Copyright 1996 Inter Press Service
Thailand-Labor: Thai Industry Can't Compete On Six Dollars A Day
by John Tanner
November 20, 1996 BANGKOK Thai manufacturers, once the low cost producers of Asia, are themselves being undercut by even lower cost exporters in the region.
"For many years Thai clothing exports have enjoyed double digit growth," says Dej Pathanasethpong, vice-chair of the Thai Garment Manufacturers Association. "This year we expect growth of perhaps five percent to seven percent."
Dej's own Thong Thai Textile Company in Bangkok anticipates a turnover of $ 30 million this year. Thong Thai knits and dyes fabric as well as cutting and sewing garments for United States corporations that include Nike, Reebok and the Gap.
The minimum daily wage in Bangkok was increased this year to 157 baht ($ 6.20). That may be tiny compared with the United States' minimum of six dollars for only one hour, but is way above Indonesia's $ 2.25 a day or mainland China's one dollar a day.
Kampong, 19, machine sews collars on to Nike shirts at Thong Thai for about 7,000 baht ($ 275 dollars) a month with overtime. She and her sister come from the northeast of Thailand and share a room in Bangkok at a rent of 1,200 baht ($ 47 dollars) a month.
Managing Director Dej has invested heavily in new capital equipment, including a Swedish computerized cutting machine. But he is also looking at the possibility of establishing a factory in Vientiane, Laos, where both land and labor costs are lower.
"People used to think of workers as machines but the culture in this company is to increase workers skills," says Dej. His company can manufacture knitted shirts for around $ 12, which then retail in Europe or the United States for $ 40 or more.
What is true for clothing is true for other Thai industries.
Piyawat Rubber Industry, which made sports shoes for Reebok and Adidas, sacked 700 employees last February. Other staff were transferred to a new non-union company, Wongpaithoon Footwear.
In the toy industry, companies such as Eddu Plush regularly lay off workers after the peak pre-Christmas rush. The Eddu Plush factory at Nakhon Pathom, 50 kilometers from Bangkok, makes dolls for export to the European market.
"I don't like factory work," admits 21-year-old Sumpson Srivichai (not her real name), who has sewn dolls for four years for Eddu Plush. "The boss forces us to work too hard but there is nothing for me in the village except poverty."
Jintana Yai-Bua, 25, is even worse off. She lost her job with the Eden Company of Bangkok on Sept. 13. She, along with 344 other clothing workers, were laid off without the compensation to which Thai law entitles them. "We have not received a single baht since we lost our jobs," says Jintana.
Eden, owned by flamboyant Austrian boss, Adam Lisowski, continues to export T-shirts printed with Mickey Mouse, Power Ranger and Loonie Tunes motifs. But the factory has cut its employees from more than 4,000 in 1991 to less than 400 today.
"The company has sacked us because it wants to reduce its costs and transfer our jobs to sub-contractors," claims Jintana, a member of the union committee at Eden.
She alleges the sub-contractors in Thailand employ workers under 15 years old. Also, she says that before being sacked, she and other employees used to sew "Made in Thailand" labels onto T-shirts actually manufactured in neighboring Laos and in China.
Company management denies the charges. "We don't want to use any sub-contractors who employ child labor," said a company spokesperson.
Adds Lisowski: "The Eden Group was founded on a personal commitment to excellence and innovation in customer service."
Earlier this month, the Eden Company agreed to pay compensation equivalent to seven months salary to each of the dismissed workers. This is higher than the legal minimum, but less than the 15 months the Garment Industry Workers' Union was demanding.
On the day the compensation was to be paid, Nov. 15, some 300 sacked women sat outside the factory gate singing protest songs. But company officials told the protesters that the Thai Military Bank had refused to supply the cash to pay compensation.
"Eden has always shipped its profits to the Hong Kong parent company," says Somyot Pruksakasemsuk, director of the Center for Labor Information Service and Training (CLIST). "Without money in Thailand there can be no compensation."
Shojei Shidei, president of the Thai Underwear Company, a Japanese joint venture in Bangkok, is also struggling to compete with other regional manufacturers.
Thai Underwear supplies Jockey, of the United States, and C & A in Europe, as well as the Japanese market.
"In Japan, young people don't want to work in the garment industry anymore," explains Shidei. "We're not just here because of the low cost of workers. We chose Thailand because it is Buddhist and the way of thinking is similar to Japan."
Girigong Supsong, 25, a sewing machinist at Thai Underwear, earns about 3,000 baht ($ 118), including overtime, every two weeks. She is one of team of 18 young women manufacturing a pair of men's briefs for the Japanese market every ten seconds.
Thai Underwear has 1,350 mainly women employees and had a turn-over of $ 22 million last year. Shidei emphasizes quality in order to compete with low-cost countries such as China in supplying the parent companies Riki Knit and Parfun in Japan.
It costs Thai Underwear $ 1.30 to produce a pair of men's briefs in Bangkok but Chinese factories are producing for as little as one dollar for 12 briefs. "This is an unbelievable price. I don't believe they include all the costs," says Shidei.
The Thai Board of Investment (BOI) is already encouraging manufacturers to move from the capital to the provinces. A package of tax holidays has lured some entrepreneurs to set up plants in the rural north-east instead of increasingly expensive Bangkok.
Manufacturing investment has never before been so willing to move from one place to the next, say experts. Companies that fail to find the lowest cost areas for production will simply not survive in the competitive global market.
Manufacturers like Dej Pathanasethpong and Shoji Shidei must get used to competing with even lower cost producers, while for workers like Sumspon Srivachai and Jintana Yai-Bua there is no longer any security even at $ 6.20 a day.
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