Labor ministry orders probe into Honda Vietnam’s alleged massive layoff

By Toan Dao   September 23, 2016 | 07:00 pm PT
Labor ministry orders probe into Honda Vietnam’s alleged massive layoff
In a Honda Vietnam's factory. Photo by VnExpress/Trong Nghiep
The company has been accused of firing thousands of workers every year to cut costs.

The Ministry of Labor, Invalids and Social Affairs has asked that authorities in the northern province of Vinh Phuc look into reports of massive layoffs that allegedly happen regularly at Honda Vietnam.

The company is located in the province and is a joint venture of Japan’s Honda Motor, Thailand’s Asian Honda Motor Co. and the Dynamic Machine Corporation and Farm Machinery Vietnam, with respective stakes of 42, 28 and 30 percent.

Vinh Phuc authorities will check if Honda Vietnam’s action is legitimate and how it has affected the local workforce, Vietnamplus reported Friday, quoting the deputy labor minister Pham Minh Huan.

“If the locality [Vinh Phuc] is not decisive, the ministry will step in by sending an inspection team to work with Honda Vietnam to find the answers,” Huan told a meeting on Friday.

According to local media reports, Honda Vietnam has sacked thousands of workers annually in recent years. The workers would be replaced with newcomers.

The intention was to reduce wage increases and higher social insurance payments for long-time workers, according to the reports.

Honda Vietnam rejected these accusations. It said about 1,600 workers left the company for personal reasons every year and that only 300-400 were fired because they were not qualified.

A representative from Vinh Phuc’s labor department said inspections show that Honda Vietnam has fully followed local regulations in the dismissal of workers.

Huan, the deputy labor minister, however, said the termination of a large number of labor contracts must be reviewed carefully.

Vietnamese law allows employers to dismiss workers in case they have to scale down business operations. But many believe there's a loophole and employers may choose to replace their workers with new ones without consequences.

Huan said that if this is proved to be true then the law should be amended to better protect workers and the local labor market.

Honda Vietnam opened its first factory in Vinh Phuc, considered one of the most modern motorcycle manufacturing plants in Southeast Asia, in March 1998.

The company’s revenue in 2015 rose 10.6 percent year-on-year to VND68 trillion ($3 billion) with about 95 percent coming from motorcycle sales.

Honda Vietnam sold 2.03 million motorcycles last year. That's a 70 percent market share.

Related news:

Honda rakes in $3 billion in motorbike-dominated Vietnam

Vietnamese snap up two million Honda motorcycles in fiscal 2016

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