TMF Group announces the release of a report on the impact of Vietnam's New Labour Code (the new Code) on companies operating within the country. The report, undertaken with KCS, found that 53% of respondents said that the new Code had moderately or heavily impacted their business in Vietnam. And over 40% of respondents said their costs had increased by 25% or more as a result of the new Code.
TMF Group KCS' report is based on the results of a survey of
115 people (managers to executives) at foreign owned and indigenous
companies operating in Vietnam.
The new Code was passed by the National Assembly on 18 June 2012
and came into effect on 1 May 2013. The new legislation, designed
to strengthen the position of employees, heralded major
developments in the areas of: working hours, labour contracts,
labour outsourcing, the hiring of foreign employees and internal
labour rules. However, it reduces employers' flexibility
and increases costs. For example, 24% of respondents said they
had to hire additional staff as a result of the new overtime
restrictions. The new Code also makes acquiring work permits
more difficult and requires them to be renewed every two years
instead of every three.
The key findings of the survey show that the new Code has had a
significant impact on companies operating in Vietnam in terms of
increasing the administrative burden and costs of compliance.
Perhaps unsurprisingly, 60% of respondents indicated that their
companies had appointed external parties to assist with the
implementation of the new Code and around 75% are likely to seek
external support going forward.
Suresh Kumar, Managing Director of TMF Group Vietnam, said:
"TMF Group KCS' report shows that Vietnam's New Labour
Code has increased the administrative burden and costs of
compliance for companies operating in the country, while doing
little to improve conditions for workers. A lot more work needs to
be done in this field to clarify elements of the new Code, to
improve employment conditions and to prevent Vietnam's
competitiveness and productivity being
undermined."
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