A mixed method study of nonstandard employment utilisation in business firms and its impact on workers’ income security in contemporary Vietnam

Abstract

This thesis explores how nonstandard employment (NSE) impacts on workers’ income security in contemporary Vietnam. Following a micro and holistic approach, the primary aim of the thesis is to identify mechanisms that can further income security for employees in developing and transitional economies that are consistent with the need for firms to become and/or remain globally competitive. By incorporating the welfare regime and segmented labour market perspectives into the conceptual framework, the research project pioneers the examination of the impact of NSE on workers’ income security in an integrative and comprehensive manner at both firm and extra-firm levels. The use of disaggregate data makes the current research unique as previous studies in developed countries have been undertaken mainly through the use of aggregate labour market data relating to the characteristics of ‘nonstandard’ jobs or ‘nonstandard’ workers. A central concern of the research is whether there has been a shift away from standard employment practice within firms. Focussing on factors that influence employers’ decisions relating to the preferred mix of employment practices in a given situation (employer-side factors), the research assumes NSE utilisation is driven primarily by short-term economic considerations relating to the minimisation of labour costs and that the impact of NSE utilisation on the income security of workers is mediated by the nature of the employment relationship and the characteristics of workers. A two-stage sequential mixed methods strategy is adopted in which a quantitative study is followed by a qualitative study. With this research strategy, the two elements have equal and complementary roles in the inquiry process. The quantitative study has a cross-sectional design and the data was collected in two survey samples of 134 firms and 1152 employees. Having a cross-case study design using in-depth interviewing as the key method of data collection, the qualitative study was conducted with three key stakeholder groups within eight case firms and four expert informants at the policy-making level. It is concluded that the adoption of more flexible forms of employment has contributed to the decreased income security of workers in general and low-skilled workers in particular. The change is found to be largely an opportunistic response to three characteristics of the labour market and legal environment in Vietnam: (1) the surplus of low skilled labour in the labour market, (2) the limited employment opportunities in the formal sector, and (3) the ineffective compliance system. The change is found to be conducted primarily through the utilisation of NSE in ongoing jobs with unidentified duration so that firms can reduce their compensation costs, especially those associated with the legal entitlements of long-term employees. Subsequently, there has been a relative increase of secondary ongoing jobs and the associated development of a core-periphery employment model in which the quasi-regular peripheral workforce can be either internal or external to the firm. Therefore, those most adversely affected by changing employment practices appear to be manual and semi-skilled workers. Notably, income security of quasi-regular peripheral workers is found to be largely determined by their productive capabilities, not their socio-demographic characteristics. These workers are found to be trapped in NSE because of their limited human capital. Furthermore, firms are often able to achieve informal agreements with low-skilled workers regarding the trade-off between gaining a job and reducing legally mandated benefits, either completely or partially, without constraints imposed by trade unions and other labour market institutions. Based on the observation above, this thesis argues that improvement in the individual rather than collective bargaining power of workers is the most effective way to enhance income security for workers. The thesis further argues that supply-side policies relating to the development of the human capital of the workforce deserve more attention than demand-side policies relating to job creation or the reforming of labour market and social security institutions as what is required is more high-quality jobs not mere job creation.