Vietnam labour policies and its impact on rural wages: an experience from hired farm labourers in the Red River Delta
Purpose. The purpose of this article is to understand how Vietnamese policies for labour impacting on wage of rural labourers in agricultural sector. To do that, the paper particularly pays attention on analyzing wage of hired farm labourers in the Red River Delta region, the rice basket of Vietnam.
Methodology / approach. Analyzing the above-mentioned impact of Vietnamese policies was performed by using data surveyed from 150 hired farm labourers in the Red River Delta of Vietnam. The survey on wages of rural labourers was conducted in Bac Ninh, Thai Binh and Hai Duong which are the three typical agricultural production areas in the Red River Delta in 2019. In this survey, the author interviewed 150 people who work as hired labourers in rice cultivation in Bac Ninh, clam farming in Thai Binh and pig raising in Hai Duong. The sample was randomly drawn among farm households which hire labourers in these provinces. This sample was divided into 2 groups of female and male labourers. The main purposes of this survey were to gather both qualitative and quantitative data on hired labourers including: age, gender, education level, money wage, wage in kind and other remunerations that they received from employers. Information relating to their participation in social insurance and vocational training were also collected like: number of years involving in social insurance; money that they used to purchase social insurance; frequency and time spending in vocational training courses. The personal interviews using a standard questionnaire with open and close questions were implemented separately with male and female hired farm labourers. They were interviewed in different places to ensure that their responses do not affect others. After checking for missing values, the author used the following methods: frequency distribution with mean and standard deviation for a description of respondents; cross tabulation and T-test were also used to test for differences in proportions and significant difference between groups; a linear regression model was applied to examine impact of wage regulation, social insurance and vocational training policies on wage of hired labourers in agricultural production (dependent variable was average money wage per month, it was estimated by sum of money wage and other remunerations that a labourer gets each month; independent variables were age, gender, education level and dummy variables which represented labourers’ participation in mentioned labour policies).
Results. Among policies relating to agricultural sector, the ones about minimum wage and vocational training statistically impact the most on labour wage. Longer time of vocational training brings an additional 3 USD to a labourer’s monthly wage. Being supported by the policy of minimum wage, labourers can achieve higher wage when negotiating with employers. The author found that wage of a labourer who is aware of this policy is about 5 USD higher than that of others. Meanwhile, social insurance policies do not impact on wage of rural farm labourers. It is stated in the Labour Code that a part of social insurance fee of a contracted labourer is paid by his/her employer. However, hired agricultural labourers usually are excluded, because they mostly work under verbal agreements which are not specified by the Code. This loophole in the Labour Code need to be corrected in the future.
Originality / scientific novelty. Despite the fact that industrialization process is rapidly developing in recent years, rural labour force still contributes a remarkable proportion in the Red River Delta region of Vietnam. The transferring skilled and young labourers from farm to off-farm sectors, from rural to urban areas leads to the existence of un-skilled and old-age labourers for agricultural production. This labour force is working in the poor condition with unstable and low wage jobs. However, they are not much concerned by labour policies and there is still a gap in research on their wage. Therefore, this study takes the advance to shed the light on the impact of labour policies on wage of rural farm labourers as well as to propose recommendations to adjust labour policies regarding this issue.
Practical value / implications. The author identifies that attending vocational training and understanding of minimum wage will increase the chance for labourers to obtain higher wage.
2. Nguyen, N. T. H., Lebailly, P. and Nguyen, D. M. (2019), Labor division in pig farming households: an analysis of gender and economic perspectives in the Red River Delta Vietnam. International Journal of Economics and Financial Issues, vol. 9, no. 1, pp. 183–192. https://doi.org/10.32479/ijefi.7274.
3. Trinh, T. V. (2018), Policies for labour’s salary to promote their emotion on work. Journal of Industry and Trade in Vietnam, available at: http://tapchicongthuong.vn/bai-viet/doi-moi-chinh-sach-tien-luong-tao-dong-luc-lam-viec-cho-nguoi-lao-dong-mot-so-van-de-trao-doi-29155.htm.
4. Nguyen, T. D. (2017), The growth of wage and labor productivity in Vietnam. Vietnam Institute for economics and policy research and Jica Vietnam, Hanoi, Vietnam, available at: http://vepr.org.vn/upload/533/fck/files/1_%20Full%20ENG_20170912_0615pm.pdf.
5. International Labour Organization (2016), 2016 Report on Informal Employment in Vietnam, Hong Duc Publishing House Vietnam, Hanoia, Vietnam, аvailable at: https://www.ilo.org/wcmsp5/groups/public/---asia/---ro-bangkok/---ilo-hanoi/documents/publication/wcms_638330.pdf.
6. Tuong, M. D. (2016), Shifting of labor structure in the Red River Delta. Working paper presented at the FAO-IFAD-ILO Workshop on Gaps, trends and current research in gender dimensions of agricultural and rural employment, Hanoi, Vietnam.
7. Oya, C. and Pontara, N. ed. (2015), Rural wage employment in developing countries: theory, evidence, and policy, 1st ed, New York Taylor & Francis Group, Hoboken, USA.
8. Engelhardt, G. V. and Purcell, P. J. (2021), The minimum wage and annual earnings inequality. Economics Letter, vol. 207, 110001. https://doi.org/10.1016/j.econlet.2021.110001.
9. Kassa, G. (2016), Determinants of job satisfaction among agricultural extension workers in Southwest Ethiopia. American Journal of Agriculture and Forestry, vol. 4, is. 5, pp. 112–117. https:// doi.org/10.11648/j.ajaf.20160405.11.
10. Schmillen, A. D. and Packard, T. G. (2016), Vietnam’s labor market institutions, regulations, and interventions: helping people grasp work opportunities in a risky world. Policy Research, Working paper no. 7587. World Bank, Washington, DC. World Bank. https://openknowledge.worldbank.org/handle/10986/23928.
11. Buckley, J. (2017), Is Vietnam minumum wage structure sustainable. Industrialization and Urbanization in Vietnam. Working paper no. 38, East Asian Development Network.
12. Nguyen, N. T. H., Lebailly, P. and Nguyen, D. M. (2018), The Red River Delta, Vietnam: how does industrialization change the use of labor in agricultural production at farm households? The Asian International Journal of Life Sciences, vol. 27, is. 2, pp. 1–18.
13. Le, H. T. V. (2018), Gender, Doi Moi and Coastal Resource Management in the Red River Delta, Vietnam in Gender and Natural Resource Management. Livelihoods, Mobility and Interventions, eds B. P. Resurreccion and R. Elmhirst. TJ International Ltd, London, UK.
14. Trung, L. D. and Oostendorp, R. H. (2016), Regional labor market integration, shadow wages and poverty. World Development, vol. 89, pp. 34–56. https://doi.org/10.1016/j.worlddev.2016.07.011.
15. Asian Development Bank (2012), Improving vocational training for Vietnamese rural workers, available at: https://www.adb.org/sites/default/files/project-document/176144/vie-rural-workers-training-report.pdf.
16. International Labour Organization (2011), Research report on rural labour and employment in Viet Nam, available at: https://www.ilo.org/hanoi/Whatwedo/Publications/WCMS_171760/lang--en/index.htm.
17. Nguyen, N. T. H. and Lebailly, P. (2018), Impact of wage employment in agriculture production on labor satisfaction in the Red River Delta Vietnam. International Journal of Applied Business and Economic Research, vol. 16, is. 2, pp. 391–401.
18. Narciso, G. (2015), Labor and migration in rural Vietnam. Working paper no. 2015/095, UNU-WIDER, Helsinki, Finland, available at: https://www.wider.unu.edu/sites/default/files/wp2015-095.pdf.
19. Nguyen, T. Q. and Le, P. H. (2016), The situation of rural labors, the impact of vocational training, employment, and income of rural laborers in Vinh Long province. Can Tho University Journal of Science, vol. 43, pp. 51–59. https://doi.org/10.22144/ctu.jvn.2016.081.
20. Robinson, J. A. and Subrick, J. R. (2020), Why did Smith suggest a labor theory of value? Journal of Economic Behavior & Organization, vol. 184, pp. 781–787. https://doi.org/10.1016/j.jebo.2020.08.040.
21. Dao, A. (2020), What it means to say “I Don’t have any money to buy health insurance” in rural Vietnam: how anticipatory activities shape health insurance enrollment. Social Science & Medicine, vol. 266, 113335. https://doi.org/10.1016/j.socscimed.2020.113335.
22. Luu, T. Q. (2015), Policy implications for extending social security system in Vietnam toward 2020, MOLISA, Hanoi, Vietnam, available at: http://ilssa.org.vn/vi/news/co-so-ly-luan-va-thuc-tien-xay-dung-chinh-sach-khuyen-khich-tham-gia-bao-hiem-xa-hoi-10.
23. Cacciattolo, K. (2015), Defining workplace learning. European Scientific Journal, vol. 1, pp. 243–250.
24. Chi, H., Vu, T-V., Vo-Thanh, T., Nguyen, N. P. and Nguyen, D. V. (2020), Workplace health and safety training, employees’ risk perceptions, behavioral safety compliance, and perceived job insecurity during COVID-19: data of Vietnam. Data in Brief, vol. 33, 106346. https://doi.org/10.1016/j.dib.2020.106346.
25. Olakojo, A. S. (2016), Seasonal labor market rigidities: impact on farm employment and wages in Nigeria. Economic of Agriculture, vol. 63, is. 4, pp. 1123–1140. https://doi.org/10.5937/ekoPolj1604123O.
26. Feuerbacher, A., McDonald, S., Dukpa, C. and Grethe, H. (2020), Seasonal rural labor markets and their relevance to policy analyses in developing countries. Food Policy, vol. 93, 101875. https://doi.org/10.1016/j.foodpol.2020.101875.