your laws for export workers." VinaSerCo sends
workers to Malaysia, Taiwan and Dubai; the Dubai
contracts can run as long as five years, and are very
lucrative for the labor export companies and the
workers, who earn many times what they could earn in
Vietnam.


5. (SBU) No firms currently have licenses to send
workers to the United States, though several firms have
tried to do so. All Qworkers scheduled to be sent to
the U.S. in 2006 thus far are to travel in connection
with a still-unapproved contract between local labor
export firms and the U.S. Global Horizons Inc. In a
meeting on March 28, MOLISA officials told Econoff,
Conoff and Econ Assistant that labor firms should not
have proceeded to recruit workers for the United
States, because the contract between local labor firms
and GHI had not yet been approved. All 25 visa
applications in Hanoi were denied and 37 of 48 visas
were denied in HCMC because of falsified applications
or the exorbitant fees charged by eight firms seeking
to send workers abroad. With firms charging between
USD 5,000 and USD 6,500 (based, we understand, on what
the export companies believed was a three-year labor
export worker contract incorporating overtime
assumptions),workers could not expect to see a profit
in one year of working abroad, and thus could be
expected to seek illegal employment in the United
States.

Mechanics of the Industry
--------------


6. (SBU) Workers participating in the export labor
market do so via contracts signed with licensed
Vietnamese labor exporting firms such as VinaSerCo, all
of which are independent, but state-owned, enterprises.
Export labor companies are licensed and managed by
MOLISA's Bureau of Overseas Labor Management. This
office also coordinates matters related to export labor
with other ministries (especially the Ministry of
Foreign Affairs and Ministry of Public Security),and
municipal/provincial People's Committees. Interagency
cooperation in Vietnam is often problematic.


7. (SBU) According to MOLISA, there are currently 145
export labor companies (including VinaSerCo) that
facilitate sending workers abroad. Only licensed labor
export companies can engage in labor export without
violating Vietnamese immigration laws. Vietnamese
export labor firms must submit their contracts with
overseas firms (which place workers with employers) for
approval before sending workers overseas. Labor export
companies recruit and train workers and are responsible
for visas, health checks, travel arrangements and other
aspects of laborers' contracts. The permissible fees
for these services are set by law.


8. (SBU) The current legal instrument governing the
management of Vietnamese overseas laborers, Decree No.
141/2005/ND-CP, was issued in November, 2005 in an
effort to regulate the growing industry and to
supplement Decree No. 81/2003/ND-CP from July 2003
which covers export labor more broadly. Decree No. 141
outlines the rights and responsibilities of workers,
labor export firms and government agencies in all
export labor activities. The decree was written with
encouragement of export labor in mind, stating: "The
State encourages agencies, organizations and Vietnamese
people at home and abroad to participate in expanding
markets, seeking partners and contacts to create
conditions for laborers to work abroad in accordance
with international law, Vietnamese laws and laws of
host countries." The decree sets out sanctions for

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violations by labor export companies, which can include
fines or license suspensions or revocations. According
to the Deputy Director of MOLISA's Department of
Overseas Labor, MOLISA is responsible for carrying out
periodic inspections to ensure compliance with the law
by labor export companies. For violations that are
"serious" or criminal in nature, violators can be
charged under criminal law, MOLISA said. Another
motivator for the decree was the high rate of broken
contracts for Vietnamese workers in certain high-wage
countries, particularly Taiwan and Korea. Forty
percent of Vietnamese export laborers in South Korea
and about nine percent of workers in Taiwan leave their
contracted workplaces or disappear into the illegal
labor market after the expiration of their contracts,
MOLISA said. Such violations have prompted periodic
suspensions of labor import from Vietnam by both Korea
and Taiwan. The decree forbids Vietnamese workers from
breaking labor contracts under penalty of
"repatriation."

Alleged Worker Abuses Causing Concern
--------------


9. (SBU) Amid stepped up efforts to promote export
labor, reports have also increased of abuses by export
labor firms, criminals in Vietnam defrauding would-be
overseas workers, and employers abroad. Alleged abuses
range from bonded labor, to extortionate fees charged
by labor contracting firms, to sexual trafficking
conducted using labor contracts as camouflage.


10. (SBU) Researchers from Taiwan's National Chi Nan
University and Canada's University of Western Ontario
recently conducted a case study of Vietnamese workers
sent to Taiwan and provided a readout to Econoff and
other NGO and International Organization staff in
Hanoi. The sample size of the survey was small (about
50 workers) but the researchers believe that data was
reliable because of the depth of interviews. They
found that fifty percent of the workers interviewed
lost money during the period of their contracts abroad
(which averaged 1.3 years). They also found that
Vietnamese laborers paid on average $6,343 during their
first year of work abroad, while earning a wage of
$5,760. Such figures are consistent with workers
seeking H2A visas in Hanoi and HCMC (ref A).


11. (SBU) In addition, the researchers documented cases
in which Vietnamese workers had been sexually abused,
coerced into signing exploitative contracts, or, once
in Taiwan, held in situations of bonded labor. They
also reported cases of Vietnamese firms running up fees
for workers by demanding extra payments for training,
brokerage service fees for receiving-country labor
firms, medical care, and airfare. Some of these fees
are legal, normal and customary, but it is unclear to
what degree the relatively unsophisticated workers are
aware of them in advance. By the time these fees
become unbearable, workers have already committed
substantial sums and are unwilling to back out, said
the researchers. The Vietnamese press runs frequent
public service announcements, cautionary tales and
feature articles on overseas workers who find their
experiences difficult and not profitable, all in an
effort to raise awareness among potential laborers and
reduce scams. But the lure of high salaries overseas
continues to draw thousands of unskilled laborers who
are extraordinarily vulnerable to scams and cons.


12. (SBU) According to the GVN and Vietnamese media
sources, the various predators who take advantage of
Vietnamese hopefuls are depressingly diverse. Some
criminals establish fake labor export companies and
collect advance fees for jobs that do not exist before
disappearing with the funds. Some semi-legal operators
set up expensive "training schools" that claim to be
able to "place" graduates with labor export companies
for good contracts overseas. Others claim to be
official intermediaries between labor export companies
and workers, "brokering the brokers" for a fee. When
the differential between the overseas wage and the
available local wage is so high, the opportunities to
defraud unsophisticated workers are ample.
Importantly, according to international organization
and NGO contacts, the labor export companies themselves
are rarely the culprits in these scams. Their

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businesses are lucrative enough from the large-scale
collection of legal and legitimate fees that they do
not need to engage in these petty scams to make money.
"Many workers have accumulated substantial debt before
they arrive at a labor export company," one Taiwan
economic official told Poloff.


13. (SBU) Another key area of difficulty is the lack of
support to help Vietnamese workers abroad. Vietnamese
embassies have MOLISA labor officers assigned to assist
workers in trouble and the GVN has also established a
"Fund for Labor Export Support" to assist workers in
need. Export labor firms must contribute one percent
of their service fees to the fund. Vietnamese
embassies in export labor destinations also have labor
sections to support workers. South Korea has four
labor workers, Taiwan has four, Malaysia has four, and
Japan has two.


14. (SBU) unfortunately, knowledge of this support
among workers is reportedly low. Decree 141 attempts
to address this issue by directing Ministries, overseas
missions and other state agencies to support overseas
laborers in a range of ways. Article 18, for example,
directs the Ministry of Foreign Affairs to "provide
consular and legal protection for Vietnamese citizens
working abroad." Article 18 directs the Ministry of
Public Security to "coordinate with overseas Vietnamese
representative missions ... to investigate and handle
in time cases showing criminal signs..." Article 20
directs Provincial People's Committees to conduct
education activities on guidelines and policies for
overseas workers. Article 22 states that "overseas
Vietnamese representative missions" have the
responsibility to:

-- Guide enterprises [labor export companies] to gain
access to markets and sign labor cooperation contracts
according to the provisions of the laws of Vietnam and
the host countries;

-- Assist specialized agencies in Vietnam in appraising
the conditions and feasibility of labor receipt
contracts and the legal person status of foreign
partners;

-- Guide and supervise activities of Vietnamese
enterprises' representatives in foreign countries
concerning their responsibilities to manage laborers
and handle matters related to laborers;

-- Protect the legitimate rights and interests of
laborers working abroad; and handle violations
committed by Vietnamese laborers working abroad
according to the provisions of the Decree;

-- Report on and propose competent Vietnamese agencies
for settlement cases showing signs of serious violation
of the provisions of Vietnamese law;

-- Coordinate with functional agencies of Vietnam and
the host countries and enterprises in sending violating
laborers home.

As always in Vietnam, implementation is the issue;
small Embassies and large numbers of Vietnamese
laborers abroad mean that this well-intentioned effort
may not be able to overcome its resource limitations.

"These are our people" -- Actions against Abusers
-------------- --------------


15. (SBU) In light of potential and real abuses, the
GVN has stepped up action against abusive export labor
firms and is seeking to increase worker protections.
In a meeting at MOLISA on March 15, Deputy Director for
International Cooperation Nguyen Manh Cuong stated: "We
understand the United States is concerned about the
rights of Vietnamese workers. You must know this: that
the concerns that you have are ten times stronger for
us. These are our people." Cuong's statements were
echoed elsewhere in MOLISA, and, importantly, by the
Vice-Chairman of the National Assembly's Social Affairs
Committee, Luong Phan Cu, in a March meeting with
visiting EAP and G/TIP staffers.


16. (SBU) Central to this effort will be to upgrade

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Decrees 141 and 81 and create an actual labor export
law to regulate the industry, facilitate export labor
and provide better protection to workers. The initial
draft of the law has been submitted for initial review
at the May 2006 session of the National Assembly, with
passage of the final law expected in the fall session,
probably in November. Post believes the current
draft's provisions for worker protection are better
than in Decrees 81 and 141, though still inadequate.
Specifically, the draft law puts greater responsibility
on labor export firms to bear the costs of providing
medical care and returning workers home if workers are
injured or fall ill. Firms must also return fees on a
pro-rata basis if workers must return to Vietnam for
reasons "not due to their faults [sic]." The draft also
clarifies the range of fees that workers are obligated
to pay.


17. (SBU) Despite these improvements, the GVN and the
National Assembly agree the law needs better
protections for trafficking victims, and are in the
process of revising the draft in coordination with the
international community. MOLISA officials in their
meeting with Econoff, Conoff and econ assistant on
March 28 expressed interest in receiving input from
other countries as well as international organizations
such as the ILO and IOM on the law to improve it. Vice-
Chairman Cu told Poloff he is "unsatisfied" with the
current draft and has returned it to the drafting
committee for re-evaluation. "The National Assembly
has instructed the Government agencies to work on the
draft law for labor export so that it will ensure that
workers are not exploited," Cu said. "Vietnam is
interested in, and welcomes, the recommendations and
suggestions of the international community on how to
protect workers."


18. (SBU) Pham Chi Lan, a senior advisor on the Prime
Minister's Research Commission, who is close to several
of the cabinet officials on the drafting committee for
the labor export law, told Poloff that the initial
draft of the labor export law was created to focus on
promotion of labor export and reduction of contract-
breaking among Vietnamese workers overseas that could
cause Vietnamese labor to be unattractive or
uncompetitive. However, the various approving
agencies, including the OOG, the National Assembly and
the Party, have all demanded that the protections for
Vietnamese workers be strengthened before the law is
passed. Officials from the International Organization
for Migration and the International Labor Organization
will meet with the Chairwoman of the Social Affairs
Committee of the National Assembly during the week of
April 10-15 to explain needed changes in the law. ILO
and IOM are optimistic that their input will be
considered and incorporated.

Current Enforcement Measures
--------------


19. (SBU) In addition to drafting a labor export law,
the GVN has stepped up other actions against abusive
labor firms. The following are concrete actions
currently under way or taken recently:

-- While the GVN does not keep or supply statistics of
export labor violations, a survey of news reports
indicates the GVN has prosecuted more abusive labor
firms in the first quarter of 2006 than it did in all
of 2005. The GVN has is currently criminally
prosecuting at least ten individuals for labor export
related abuses in 2006. Post found two such cases in

2005. Most alleged crimes relate to theft of worker
fees, though in at least one case victims were
trafficked illegally with no documents after workers
paid substantial fees.

-- MOLISA, has suspended approvals of new contracts for
work in the United States in order to learn the facts
surrounding the recent GHI case (ref A). MOLISA is
also interviewing workers associated with apparently
illegal attempts to send workers to the United States
related to the GHI case.

-- MOLISA has increased regular and spot inspections of
export labor firms. MOLISA carried out 46 periodic
checks and three surprise investigations on labor

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supply companies in 2005. Seven firms were faced with
fines in 2005; while no licenses were withdrawn or
suspended. In 2006, MOLISA has thus far carried out
three regular inspections and four surprise
investigations. From these, it levied fines in four
cases, and suspended license for three of the four
firms because the severity of their violations. "There
are more checks and more severe punishments than last
year," said Tuan Nhu Nguyen, Deputy Head of the Labor
Market Division in MOLISA's Department of Overseas
Labor.

Comment
--------------


20. (SBU) Vietnam is tackling head-on the central
contradiction of export labor: how do you develop your
labor export market without falling into the trap of
competing in a "race to the bottom" with other labor
export countries concerning worker protection? Vietnam
officials are sincerely interested in creating a legal
and regulatory framework that protects workers. We are
encouraged that MOLISA officials have asked for post
assistance in understanding U.S. immigration law, and
we believe that strong progress is being made in
raising the GVN's consciousness regarding the important
human rights issues related to export labor. Once a
sufficient legal framework is in place, the next
challenge will be to convince Vietnam to put time and
money into implementing that framework, especially when
funds are so short.


21. (SBU) There are other ways we can help. The COMMIT
process (ref B),despite high administrative and staff
costs, generated a useful project proposal (Project
Proposal Concept 10) entitled "Addressing Exploitative
Brokering Practices" that could make a difference in
this problem across the region, not just in Vietnam.
Here, in Vietnam, we also hope to use the United States-
Vietnam Labor Dialogue to educate Vietnam on export
labor. We hope that the dialogue, which did not take
place in 2005 because of a lack of funding for a U.S.
Department of Labor delegation to visit Vietnam, could
include a ministerial level visit to Washington.

MARINE