March 31, 2015 / 8:14 AM / in 3 years

Vietnam hit by rare strike at major footwear factory

HANOI (Reuters) - Thousands of workers at a major factory in southern Vietnam went on strike for a fifth day on Tuesday in protest over social insurance cover, in rare show of labor unrest in a country positioning itself as a future Asian manufacturing powerhouse.

Workers of Pou Yuen Vietnam gather at their factory on the fifth day of a strike in Vietnam's southern Ho Chi Minh City March 31, 2015. REUTERS/Stringer

Witnesses in the industrialized suburbs of Ho Chi Minh City said hundreds of workers massed peacefully inside and outside the factory owned by Pou Yuen Vietnam, a footwear maker for firms that include Nike Inc and Adidas and brands like Lacoste, Converse and Reebok.

Pou Yuen, which employs close to 80,000 workers, is controlled by Chinese shoemaker Yue Yuen Industrial Holdings Ltd, a subsidiary of Taiwan-listed Pou Chen Corp.

Strikes and protests are rare in communist Vietnam, which has been tightly controlled by one party for four decades. It is known for taking decisive action to thwart the kind of labor and civil unrest that has affected other textile manufacturing rivals like China and Cambodia.

That has earned Vietnam a reputation as a safe bet for firms like Gap, H&M and Inditex’s Zara. Such companies have helped fuel annual export growth of 15.8 percent last year in garments, to $20.8 billion, and 21.6 percent in footwear, to $10.2 billion.

Workers blocked nearby streets on Monday, according to news websites of some state-run media, which has given the issue only limited coverage. VN Express reported several nearby factories closed for security reasons.

The employees are disgruntled about a social insurance law taking effect from 2016, which restricts the scope of entitlements for a lump sum payment if they leave.

Pou Chen Corp in Taiwan urged swift resolution to the dispute and said the issue was about government policy and it had no authority to intervene beyond facilitating dialogue.

A company representative told Reuters the firm had temporarily moved some operations to other Vietnamese factories it ran and the strike “had not caused a large material impact”.

City officials said they were trying to settle the dispute.

“The company has given them a day off today and we are holding dialogue with workers,” Nguyen Tran Phuong Tran, deputy chairwoman of the city’s Labor Union, told Reuters by telephone.

It comes as Vietnam’s tries to lure big firms with its cheap labor, tax breaks and its looming accession to Free Trade Agreements (FTA) with its biggest export partners.

Additional reporting by Michael Gold in Taipei, Do Khuong Duy and Nguyen Huy Kham in Hanoi; Writing by Martin Petty; Editing by Jeremy Laurence

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