Amid woes, some Vietnamese strike, others tough it out

By Grant McCool

HANOI (Reuters) - Hundreds of thousands of factory workers have gone on strike for higher wages but many Vietnamese are taking spiraling inflation and a declining value of their currency on the chin.

Others are calling on survival instincts honed by families through decades of war and a Soviet-style command economy up to the early 1990s by looking after their own patch, hoarding rice and petrol, gold and dollars.

In the one-party ruled Southeast Asian country where dissent is muted and street demonstrations extremely rare, others still take quiet satisfaction from watching the Communist Party leadership grapple with serious macro-economic problems.

"It is a crisis and as one Vietnamese friend of mine told me, 'sometimes very bad is very good'," said one Western diplomat.

Overall, foreign donors and governments are optimistic about the long-term potential of economic reforms, despite complaints from the United States and the European Union about corruption, lack of freedom of speech and jailing of political activists.

The ruling party faces one of its biggest challenges with yearly inflation in double-digits for seven consecutive months, hitting 25.2 percent in May.

Imports have soared causing a tripling of the trade deficit, a liquidity crunch has put pressure on the underdeveloped banking system and the fledgling stock market is down 60 percent, the world's worst performer.

"A dark cloud over the stock market has created a gloomy mood in my company" said a 25-year-old securities broker who requested anonymity for professional reasons.

The official interbank exchange rate of the dong has dropped nearly 5 percent since late March against the dollar. In the highly polarized economy, rising prices are stinging Vietnam's 85 million people, most of whom live in rural areas.

Tens of millions live in poverty or just above the poverty line as annual per capita income averages only $835 even as it has been hyped by pundits as the next "Asian Tiger" economy.

"Poor people and the elderly in the countryside are hurting a lot, our government does not provide a proper social security system for times like these," said Nguyen Van Hoang, a minibus driver whose family lives in the countryside.

FACTORY STRIKES

Although media is state-controlled and puts a positive spin on most issues, they have reported workers staging 300 strikes nationwide in the first quarter for higher wages -- food costs 42 percent more than a year ago and fuel 30 percent more.

Most strikes have been at foreign-owned textile and garment factories, most of them peaceful, but a few turned nasty with punch-ups between workers and police or management personnel.

A worker's average monthly salary of $60 is not enough to cope with soaring inflation, but that is a common complaint even among those who earn higher salaries in the capital, Hanoi, and Ho Chi Minh City, the largest city with 8 million people.