Production resumes after rare factory strike in Vietnam

Production resumed at a major footwear factory in Vietnam on Thursday after a rare six-day strike in a country aggressively courting investment for one of Asia's fastest-growing manufacturing centres.

Pou Yuen Vietnam, which employs 80,000 workers, makes footwear for brands including Nike Inc and Adidas , Lacoste, Converse and Reebok. The striking employees had been disgruntled about a social insurance law that goes into effect from 2016, which restricts the scope of entitlements for a lump sum payment if they leave.

Labour unrest could hurt Vietnam's bid to become a manufacturing heavyweight, especially in textiles and electronics. Hanoi hopes the country's low labour costs and a slew of free trade pacts nearing conclusion will prompt foreign investment to surge.

"Workers have returned to work today," Nguyen Tran Phuong Tran, deputy chairwoman of the Ho Chi Minh City Labour Union, told Reuters.

The workers had calmed down after seeing a television news report that the government had guaranteed all social insurance policies would stay unchanged until year-end, Tran said.

State-run VTV said the government would seek amendments so employees could choose to take the lump sum payment right after they leave, or get paid in retirement.

Witnesses in the industrialised suburbs of Ho Chi Minh City had said the strike was peaceful, with hundreds of workers massing inside and outside the factory.
Pou Yuen is controlled by Chinese shoemaker Yue Yuen Industrial Holdings Ltd, a subsidiary of Taiwan-listed Pou Chen Corp. A Pou Chen representative has said the strike "had not caused a large material impact".

Strikes and protests are rare in communist Vietnam, which has been run by one party for four decades and has dealt swiftly to stem the sort of labour and civil unrest that has affected other textile manufacturing rivals like China and Cambodia.

Vietnam produces a tenth of the world's shoes and business from brands like H&M and Inditex's Zara helped its 2014 garment exports grow 15.8 percent to $20.8 billion, while footwear shipments grew 21.6 percent to $10.2 billion.

The country has been committed to keeping a stable investment and operating environment, but problems could still erupt in the absence of proper mechanisms to air grievances, said Asian analyst Firat Unlu at UK-based Verisk Maplecroft.

"As a result, 'wildcat' industrial actions will continue to expose Vietnam's important manufacturing sector to the risk of disruption to business operations and supply chains," Unlu said.