Participation of Labor Union in Social Housing Construction: Legal Considerations

The involvement of Labor Unions in the construction of social housing for rent to workers is a manifestation of social responsibility and contributes to improving the living standards of laborers. However, such endeavors necessitate meticulous legal scrutiny.

At the ongoing 6th session of the 15th National Assembly, nine legislative projects are under consideration, including the proposed amendment to the Housing Law. This amendment includes provisions wherein the Vietnam General Confederation of Labor (VGCL) is permitted to participate in the investment and construction of social housing for its members to lease. This matter has garnered considerable interest from a diverse range of stakeholders, including workers, enterprises, and labor union officials.

Housing Instability for Workers

Section 4 of Article 78 in the draft amendment to the Housing Law stipulates that the VGCL may engage in the investment and construction of social housing for rent, targeting workers who are beneficiaries of housing support policies.

During consultations on this legislative proposal, a majority of labor union officials and workers expressed unanimous support, highlighting the pressing need for affordable housing options for workers, particularly in provinces and cities experiencing a significant influx of migrant laborers. Ms. Pham Thi Dung, an employee at PouYuen Vietnam Co., Ltd., has been eagerly awaiting such a development. For nearly two decades, her family has resided in a cramped 10-square-meter tenement on Le Dinh Can Street, Binh Tan District, Ho Chi Minh City, paying a monthly rent of 800,000 VND.

Due to the aging infrastructure, the tenement has deteriorated over time, subjecting occupants to discomfort during hot and humid seasons and recurrent flooding during the rainy season. Despite these inconveniences, Ms. Dung accepts her situation due to the affordability of the rent. She shared, “Both my husband and I are laborers, and making ends meet is already a struggle, so the thought of buying a house is beyond our reach. If the VGCL invests in constructing social housing for workers at an affordable price, it would be a tremendous boon.”

Ms. Nguyen My Linh, Vice President of the Labor Union at Juki Vietnam Co., Ltd. (Tan Thuan Export Processing Zone, District 7, Ho Chi Minh City), noted that the demand for social housing within the workforce is substantial. However, many are currently unable to access such housing either due to a lack of information or, even if aware, being ineligible or financially incapable of making a purchase.

In Ms. Linh’s view, entrusting the VGCL as the project’s principal investor aligns with the union’s caregiving function. When the labor union assumes this role, workers are more likely to trust, and the union can conduct surveys to construct housing that aligns with the needs and preferences of workers. Similarly, Ms. Nguyen Kim Loan, Chairwoman of the Binh Duong Provincial Labor Federation, asserts that the primary objective of the VGCL after completing the construction of social housing is to lease rather than sell. This approach resonates with the current realities in many localities, as surveys indicate that the number of workers meeting the criteria to purchase social housing is limited.

If this proposal receives approval, a significant portion of workers will have access to affordably priced social housing. Ms. Loan also suggests that social housing projects undertaken by labor unions should incorporate complementary facilities such as schools, cultural centers, and union-operated supermarkets to foster community cohesion and maximize service provision to workers.

Feasibility with Prudent Examination

While many labor union officials, business owners, and laborers express agreement with the provision allowing the VGCL to invest in the construction of social housing for union members, several advocate for thorough scrutiny.

Mr. Lam Ngoc Man, Deputy Chairman of the Labor Union of Industrial and Export Processing Zones in Ho Chi Minh City, believes that entrusting the VGCL as the principal investor would streamline the investigation and survey processes, ensuring that investments are strategically focused to enhance efficacy. Currently, the VGCL has established a Project Management Board for union facilities based on the Prime Minister’s Decision No. 1729/QD-TTg dated November 4, 2020, amending and supplementing Decision No. 655/QD-TTg dated May 12, 2017, approving the project “Investment in the construction of union facilities in industrial and export processing zones.” This legal foundation empowers the VGCL to assume the role of principal investor.

However, Mr. Man posits that projects involving substantial investment in housing for rent to workers entail prolonged capital recovery periods. Therefore, an evaluation of the impact on investment resources and the capacity for capital recovery is imperative. Additionally, elucidation of the investment procedures in accordance with either public investment or enterprise investment laws, as well as determining ownership rights over housing units within the project, is essential to formulate a management mechanism that aligns with the context.

The National Assembly may consider implementing a pilot program, focusing on the construction of social housing for worker lease in industrial and export processing zones. Revenues generated from such projects can be reinvested.

Support for VGCL Involvement in Constructing Housing for Workers: While there is widespread support for the VGCL’s engagement in the construction of housing to improve the quality of life for workers, Ms. Do Thi Hang, Director of Marketing and Communications at Him Lam Real Estate Trading Joint Stock Company (Binh Thanh District, Ho Chi Minh City), expresses reservations. She emphasizes the need for specialized expertise in executing such a significant endeavor, emphasizing the considerable complexity of the matter. Furthermore, profit margins in constructing social housing are typically slim.

Particularly, for workers who are the intended beneficiaries, rental or purchase rates must be commensurate with their income levels. In Ms. Hang’s opinion, if the VGCL is entrusted with this responsibility, there must be an assessment of the needs and financial capacities of the target demographic. Additionally, collaboration with entities possessing expertise and experience in social housing construction is imperative. Moreover, the state should establish a dedicated regulatory framework for this type of housing product to facilitate the seamless implementation by labor unions.

Concurring with this perspective, Ms. Le Thi Hong Nhung, Chairwoman of the Labor Union in Binh Duong Provincial Industrial and Export Processing Zones, contends that workers aspire to purchase social housing through long-term installment plans or rent at reasonable rates. The latter should be slightly higher than the cost of renting traditional tenements. If the VGCL can meet these criteria, workers will overwhelmingly support the initiative.

Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association:

Alignment with Organizational Mandate

The provision allowing the VGCL to participate in the investment and construction of social housing for its members, targeting beneficiaries of housing support policies, in the proposed amendment to the Housing Law is in harmony with the organizational role of the VGCL, which collaborates with the government and local authorities in directing the development of social housing and worker accommodations. Nevertheless, the VGCL should not directly assume the role of principal investor. Instead, this responsibility should be delegated to economic entities within the VGCL and provincial-level labor unions that possess the legal standing, real estate business capabilities, and meet the regulatory requirements to act as project owners under the “Project Management Board for Union Facilities” affiliated with the VGCL.