TẠP CHÍ CƠNG THIÍ0NG FACTORS INFLUENCING LABOR DISPUTES AT KOREAN FIRMS IN VIETNAM • KIMTAE-KYU ABSTRACT: This study is to seek out a clearer insight into the factors influencing the labor disputes at Korean firms in Vietnam By conducting a literature review about labor disputes and previous research models, this study proposes hypotheses and a regression model to measure the impact of seven identified factors, namely labor-related factor, trade union factor, employer-related factor, enterprise-related factor, labor-living related factor, internally environmental factor and externally environmental factor The study finds out that all of these seven factors positively affect labor disputes at Korean firms in Vietnam Keywords: labor disputes, factors influencing, regression analysis, Korean FDI, Vietnam Introduction Fueled by continuous growth, Vietnam continues to attract record foreign direct investment (FDI) The Vietnam Briefing (2019) reveals that FDI accounts for approximately 70 percent of the countrys total export turnover and according to FIA, FDI contributed an average of 25 percent of total Vietnam’s GDP and created 10 million jobs in 2019 In term of the investment relationship between Vietnam and Korea, it is reported by Korea TradeInvestment Promotion Agency (KOTRA) that the cooperation between two countries results in a successful investment story (KOTRA, 2020) According to the report, cumulative FDI investment of Korean firms to Vietnam is ranked No.l Cumulative FDI investment of Korean firms in Vietnam stands at US$67.7 billion with 8,467 projects in the period of 1988-2019 Around 9,000 Korean FDI firms have invested in Vietnam, and they contributed more than 30 percent of Vietnam’s economy and provided around 700,000 jobs domestically (Invest Vietnam, 2020) Despite these achievements, Korean overseas 294 So 25-Tháng 11/2021 investment poses several problems caused by the industrial sectors The investment in labor intensive and small to medium size industries leads to conditions where local workers are forced to work in a poor working environment with minimal wages The situation is basically very similar to the 1970s in Korea and there are many labor disputes among Korean firms in Vietnam and Vietnamese workers The number of labor disputes in Korean FDI firms forms the highest portion of total labor disputes according to Vietnam General Confederation of Labor Therefore, it is vital that the Korean FDI firms should explore and identify the current situation of labor disputes in their firms and the influencers of labor disputes for the development of strategies and practices to handle this serious problem Theoretical background and conceptual framework 2.1 The definition of labor disputes Many definitions of labor disputes are existing It is difficult to understand the definition precisely because labor disputes arise in various forms and in many cases, they are resolved through mediation QUẢN TRỊ-QUẢN LÝ fter the occurrence So, it is difficult to objectively teasure and evaluate labor disputes numerically, nd as Chae s H (2013) mentioned the standards nd definitions for labor disputes that are considered strikes are not clear Therefore, the author uses the definition of labor disputes in this research, as Tran Ngoc Dien (2012) noted that the climax of the labor disputes appears to strike so the author defines labor disputes in the same definition as labor strikes to measure and evaluate labor disputes numerically and to avoid non-specific definition of labor disputes 2.2 Review of literatures on labor disputes and literature gaps The concept of labor dispute itself is broad therefore the previous studies to be dealt with in this research will review the literatures focusing on the causes of labor disputes In particular, the author will review the literatures that studied by Korean researchers or analyzed about labor disputes at Korean firms Some research results of overseas researchers will be reviewed for reference purposes Ảs a research model directly related to this research, Jeremy Brecher's research model is widely used in the research model that analyzes the causes of labor disputes According to the results, beta coefficients are greater than zero, indicating chosen factors such as poor working conditions, low compensation scheme for the workers, low perception of labor laws of the workers, and low salary and benefits have a positive impact on labor disputes Another remarkable research model is Jie Shen's research model In the analysis results, beta coefficients are greater than zero, indicating income (salary and benefits), job reduction, poor working conditions and workers lack of knowledge of labpr laws are all positive impacts on labor disputes In I^orea, there are many studies but to reflect the latest trend and causes, the author concentrates on the research since 2010 Lee J.K & Kim Y.M (2010, pp.49-53) researched the status of industrial relations and the causes of labor disputes at Korean FDI firms in Vietnam The causes of labor disputes can be broadly divided into pay-related and non-pay-related issues Kwon Y (2010) analyzed the influencing factors of labor disputes at his labor management ! seminar There are five main factors including low wage, compensation and benefits, shortage of jobs, working conditions and communication barrier Communication barriers arise from language differences between Korean managers and Vietnamese staff, his finding is the same as Chaes results (Chae S.H., 2013) According to Chae S.H (2013), major influencing factors on labor disputes are wage level, performance of trade unions and organizational communication KOTRA (2011, pp 6-7) also presented the causes of labor disputes at Korean FDI firms in Vietnam The main causes of strikes are low wage compared to inflation, excessive overtime, and unfair dismissals A unique approach that the role of trade unions affects labor disputes is found in Jeoung Y.K (2013)’s research results The main cause of strikes lies in the failure of the trade unions at enterprise level effectively to represent the rights and interest of employees Finally, Kim J.C., Kim D.A & Yoo J (2014, pp 27-40) investigated Korean multinational corporations human rights practice In the field investigation report, there are several factors such as wage and bonuses, working conditions, degrading treatment of workers, labor contracts and social insurance issues, meals and accommodation issues, discrimination and lack of corporate social responsibility activities affecting labor disputes occurrence In Vietnam, the early stage of research starting, most of the research focused on industrial relations It can be said that the first study on labor disputes was conducted by Clarke s in 2006 Citing some of the early-stage research in Vietnam, regarding industrial relations, in 1997, Nguyen Ngoc Quan focuses on the industrial relations between employees and employers and solutions for improving the relations Nguyen Xuan Thu clarified the role of three parties of the State, employees and employers (as cited in Vuong Vinh Hiep, 2014, pp 8-9) With respect to research on tripartite relations, there is a typical research result for analysis of tripartite relations among the State, employers and employees in market economic conditions by Nguyen Viet Vuong (2010) In 2011, Nguyen Duy Phuc (2011) studied and analyzed the current status of industrial relations in SỐ 25-Tháng 11/2021 295 TẠP CHÍ CƠNG THƯƠNG small and medium-sized enterprises in Hanoi and this research raised a number of orientation viewpoints and proposed solutions for the State, the trade union system, employers representative organizations and enterprises in creating and promoting healthy industrial relations in small and medium-sized enterprises in Hanoi The following studies directly address the issue of labor disputes and strikes As already mentioned above, there are findings on the causes of strikes in the research results of Clarke s (2006, pp.354-357) Duong Van Sao (2009) specifically analyzed the causes of labor disputes through regression analysis The published research results showed that incomplete legal system, poor social responsibility, low incomes, inefficient performance of trade unions, poor integration of managers (employers) affecting labor dispute occurrence Do Quynh Chi, Jan J.M.S & Lee C.H (2009) also provided the answer to the cause of labor disputes According to the results, poor management skills, low educational level of the employees, low income and poor compensation schemes have a positive impact on labor disputes occurrence Le Quang Sang, Huynh Thi Ngoc Tuyet, Nguyen Thi Minh Chau, Nguyen Lan Huong & Tran Minh Ut (2010) conducted the study on industrial relations and labor disputes at three industrial parks and export processing zones The research clarified the nature and content of the labor disputes, labor disputes and the roles of parties, taking in to account the causes of labor disputes from enterprises, employees, the role of trade unions, government, other institutions and coordination of the parties Jan J.M.S., Lee C.H & Do Quynh Chi (2009) are the co-authors of the book titled Vietnam Handbook of Industrial Relations that was published by the Bureau for Employers Activities in Vietnam under VCCI The book states that most of the strikes took place without prior consultation with relevant trade unions and failed to follow the legal procedures specified in the labor law In cases where trade unions are involved from the outset, employers respond to employees' requirements prior to actual strikes happening 29Ó SỐ25-Tháng 11/2021 Since 2009, research on labor disputes has been lacking for a while but in 2013, the research results were published based on the analysis of the causes and effects of labor disputes in Vietnam In 2013, Do Quynh Chi & Broek D.V.D (2013, pp 4-8) studied about wildcat strikes, then Vuong Vinh Hiep (2014) in his thesis not only addresses the factors such as knowledge of labor law, attitudes and perception, organizing and management, relationship with employers, harmony, working conditions, wage, and Benefits influencing labor disputes and strikes, but also proposes solutions for dealing with influencing factors to prevent and solve labor disputes and strikes The important role of this research is that various solutions were presented to labor policy maker, labor management agencies, managers and workers Siu K & Chan A (2015) analyzed the reasons for strike action to have become a normal in Vietnam Finally, the most recent study on the causes of labor disputes, in other terms labor strikes, is the result of the investigation of Better Work (2017) According to the investigation results, the strikes caused by a desire for wage increases, bonuses and allowances increases, improving food quality, and by conflicts with supervisors The author examined the previous literatures of both Vietnam local and foreign researchers about factors influencing labor disputes then the author provides some literature gaps upon previous research as below: Firstly, most of the reviewed studies deal with the period till 2014 As labor disputes have not abated since 2014, the author believes a study extending the timeframe to 2020 is timely Secondly, regarding factors influencing labor disputes occurrence, almost all researchers gave each factor name and analyzed it as a single independent variable, but in the case of low wage item, it is believed that low wage itself can be called various factor names depending on who are directly connected to, not just one independent variable For example, if a worker finds it economically difficult to live due to the low wage, it can be included in the factor group called “labor living related", and in the case of the employer giving the low wage that employer does not guarantee the worker's standard of life it can be QUẢN TRỊ - QUẢN LÝ included in the factor group called “managerrelated” Therefore, it is time to try to analyze based on workers, employers, trade unions, through grouping Thirdly, although there is no empirical research about the relationship between nationalism and labor disputes, the findings from the previous studies by the author encourage nationalism also an important factor on labor disputes but none of research mentioned this important factor Finally, while business contributions to economic growth, wealth creation, and employment are a given, business is also being ascribed roles and a non-economic significance that not have previously been expected There are expectations that business will come up with solutions to many of the twenty-first centurys main social and environmental challenges, such as water Iccessibility, global warming, climate change, and ffordable health care When the employer fails to erform its social responsibility by deliberately Diluting the environment, for profit purposes that arm the health and well-being of local people, it clauses labor disputes Although corporate social responsibility may be a factor leading to labor disputes, only one local researcher mentions the corporate social responsibility factor 2.3 The concept of research factors Based on the theoretical basis of the labor disputes which have been summarized, systemized, apd reviewed both Vietnam local and foreign SI idies, and referring to the theoretical models, the author proposes the following concept of research factors for developing research model and hypotheses of this research 2.3.1 Labor-relatedfactors (LD) It is a factor that many researchers have studied Ul ider a different name, the labor-related factors are a group of factors that analyze the relationship with the occurrence of labor disputes through workers' abilities, qualifications, and their background 2.3.2 Trade union factors (CD) The role of trade unions is a factor that has recently grown in importance Even though the unions should take the main role in collective ba •gaining negotiations with the employers on behalf of employees, in many cases the unions not fully perform their duties so that employees pointed out as the first or second factor of the occurrence of the labor disputes Many researchers have studied the relationship between the occurrence of labor disputes and trade unions In this thesis, the trade union factors to be included are the key concepts of trade unions organizing and management capacity such as fulfilment of collective duties, qualifications of union members, protection and support of employees rights, lack of clear collection of fees and role in relationship for both employees and employers 2.3.3 Manager-relatedfactors (NSLD) Among the factors that are the cause of labor disputes, the manager-related factors are included that the failure of the managers or employers to respect the rights and interests of employees, the failure of the managers to actively resolve labor issues, and the lack of management ability and skills of employers 2.3.4 Company-related factors (DN) The company-related factors relate to the conditions in which workers directly work and meet the conditions for going to work including working conditions, health and safety conditions, hygiene for meals, reducing workers working pressure or stress, insurance to employees, and the corporate culture and climate in the workplace 2.3.5 Labor-living relatedfactors (SHLD) There are many causes of labor disputes that are rooted in political, historical, socio-economical and behavioral factors Among the factors, no one can deny that the biggest cause of labor disputes is related to economic factors In this thesis, the factors that are directly related to the lives of workers are classified into the labor-living related factors The labor-living related factors including income or wage (salary) and bonus, pay schedule, dissatisfaction with the pay system, dissatisfaction with the companys welfare policy or system, compensations and benefits, and the promotion policy that is directly related to the wage increase was also included 2.3.6 Internally environmentalfactors (MTN) The internal environmental factors included mass layoffs (dismiss), factory relocation, lack of communications across teams, between individuals and with managers or employers by differences, lack of internal regulation to resolve labor issues and complicated process of resolving labor issues SỐ25-Tháng 11/2021 297 TẠP CHÍ CƠNG THƯƠNG The Vietnam Briefing (2019) reveals that FDI accounts for approximately 70 percent of the countrys total export turnover According to Invest Vietnam (2020), FDI contributed an average 25 percent of total Vietnams GDP and created 10 million jobs in 2019 Korean FDI in export-oriented manufacturing has been a boon to the Vietnams economy Cumulative Korean investment in the last 27 years has increased rapidly, rising to US$67.7 billion as of 2019, accounting for 18.6% of the total FDI in Vietnam between 1988 and 2019 Around 9,000 Korean FD1 firms have invested in Vietnam in the last 27 years, and they contributed more than 30 percent of Vietnams economy and provided around 700,000 jobs domestically Figure I: Research model (Invest Vietnam, 2020) 3.2 The current situation of labor disputes at Korean FDI in Vietnam Strikes have steadily risen since 2005, reaching a peak in 2008 with almost 762 strikes They dropped in 2009 due to Company-related factors (DN) the impacts of the global economic crisis, but increased Labor-living related factors (SHLD) again in 2010, reaching a new tg n I,,n.if W record of 993 in 2011 Since Internally environmental factors (MTN) 2012, total number of strikes slightly decreased by the effort Externally envứonmental factors (MTNG) of the Vietnam government to Source: the author developed improve industrial relations Despite the shrinking situation from 2018, strikes mainly occur in the private Overview of Korean FDI and the current sector and 86 percent of total strikes in FDI firms situation of labor disputes at Korean FDI in alone in 2019 (VGCL, 2020) Vietnam A wave of strikes has been ripping through 3.1 Overview of FDI into Vietnam and Korean Korean FDI in Vietnam, and it is implied from FDl in Vietnam Table that in the sector of FDI nationality, Korean Vietnams economic success over the past three FDI firms have been featured with the high decades has been built in no small part on its proportion of strike occurrences during 2014-2018 openness to international trade and investment It is Although in recent years from 2018 to 2019, the now among the worlds most open economies, proportion of strikes at Korean firms has slightly according to the IMF, in the last 15 years alone, its decreased, however, they have still taken a rather share of world trade has quintupled, with combined larger proportion than other FDI nationality imports and exports now equal to around 160-170% The investigation on labor disputes, particularly of GDP FDI in export-oriented manufacturing has strikes, at Korean FDI firms in Vietnam has been a boon to the economy This has linked indicated that: Firstly, the employee relations in investment, trade, and broader GDP expansion Korean FDI firms in Vietnam have become more together even more closely than in most markets 2.3.7 Externally environmentalfactors (MTNG) External environmental factors can be classified as the last group of causes of labor disputes The external environmental factors to be included are political and diplomatic relationships (including nationalism), labor law and regulations, social issues and its responsibilities for local community activities 2.4 Research model Based on the theoretical basis of the labor disputes which have been summarized, systemized, and reviewed both Vietnam local and foreign studies, and referring to the theoretical models, the author proposes the following research model of this research 298 SỐ25-Tháng 11/2021 QUẢN TRỊ-QUẢN LÝ Table Strikes by FDI nationality Total FDI Others Japanese Taiwanese Korean Year No No % No % No % No % 2014 206 89 43.20 47 22.82 11 5.34 59 28.64 2015 191 62 32.46 59 30.89 15 7.85 55 28.80 2016 219 74 33.79 66 30.14 12 5.48 67 30.59 2017 245 113 46.12 60 24.49 11 4.49 61 24.90 2018 157 58 36.94 40 25.48 5.73 50 31.85 TOTAL 1,018 396 38.9% 272 26.7% 58 5.7% 292 28.7% Source: VGCL, 2020 serious than ever before with the increase of the portion of strike occurrences of firms across the countries Secondly, the major factors influencing the labor disputes of workers at the Korean FDI firms in Vietnam are consistent with the authors previous research such as labors rights (working hours, annual leave, breaks ), benefits (allowance ), mix of labors right and benefits, and other reasons (such as lack of communication, manager or supervisor issues) Although there is a significant improvement in their rights, and benefits for workers, still the leading cause of labor strikes in Vietnam Research results 4.1 Qualitative research results To develop the questionnaire used in the qualitative method, the author conducted several steps of literature reviews and interviews Finally, the author extracted the following official scale for formal research To sum-up, LD factors scale with variables, the CD factors scale with variables, the NSLD factors scale with variables, the DN factors scale with variables, the SHLD factors scale with variables, the MTN factors scale with variables, and MTNG factors scale with variables developed by literature reviews Also, the dependent variable labor disputes scale was shown with variables developed by literature reviews and qualitative research Beside the scale of the main factors of the model, some out-of-model variables such as gender, marital status, age, educational level, year of working experience, job level (position), hometown and average wage were also collected as below coding and descriptions 4.2 Quantitative research results The questionnaire consists of parts with 5point Likert scale Also, the nominal scale was chosen to establish the questions for sub-variables such as age, gender, income, etc In terms of form, the questionnaire used the online method (of KSDC online survey) and was presented clearly, easy to read and understand and included the following content Systematic sampling is a type of probability sampling method was considered and chosen, in which sample members from a larger population are selected according to a random starting point but with a fixed, periodic interval Among 4,672 employees currently working at Korean firms in Vietnam, the author proposed 533 respondents After 1.5 months, 363 responses were filled in the online survey form After sorting out, 359 responses are proper and can be used for the analysis 4.2.1 Cronbachs Alpha reliability analysis of the scales According to the reliability analysis results of scales including dependent variable (TC), Cronbachs Alpha coefficients of the scales all met the standard (LD: 0.791, CD: 0.919, NSLD: 0.853, DN: 0.888, SHLD: 0.920, MTN: 0.897, MTNG: 0.882 and TC: 0.831 > 0.60), and the item-total correlation of the item was satisfactory and reliability (> 0.30), except items (LD1, LD2, LD3) of the LD scale and item (SHLD5) of the SHLD scale Therefore, the measurement items of the scales (the remaining 37 observed items) were used in the next EFA So 25-Tháng 11/2021 299 TẠP CHÍ CƠNG THƯƠNG 4.2.2 Exploratory- Factor Analysis (EFA) When running EFA for the first time, variables CD5 DN3 were deleted due to their factor loadings is less than 0.5 After running again for the second time, variables MTNG3 and MTN2 were deleted since their were uploaded in many factors, violating the discrimination Therefor, the third run was done KMO = 0.914> 0.5 showed that the factor analysis was appropriate Sig (Bartlett's Test) = 0.000 (sig 50% This proves that 71.065% of the data variation is explained by factors 4.2.3 Pearson correlation The results that all Sig values of Pearson correlation between the independent variables and the dependent variable were less than 0.05 Therefore, the independent variables are linearly correlated with the dependent variable (Noh G.S., 2015,p.l38) 4.2.4 Regression analysis The results obtained showed extremely small Sig value (0.00) and coefficient of determination R2 of 0.617 (or adjusted R2 = 0.610) proved the fit of the model That means the linear regression model was built with the fit of 61.0% to the data set In other words, 61.0% of difference of the independent variables can be explained by the difference of the dependent variable DurbinWatson of 1.926 ensures that no autocorrelation exists in the model (Noh G.S., 2015, pp.168-171) Also, the analysis of variance above indicates that F value has a tested Sig F = 0.00 (