HANOI - A RECENT violent conflict between disgruntled factory workers and police near the country's capital has fuelled concerns that Vietnam's economic downturn could precipitate an acceleration of social unrest.

On May 9, some 3,000 workers at the Nam Hoa Ha Co in Bac Giang province, 60km north of Hanoi, again lobbied their managers for a 20 per cent salary raise - almost equivalent to Vietnam's current inflation rate of 21.4 per cent.

That might seem like a hefty increase, but like millions of workers across Vietnam, they argued that their average monthly salary of US$60 (S$82) was just not enough to cope with soaring inflation.

So, when the Chinese-owned plastics factory again refused to meet their demand, scuffles ensued, and several workers were beaten up by the company's security staff.

That only enraged the workers even more, until the police were called in.

In the ensuing clash between the baton- armed police and the workers, who fought back with their tools, many were badly injured. Eventually, 60 people were arrested.

More than a week later, the factory remains closed, a testament to the growing divide between low-income workers and foreign factory owners who invested in Vietnam because of its purportedly stable and cheap workforce.

Mr Lai Shen Shen, Nam Hoa Ha's director for import and export, said: 'We do not know when we will be able to reopen because the authorities have not yet said it is safe to do so.'

The Nam Hoa Ha episode follows a string of wildcat strikes across Vietnam since the start of this year by workers on minimum wages who are unable to make ends meet as the prices of essential commodities such as food and fuel continue to soar.

Most disputes are quickly settled when managers agree to raise wages, but in many cases, when the increase is below the inflation rate, workers only return under duress.

Dr Trinh Duy Luan, director of Hanoi's Institute for Sociology Studies, said: 'Nowadays, Vietnamese workers are more aware of their right to a decent, livable wage - and they want to claim those rights.'

Last month, about 20,000 workers earning around US$58 a month walked off the job at a factory near Ho Chi Minh City that makes shoes for the globally known Nike brand. They had failed to get the 20 per cent pay raise they asked for.

After union intervention, they reluctantly accepted a 10 per cent pay rise instead.

But like the Nam Hoa Ha incident, some Nike workers resented the lower increase, resulting in fights and the shutting down of the plant for a week.

'If these violent actions and wildcat strikes continue, it will certainly make foreign investors more hesitant about investing in Vietnam,' said Dr Nguyen Quang A, director of Hanoi's Institute for Development Studies.

This article was first published in The Straits Times on May 20, 2008