Vietnam to allow independent trade unions, raise retirement age

The adjustment of the retirement ages is aimed at avoiding an imminent labour shortage from 2040 as Vietnam's population continues to age rapidly. PHOTO: AFP

HANOI (REUTERS) - Vietnam this week adopted an amended Labour Code that allows the formation of independent trade unions at the grassroots level and raises the retirement age to cope with an imminent labour shortage.

The communist-ruled country has one of Asia's fastest-growing economies, driven by robust foreign investment and exports largely produced by labour-intensive industries.

The adoption of the law, hailed by the US Embassy in Hanoi as a "historic legislation", is expected to pave the way for the ratification of several free trade agreements Vietnam has signed, including one with the European Union.

The National Assembly, the country's lawmaking body, ratified the amended Labour Code on Wednesday (Nov 20). It will take effect in 2021.

Allowing the formation of the independent trade unions is aimed at "protecting the interests of labourers", the Ministry of Labour said in a statement earlier this week.

The ministry said the move will also facilitate Vietnam's efforts to integrate further into the global economy.

The South-east Asian country has one of the most open economies in the world, having signed more than a dozen free trade agreements, including an 11-country Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) deal that will slash tariffs across much of the Asia-Pacific.

Labour issues had often topped the negotiation agendas for these free trade deals.

The EU signed the landmark free trade deal with Vietnam in June. The agreement, which includes a chapter on sustainable development, such as implementing international standards on labour rights and the Paris climate accord, still needs the approval of the European Parliament.

The law also improves collective bargaining rights, strengthens protections against discrimination at work, and enhances protections for younger workers.

"These new provisions demonstrate a significant commitment to advancing the protection of labour rights," the US embassy statement said.

Under the new legislation, the retirement age of men will be gradually raised by two years to 62 by 2028, while that of women by five years to 60 by 2035, according to a copy of the new law.

The adjustment of the retirement ages, according to the Labour Ministry, is aimed at avoiding an imminent labour shortage from 2040 as Vietnam's population continues to age rapidly.

At present, companies shifting manufacturing to Vietnam amid a trade war between Washington and Beijing are engaging in a fierce battle for skilled labour, aggravating an existing shortage and prompting calls for education reforms to address the problem.

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