eNewsletter

In late May 2010, labor ministers from the ten ASEAN nations met in Hanoi, Vietnam to develop an action plan to improve labor cooperation and labor law standardization throughout the region.  The labor ministers typically meet every two years, but the 2010 meeting was particularly significant in its strong focus on the future and bringing the ASEAN nations up to regional standards in terms of human resources infrastructure.

During the meeting, examples of HR and labor regulations from developed Asian nations such as South Korea and Japan were analyzed.  The recent Chinese labor reforms (including the 2008 Labor Contract Law) were also used as an exemplary next step for the Southeast Asian nations.  Of particular emphasis during the meetings were the topics of labor rights and working conditions, more stringent enforcement of labor laws (including minimum wage, social welfare, etc.) and easier movement of skilled labor between ASEAN nations.

Vietnam, in particular, is likely to be in the labor spotlight during the next decade.  The country has a relatively young workforce with more than 1.5 million young people being added to the labor market each year.  As the country’s infrastructure and stability have improved, more foreign manufacturing companies have considered the country a viable alternative to southern China.  While further regulation of labor and unionization of workers in Vietnam is sure to drive up the cost of doing business there in the years to come, foreign investors are still likely to benefit from increased standardization and transparency.

In the case of Malaysia, foreign companies doing business there have generally been in favor of the recent revisions to the country’s labor laws.  Malaysia is currently considered the most expensive country in world in which to terminate an employee.  However, newly proposed labor laws will simplify this process.  While the new proposal also promises to make hiring of foreign workers in Malaysia easier, however, it will also introduce a multi-tiered levy system, which could ultimately make this practice more expensive.