Vietnam - Impact of Economic Change

Can Economic Change Eliminate Child Labour?

by Caitlin Ryan

Change is happening rapidly in Vietnam. Signs are everywhere here. In the Hanoi neighborhood where I’m staying, you can spot Cartier and Louis Vuitton stores across the street from dusty mom-and-pop shops offering straw hats, herbal medicines, and other oddities. The occasional Bentley speeds past the millions of motorbikes and Kia taxis clogging the city’s roads. Pedestrians glance up from their mobile devices just long enough to avoid getting hit by oncoming traffic. And the ex-pat community is surging – a mix of cautious diplomats, manicured professionals in business wear, and crunchy NGO-types.

But there’s a sense here that the biggest changes are just around the corner.

If the Trans-Pacific Partnership (TPP) is signed, Vietnam may see the most growth out of the 12 countries covered by the trade deal. Over the next decade, elimination of tariffs delivered through TPP are projected to boost Vietnam’s GDP by 11 percent or $36 billion USD.

My research trip has been focused on the apparel industry, a pillar of Vietnam’s economic development. Currently Vietnam is the fifth largest textile and garment exporter in the world, with products going to nearly every country in the world and the largest share to the United States, Europe, and Japan. The industry saw rapid expansion in the 1990s when the lifting of the United States trade embargo brought an influx of outside investment. Now under TPP, apparel and footwear exports could grow by as much as 50 percent.

Who works in Vietnam’s garment industry? About 2 million workers are employed in the sector, and the labor force is is disproportionately female (around 70%). These are young women with relatively low levels of education and skills.

Expansion of the local apparel industry is good for Vietnamese workers, right? After all, economic growth is central to a country’s development. And countries that have opened their markets to international trade have grown faster than those that have not. While it is broadly accepted that the benefits that accrue from trade must come hand in hand with short-term costs, those benefits and costs are distributed disproportionality between different sectors and groups within society.

In other words, in our capitalist global economy of course there will be winners and losers. But how big should the gap between these groups be? As consumers, what’s our moral obligation to make sure life isn’t so bad for the humans who put more into the global economy than they take out?

In Vietnam’s rural areas that make up the majority of the country, agriculture remains the most important economic activity. The income generated from farming is often not sufficient for farmers to earn above the national poverty line. Instead, many people end up migrating to urban centres to work. With low incomes, poor benefits, unstable employment, and far from traditional family support systems, migrants are particularly vulnerable to exploitation and social evils such as prostitution, drugs, and HIV/AIDS infection.

Parents in poor rural areas often face a difficult decision: seek employment in the city and leave the kids to tend to the farm, or send the kids to work in the city. According to a 2012 Vietnam National Child Labor Survey, out of Vietnam’s child population of 18.3 million, one-sixth are currently engaged in some form of economic activity. Among the 41,240 children surveyed working in the textile-garment industry, 79 percent are girls. Girls working in urban centers face a unique set of challenges and are especially vulnerable to exploitation, sexual violence, and trafficking.

Life is not easy for the children left behind in the villages, either. Nearly 86 percent of Vietnam’s working children live in rural areas and tend to engage in household chores more than kids in cities. Girls in these communities work more hours than boys. When young women and girls complete absent mothers’ household responsibilities, their own education and future opportunities may be stunted.

Much of the debate around the TPP in the U.S. has been around the deal’s impact on labour. TPP proponents see the trade deal as an opportunity to promote human rights – the deal commits the Vietnamese government to pass new laws ensuring better wages and working conditions, as well as allowing workers to freely unionize and strike. Others remain skeptical about the enforceability of any new laws.

Private sector actors will play a big role in shaping Vietnam’s mounting tidal wave of economic, legal, and social changes. New production and business models that promote and uphold human rights have started to emerge. Watch for a future post that will cover some of these examples.

Some of the background research done for this blog post was completed in conjunction with an assignment for a course at Harvard Kennedy School taught by Professor Jeni Klugman