Circular No. 11-LDTT explaining and detailing the implementation of the provisional charter on democratic management of state enterprises.

CIRCULAR

Explanation and determination of details for the implementation of the provisional charter on democratic management of state enterprises

THE MINISTER OF LABOR

Respected: - Directors of the Labor Zones of North Vietnam, Zone 3, Zone 4, South Central Coast, and South Vietnam.

- Chairmen of the People's Committees of North Vietnam, Zone 3, Zone 4, South Central Coast, South Vietnam, and Left Bank.

The Prime Minister's Office has issued the provisional charter 215-TTg dated November 4, 1952 regarding the democratic management of state enterprises. Here, the Ministry outlines points that need to be clarified further to ensure effective study, dissemination, and application of the regulations.

I. THE IMPORTANCE OF THE ISSUE OF DEMOCRATIC MANAGEMENT

To boost production and provide timely and adequate supplies for the needs of the resistance war and civilian life, and to implement the development of production and thrift, the Government has planned to address issues related to capital, raw materials, machinery, labor, and transportation, and is actively improving the management of state enterprises.

The enterprise committee system established by Decree 118 on October 18, 1949 was the initial step towards implementing democratic systems in enterprises.

After two years of implementing this system, we have gained many experiences showing its shortcomings which need to be improved so that management and production work can be adjusted according to a more complete democratic system.

The new system, based on the provisional charter issued by the Prime Minister's Office, is grounded on the principles:

Unifying leadership and management of enterprises.

Workers and staff will participate practically in enterprise management tasks, their responsibilities being elevated in all enterprise activities.

Clearly defining the responsibilities and authorities of the director while combining the director's responsibility system with the democratic rights of workers and staff.

This system will:

- Enable workers and staff to recognize their responsibilities towards the enterprise, voluntarily and consciously enhance their sense of responsibility, positivity, creativity, and develop their management capabilities.

- Allow directors and technical specialists to clearly see the necessity of relying on the strength of workers and staff to manage the enterprise thoroughly, fully implement government policies on production and business operations, and protect labor health.

II. CHARACTERISTICS OF THE DEMOCRATIC MANAGEMENT SYSTEM FOR STATE ENTERPRISES

Compared to the enterprise committee system established by Decree 118-SL, the new system has many progressive features:

1) The enterprise management committee is the unified administrative body of the enterprise.

Under the Decree 118-SL system, the enterprise committee stood separately outside the administrative system, leading to three separate leadership bodies within the enterprise: the Trade Union, the Enterprise Committee, and the administrative body. Their operations did not align, and the Enterprise Committee's participation in production or improving worker living conditions was impractical, as the Committee could only offer opinions without concrete measures to compel the director to respect them.

According to the new system, the enterprise management committee is the unified administrative body within the enterprise. Every enterprise matter must be discussed and decided upon by the enterprise management committee, whose authority is delegated by the state and who alone has the power to decide all enterprise matters under the leadership of the higher administrative body. The participation of the Trade Union, worker representatives, and specialist representatives is concentrated in the enterprise management committee, where all issues are discussed and consensus reached. Thus, there will be no overlapping or competing influences as before.

2) Workers and staff will directly participate in enterprise management:

In the old enterprise committee, only worker representatives were present, but the committee's opinions were not unified by the administrative body, and the director could choose whether or not to implement them.

In the new system, the composition of the enterprise management committee includes an equal number of worker and staff representatives elected by workers and staff as well as those appointed by specialists and administrators. All opinions are voted on by majority rule, ensuring that worker and staff views are considered. Workers and staff can express their opinions and aspirations, and at the same time, through these opinions, they will internalize government policies and understand the overall situation of the enterprise, thereby contributing to the development of their management capabilities.

Workers directly engage in production, understanding the condition of the machinery they oversee, grasping the situation of their department or section, and pooling individual knowledge. The enterprise management committee will thus gain a comprehensive view of the enterprise's situation to make appropriate decisions.

Through general meetings or worker and staff representative meetings, it is also possible to monitor, control, and criticize the work of the enterprise management committee.

Democratic management does not conflict with the director's responsibility system; rather, it complements it closely. Responsibility must be built on the awareness and initiative of the masses for work to succeed. With democratization, the sense of responsibility of all workers and staff will be heightened, they will work positively, and contribute ideas with a sense of ownership, thus enhancing production results and enabling the director to better fulfill their duties than if solely relying on personal responsibility.

There is no fear that democratization will strip the director of all authority and initiative, as the director is the chairman of the enterprise management committee, and committee resolutions must be implemented through administrative orders issued by the director, who retains the right to suspend resolutions deemed contrary to the enterprise's interests or higher-level policies and government policy.

The right to suspend execution by the director does not conflict with democratic management because if the director did not have such a right, it would not be guaranteed that government policies would be implemented, production would not align with the overall plan, and extreme democracy might occur, where actions based on local factory power would contradict the interests of the whole. Moreover, the director is appointed by superiors to manage the factory. The director is fully responsible for the success or failure of the factory, along with the factory management committee. However, spiritually, there must always be unity between the directorate and other committee members within the factory management committee.

III. COMPOSITION AND ORGANIZATION OF THE FACTORY MANAGEMENT COMMITTEE

The factory management committee is only established in production units. Particularly in large factories with many workshops, branches, etc., if the number of workers and staff reaches 50 or more, a factory management committee should also be established because with such a large number of workers, the workshop has its own importance, similar to separate factories with an equivalent number of workers and staff, democratic management needs to be put in place. However, for workshops and factories under the same production system, there needs to be unity in control as well as in planning and production programs.

The full factory management committee consists of representatives from the management committees of each workshop, with the number of committee members elected to the full factory management committee from each workshop management committee. Among the minimum number (50) of workers and staff required to establish a factory management committee, it includes the director and all salaried workers and staff.

IV. ESTABLISHMENT OF THE FACTORY MANAGEMENT COMMITTEE AND THE WAY TO ELECT WORKERS' AND STAFF REPRESENTATIVES TO THE FACTORY MANAGEMENT COMMITTEE

The establishment of the factory management committee is the responsibility of the administrative agency. The factory director has the duty to establish a factory management committee at his factory if it meets the worker quota specified in the charter. The director will coordinate with the Trade Union to propose a list of members designated by superiors and determine the number of members to be elected by workers and staff to report to the higher-level administrative agency. The higher-level administrative agency will issue a decision appointing the officially designated members. After that, the Trade Union will convene a general meeting or a meeting of workers and staff representatives to elect. The list of candidates and voters must be posted at the factory at least 15 days before the election date, so everyone can lodge complaints if there are any deficiencies or irregularities, and voters can review and select suitable candidates. The director will inform the labor agency at least 15 days before the election date. Labor agencies may send representatives to attend elections to assist in organizing the election, explain the government's charter to workers and staff, and intervene if there are any irregularities.

The election of full factory management committee members will be conducted by the workers' and staff meetings of each workshop, branch, etc., selecting among the members of the workshop, branch, etc., management committees. After announcing the results, the meeting can immediately elect members to the full factory management committee.

All workers and staff who have worked in the factory for three months have the right to vote, including apprentices who meet the working time requirement. In special cases, where there are young apprentices or workers under 15 years old who are too young and lack the maturity to make sound judgments, they should not be allowed to vote. Those who have just transferred to another factory and have not worked for three months are also not eligible to vote or run for office. This differs from the old factory committee, aiming to give workers and staff sufficient time to understand the situation of the factory and the candidates, and for others to evaluate themselves. However, this three-month period does not apply to newly established factories or those reorganized with many workers and staff transferred from other factories. In special circumstances, the general meeting or the meeting of workers and staff representatives may waive the three-month requirement for some workers and staff.

If a factory meets the conditions but does not establish a factory management committee, the labor agency will urge and remind it. If necessary, the labor agency may intervene with the higher-level administrative agency of the factory to issue a directive for the factory to implement.

V. DUTIES AND LIMITS OF THE FACTORY MANAGEMENT COMMITTEE

The factory management committee will discuss and decide on all issues related to the factory, such as:

1) Regarding organization and protection of the factory

- Construction of buildings, arrangement of machinery, expansion of the factory, relocation.

- Militarization of air defense, protection, counterintelligence, confidentiality of the organization and production secrets, etc.

2) Regarding management of the factory's assets

- Deciding on major expenditures and loans, purchases and sales of real estate.

- Supervising the factory's expenditures and sales.

- Organizing, maintaining, and preserving machinery, materials, warehouses, products, etc.

3) Regarding management of workers and staff

- Recruitment and dismissal of workers and staff.

- Implementation of wage systems.

- Arranging ranks and grades.

- Implementation of employment contracts, collective agreements.

- Rewards, promotions, punishments, etc.

4) Regarding production and business

- Setting plans to implement upper-level programs and plans.

- Determining production quotas.

- Deciding technical and professional issues to improve technology and increase production levels.

- Reducing internal costs, practicing thrift.

- Encouraging patriotic competition, researching and disseminating innovative ideas of model workers.

- Reminding workers and staff to respect labor laws.

5) Regarding protection and enhancement of labor strength:

- Implementing labor regulations.

- Implementing productivity bonus systems.

- Attend to improving the material and spiritual living conditions for workers and staff.

- Enhance the political, cultural, and professional qualifications of workers and staff, etc.

In these tasks, the mission of the Enterprise Management Committee is to actively promote the initiative and creativity of the working masses, lead the workers and staff to enthusiastically produce, monitor the activities of the enterprise; encourage quality improvement, combat bureaucracy, corruption, waste, implement thrift, and reduce costs.

The program, plan, directive from superiors, and all policies of the director must be brought to the Enterprise Management Committee for discussion to decide on implementation.

The Enterprise Management Committee discusses and makes resolutions. In terms of implementing these resolutions, it must be done through administrative orders issued by the director. If the director disagrees with the resolution of the Enterprise Management Committee, he may not issue an order to implement that resolution or may issue an order different from the resolution of the majority but must immediately report to superiors for instructions.

In this case, the Enterprise Management Committee may also send representatives to present their views to superiors. Until there is an instruction from superiors, the director's opinion must be respected and implemented.

As mentioned above, the right not to implement the resolution of the Enterprise Management Committee does not violate the principle of democracy, thus ensuring that the decisions of the Enterprise Management Committee are in accordance with the instructions of superiors and the overall policy and plan. Only when the resolution of the Enterprise Management Committee contradicts government policy, the general production plan, or superior instructions, will the director use the aforementioned authority. This situation is rare and can be said to be impossible if the Enterprise Management Committee operates properly. The director should avoid using his power to suspend implementation and instead patiently explain and persuade to achieve consensus within the Enterprise Management Committee.

For large enterprises with Enterprise Management Committees at workshops and departments, these committees are under the leadership of the overall Enterprise Management Committee. Matters beyond the administrative jurisdiction of the workshop will be referred to the overall Enterprise Management Committee for resolution. The overall Enterprise Management Committee will discuss and make resolutions, and the director will issue an order for implementation.

VI. LIFE AND WORKING STYLE OF THE ENTERPRISE MANAGEMENT COMMITTEE

The Enterprise Management Committee convenes regularly at least twice a month. Additionally, if there are urgent important issues, the Enterprise Management Committee may hold extraordinary meetings.

Important issues must be prepared in advance, at least one week before the meeting, the director must provide proposals or plans for committee members to collect opinions from workers and staff, study, and propose solutions. At regular meetings, the director must report clearly on the enterprise's situation, the implementation of previous Enterprise Management Committee resolutions, and superior instructions. The director must ensure that committee members, especially worker and staff representatives, have sufficient time to prepare opinions on important issues so that the leadership of the Enterprise Management Committee can be effective. It is necessary to avoid situations where worker and staff representatives attend meetings without knowing what to say, and the Enterprise Management Committee only holds formal meetings without practical benefits.

In addition to the official representatives, the Enterprise Management Committee may invite additional technical or specialized personnel, or model workers to participate if the issues require their expertise.

As an administrative body of the enterprise, the expenses of the Enterprise Management Committee for performing its duties will be covered by the enterprise. The meeting times of the Enterprise Management Committee are part of the enterprise's professional work, so there is no need to limit the time, but to avoid wastefulness harmful to production, the Enterprise Management Committees need to pay attention to improving work methods, shortening meeting times, and preparing each issue in advance to avoid lengthy discussions wasting time.

Enterprise Management Committees with seven or more members must establish a Standing Board consisting of the director, the Trade Union Secretary, and a member elected by the Enterprise Management Committee. If the number of members is less than seven, the director and the Trade Union Secretary will perform standing duties. Members of the Standing Board do not need to leave their professional work. However, they must consult daily outside of their professional hours to resolve matters and plan to urge and inspect the implementation of Enterprise Management Committee resolutions.

VII. GENERAL MEETING OR MEETING OF WORKER AND STAFF REPRESENTATIVES

The general meeting or meeting of worker and staff representatives is a mass organization directly led by the Trade Union. The Enterprise Management Committee must rely on these meetings to fulfill its tasks. The Enterprise Management Committee must report its work to the meeting, and the meeting has the right to comment and criticize the leadership style and working methods of the Enterprise Management Committee. The meeting will present the opinions of workers and staff to the Enterprise Management Committee for discussion and implementation.

Meeting representatives have the duty to gather the opinions of the masses, present them at the meeting, and bring the meeting resolutions back to the masses for propaganda and explanation.

At least once every three months, the Trade Union must convene a general meeting or a meeting of worker and staff representatives. For enterprises with relatively few concentrated workers and staff, monthly meetings should be held to allow the Enterprise Management Committee to closely follow the overall situation and promptly address the wishes or suggestions of workers and staff.

Meetings should be held on days off to avoid disrupting production.

VIII. PREPARATION FOR IMPLEMENTATION

To ensure successful democratic management, adequate preparation according to the following points is necessary:

1) At present, the reorganization of enterprises is underway; it is not possible to establish an Enterprise Management Committee while enterprises are being reorganized, and the situation of workers and employees, as well as production, has yet to stabilize. Otherwise, this will hinder the work due to changes in the enterprises.

2) It is necessary to disseminate and study the Charter and Circular so that all workers and employees thoroughly understand the fundamental aspects of democratic management. In dissemination activities at places where the Enterprise Committee system has been implemented, attention must be paid to clearly delineate the differences between the old Enterprise Committee system and the new system, and emphasize the administrative unity of the Enterprise Management Committee under the new Charter. This is the basis for resolving difficulties encountered by the old Enterprise Committee system. There may be erroneous thoughts such as: democratic management will reduce the authority of the director or lighten the responsibility of the director, or that workers and employees lack the qualifications or capacity to participate in enterprise management. These erroneous thoughts must be thoroughly clarified.

In these dissemination and study activities, there is no need to launch a mass movement as was done with the old Enterprise Committee system. Careful organization of learning should be conducted to ensure that workers and employees fully understand the new system, and to address any questions from both directors and workers. Cadres of Labor and Trade Union cadres should study first, then coordinate together to organize learning for workers and employees in enterprises.

3) Implementation must be focused and special monitoring measures taken to avoid initial deviations that could harm production. Efforts should be made to study and resolve questions through learning and research before selecting model enterprises for experimental implementation. Therefore, it is not necessary to implement immediately in all enterprises. Labor cadres must cooperate with Trade Unions and other sectors to select model enterprises for experimental implementation, organize thorough learning and clarification for workers and employees, then establish the Enterprise Management Committee, closely monitor to guide and prevent errors, draw lessons and make corrections, and subsequently gradually implement in other areas.

Currently, the Ministry has coordinated with the General Federation and various sectors to conduct experiments in some enterprises in the Vietnam North Region. Other Regions, upon receiving this Circular, must immediately organize internal learning within their agencies and ensure that staff thoroughly understand it. Any questions during the learning process should be promptly reported to the Ministry.

November 21, 1952