The Ministry of Labour, Invalid and Social Affairs has proposed to revise Vietnam’s 2012 Labour Code to increase the overtime limit from 200 hours per year to 400 hours per year.
Manufacturing enterprises have long requested an increase in the overtime limit to raise production efficiency, worker incomes and competitiveness. Once the draft is approved, businesses will be able to ask workers to undertake more overtime.
The current Vietnamese overtime limit of 200 hours per year or 30 hours per month is much lower than neighbouring countries. China, Laos, Indonesia, Singapore and Malaysia’s monthly limits are 36, 45, 56, 72, and 104 hours per month respectively, while Cambodia and Philippines have no limits.
Vietnam’s overtime limit affects sectors such as textiles and garments, leather, aquaculture, processing, telecommunications and water and power supplies.
For several years, enterprises in the country have stressed the need to increase the overtime limits to raise the competitiveness of the country’s labour market. And it’s not just the manufacturing sector hoping for change; IT services organisations also support the increase, arguing the need for round-the-clock technical support for clients.
Although Vietnam has benefitted in the last decade from lower labour and production costs, productivity has been sluggish. This has prompted businesses to push for changes in overtime regulations to compensate for decreasing efficiency.
The proposal has received mixed responses from businesses, government officials and workers. Many female employees reported that although an increase in overtime caps will increase their income, they would prefer to spend that time taking care of families. Migrant workers generally welcomed the proposal, which they said would enable them to increase their savings.
The Vietnam General Confederation of Labour, which represents trade unions, came out against the proposal, citing the potential for businesses to misuse the new regulations, as well as the impact on workers’ wellbeing.
The ministry said it had considered welfare issues before deciding to increase overtime caps. It stressed the need to increase the limits to align with neighbouring countries with whom Vietnam competes for global trade.
Overtime incomes, which can often be a third of total income, will benefit workers, increasing their spending capacity and savings, the government said. They will encourage greater flexibility in the workforce and address issues around production schedules at busy times over the year. However, employers were warned that they need to maintain a balance to ensure their workers are not fatigued, which can affect production in the long run.