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High labour costs – Thai garment makers shift overseas
Mar '11
Soaring cost of production in the domestic markets have impelled five leading garment producers from Thailand to shift to Vietnam. The move lead to a transfer of investments worth 1.5 million baht.

President of the Thai Garment Manufacturers Association (TGMA), Sukij Kongpiyacharn said that, the election promise made by the Democrat Party to raise the minimum wages by 25 percent over the next two years would undoubtedly have an adverse impact on the industry's competitiveness.

He stated that, the promises made by the party are not anchored in factors like, inflation or others like development of workers skills.

In order to stop the workers from shifting to the electronics industry, the garment industry has retained its pay above the minimum wage levels.

In view of the same, if the minimum wage is fixed at 296 baht, the garment producers would have to bear a cost of 350 baht for a 10 hour shift, Sukij said.

He further sought of the government to fix a clear policy for supporting the garment industry.

An honorary adviser to the TGMA, Vallop Vitanakorn said that, the five factories relocating to Vietnam would start functioning this year itself, with 24,000 workers, owing to the cheap availability of labour there.

The five firms include Hi-Tech Apparel Co, Liberty Garment Co, Hong Seng Knitting Co, Nice Apparel Co and Golden Thai Industry Co.

Vallop further voiced his apprehension that, owing to deteriorating tendency of Thai labour, other firms too may shift to countries with cheap labour like Vietnam, Cambodia, Bangladesh, Indonesia and probably Burma.

One of the issues that the Thai garment industry is facing is of retaining the employees, as around 10 to 20 percent of the workers do not return back after they go to their home towns for crop harvesting. This certainly leads to an irregularity in supply of trained labour, Vallop added.

As against 2,600 in 2005, at present there are only 1,600 garment factories in Thailand, he revealed and added that, if the increase in labour cost persists there would be hardly 500 to 600 factories left over the next five years.

Fibre2fashion News Desk - India

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