The Ministry of Labour, Invalid, and Social Affairs has proposed to revise the 2012 Labour Code to increase the overtime ceiling from 200 hours per year to 400 hours per year. Manufacturing enterprises have long asked to increase overtime limit to increase production efficiency, worker incomes, and competitiveness. Once the draft is approved, enterprises will be able to ask for more overtime work.
Overtime limits in Asia
The current overtime hours limit of 30 hours per month in Vietnam is much less than its neighboring countries. China, Laos, Indonesia, Singapore, and Malaysia monthly limits at present are 36, 45, 56, 72, and 104 hours respectively, while Cambodia and Philippines have no such limits.
However, Vietnam’s overtime limit for sectors such as textiles and garments, leather, aquaculture, processing, telecommunications, and water and power supplies is set at 300 hours per year.
Need to change
For several years, enterprises in Vietnam have stressed the need to increase the overtime limits to increase production efficiency, increase labor incomes, and raise the competitiveness of the country’s labor market. Not only manufacturing, even IT services companies support the increase, arguing the need for round the clock technical support for clients.
Although Vietnam has benefitted in the last decade from low labor and production costs, productivity has been low which has prompted businesses to push for changes in overtime regulations to compensate for decreasing production efficiency.
The proposal has had mixed responses from enterprises, government officials, and workers. Most of the female workers believe that although an increase in overtime caps will increase their incomes, they would prefer to spend that time taking care of families. On the other hand, migrant workers welcomed the proposal, as it would increase their net income, which can cover their living expenses and increase their savings.
Vietnam General Confederation of Labor, which represents unions are against the proposal. They have cited issues such as enterprises taking undue advantage and worker’s health as their major concerns.
The Ministry of Labour, Invalid, and Social Affairs stated that they have considered workers’ issues and enterprises benefits before deciding to increase overtime caps. The government stresses the need to increase the limits to match up with neighboring competing countries with higher limits to remain competitive and increase production efficiency.
Overtime incomes, which can often be a third of total income, will benefit workers, increasing their spending capacity and savings. The increase in overtime caps will also help enterprises have a flexible workforce and address shortage issues and busy production periods. However, businesses need to maintain a balance to ensure workers are not fatigued which can affect production in the long run.
This article was first published June 2017.
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