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In March of 2011, approximately 4,000 employees went on strike at Yamaha in southern Vietnam.    The Japanese multinational corporation was forced to stop its motorbike production as a result.  The workers were eventually given a 13% pay raise to return to work. 

The strike at Yamaha is one of a rising number of labor actions against both local and foreign companies in Vietnam this year.  Despite the advantage of lower wages in Vietnam compared to China, labor unrest threatens foreign investment.  Foreign companies in Vietnam are facing wildcat strikes as workers are demanding better pay.  According to the International Labor Organization, about 336 strikes occurred in Vietnam in the first four months of 2011.  Annually, this would be over 1,000 strikes.  The national record of strikes in one year in Vietnam is 762 in 2008.  

Sky-high inflation is one of the main triggers for labor unrest in Vietnam.  The country’s inflation rate of about 19.78%, the highest in Asia, weakens the workers’ purchasing power.  In addition, according to the Vietnamese government, the consumer price index rose about 16.3% last year.  Disgruntled workers claim that they are unable to break even each month with their current salary levels.  

As a result of strikes like Yamaha, foreign investors are being more cautious in making long-term investments in Vietnam, citing economic instability as the main culprit.  According to Bloomberg news, in the first five months of 2011, planned foreign direct investment into Vietnam dropped a whopping 48% to $4.7 billion.  Many foreign companies are now looking to see whether Vietnam can manage its wage pressures and high inflation.