Overtime working hours under consideration

Saigon Investment
Companies and businesses across various sectors will probably need to consider overtime working hours for their employees, as a temporary measure to cover the current serious shortage of workers due to the ongoing increase in the number of Covid-19 cases.
Ms. TRAN THI LAN ANH, Deputy General Secretary of the Vietnam Chamber of Commerce and Industry (VCCI), and Director of the Bureau for Employer Activities in Vietnam (BEA/VCCI), spoke with Saigon Investment on how it is reasonable to propose overtime working hours, as this could pave the way for a speedier recovery for businesses that have been severely affected by the pandemic.

JOURNALIST: - What do you think about the overtime working hour plan that the Ministry of Labor, Invalids and Social Affairs has submitted to the Government to be presented to the Standing Committee of the National Assembly for approval?

Ms. TRAN THI LAN ANH:  - First of all, I highly value the appropriate policies introduced by the Government over the last months by introducing drastic and prompt measures in an effort to provide significant support for businesses and workers to overcome difficulties caused by the Covid-19 pandemic. Among the great efforts, the proposal to raise the one-month working hour limit from 40 hours to 72 hours with no more than 300 hours a year in all trades, indicates that the Government and concerned agencies have been attentively listening to and standing by companies in their uphill struggle for a quick recovery.

The disruption of production and business activities over the last months, especially the stagnation during the fourth outbreak in 2021 due to strict social distancing and disease control measures, has caused many businesses to go belly up or fall into an extremely difficult situation due to high costs and failure to produce and deliver the products as agreed and scheduled in their orders. For enterprises producing export products such as textiles, garments, footwear and seafood, production disruption also led to risks that customers would transfer orders or shift their purchasing base from Vietnam to other countries. Therefore, the proposal to adjust for overtime working hours is a very necessary solution to support businesses for the time being. We predict that industries will need up to two years to make a full recovery back to normal.

However, increasing overtime working hours for one month or one year is at the moment only a temporary attempt to help businesses deal with the hard times caused by the pandemic. Currently, the pandemic situation is still complicated and unpredictable, with increasing number of infections over the last few weeks, which will cause a negative impact on the production and business activities of all enterprises. In fact, many manufacturing enterprises have a large number of infected employees who have to self-isolate, and businesses are forced to relax their shifts hours, and one worker may have to be deployed to work in several positions of a factory across various production lines.

The adjustment to increase the overtime working hours will enable businesses to partially compensate for the shortage of labor and low output left by the pandemic, especially for export businesses who need to keep up with their order schedules. As for employees, overtime is also a way to help them increase their income, especially for workers who have had to stay away from work for a long time due to the lockdown or because of social distancing and isolation rules. If this proposal is approved, it will not be applied in the long term, but only as a flexible measure to provide support for businesses in the short term, probably in 2022 and up to 2023, which is also in compliance with the Government socio-economic recovery and development program under Resolution 11/NQ-CP issued on 30 January 2022.

- Employees expect an income increase in line with overtime working hours. What pressures do you think a pay raise would put on employers?

- Basically, overtime work hours are not the optimal solution for businesses. When arranging for overtime working hours, businesses could face issues whose pros and cons need to be carefully weighed. This is to say, overtime pay rates are higher than those for normal working hours, while productivity during overtime can be reduced, and there is a higher risk of occupational accidents. Over the last two years, enterprises have suffered huge losses due to interruptions in production and business activities. Therefore, if working hours are increased, enterprises will have to bear an additional burden of higher overtime wages for employees at the rate of 150 percent, 200 percent and 300 percent, depending on the working time, as set forth by the Labor Code.

In the current situation, however, it is necessary to adjust the overtime limit in ways that enterprises could flexibly arrange the workforce while the labor force is still volatile. More importantly, enterprises must develop production and business plans with appropriate personnel and recruitment strategies, and even some contingency plans.

- Do you think an overtime working hours’ regulation could still comply with the labor codes in other countries and international practices as some countries tend to reduce working hours?

- The statistics collected by the International Labor Organization (ILO) in 2012 from 102 countries show that 13 countries have monthly overtime limits between 20 and 104 hours, like it is 72 hours in Singapore and 104 hours in Malaysia. Overtime limits are introduced to ensure good health for workers. At present, the overtime limit of 72 hours per month is acceptable. It could make it possible for businesses to arrange for products to be made as per schedule, especially during the peak times of the year.

When overtime working hours are introduced, companies must make it known to all the workers and the workers' union, and it must be accepted by the workers as well. Companies must also take into consideration the tendency towards a better standard of living in Vietnam. This means that companies may maintain an overtime working hour plan in the short term only, and must develop plans for shorter overtime working hours in the long run. Additionally, companies must have plans for increased productivity by investing in machinery and high technology as well as improve worker skills.

- Thank you very much.

Saigon Investment

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