Wage hike affects Thailand textile industry: Report

03 Aug '12

2 min read

The textile industry in Thailand has been badly impacted by the Government’s 300 baht daily wage policy, which is compelling several firms to shift their production bases to neighbouring countries, according to a report released by the University of the Thai Chamber of Commerce (UTCC).

UTCC Research Centre Director Kiatanant Luankaew said the wage policy, which has already been implemented in Bangkok, Nakhon Pathom, Pathum Thani, Samut Sakhon, Samut Prakan and Phuket provinces, is badly hitting the textile producers in those areas.

The policy, he said, forced a number of factories in the Northeast to either reduce their workforce or shift their production to neighbouring countries to cut labour costs.

Meanwhile, as workers flee to larger provinces to earn increased daily wage, this has even stirred up a labour shortage problem for small and medium sized enterprises (SMEs) in small provinces, Mr. Luankaew added.

The hike is seen to compel around 130,000 SMEs to cease operations, while another 50,000 are also in a critical situation. This has put jobs of around 500,000 to 1 million workers at risk, he said.

The report says that the increase in wages has pushed up the labour costs of textile producers in seven provinces by 17 percent, with Samut Sakhon province being the most badly hit, followed by Bangkok and Pathum Thani.

About 50 percent of the affected firms have cut their workforce and production, while raising prices of their products to cover the rise in production cost resulting from a rise in cost of labour, the report said.

Fibre2fashion News Desk - India

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