Higher labour cost will not prompt auto-parts industry to lay off workers

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BANGKOK, 27 March 2012  – The Thai Autoparts Manufacturers Association has reaffirmed that it will not lay off employees despite the rising labour cost while stating that the sector is still in need of around 50,000 more workers.

President of the Thai Autoparts Manufacturers Association Achana Limpaitoon stated that currently over 60% of the industry’s flood-affected factories have now resumed their operations and the rest are expected to be back in business by the second quarter of 2012. Meanwhile, Mrs. Achana admitted that the 300-baht minimum wage hike policy to be implemented in 7 provinces and the 40% wage increase in the remaining provinces will have an impact on the industry, especially SME groups, given they must raise present employees’ minimum wage as well.

The wage increase will be carried out in a progressive manner. Entrepreneurs will be forced to face a 10% increase in labour cost, which will in turn impact initial production cost by 3-5%. As manufacturers are obliged to maintain the prices of their products at the current rate, more machinery will be brought in to replace human workforce. Meanwhile, the sector aims to enhance the capacity of workers and management teams to be commensurate with the higher initial cost.

Additionally, Mrs. Achana has reiterated that the auto-parts industry will not lay off any workers despite the impact it is forced to face from the entry into force of the government’s minimum wage hike policy; on the contrary, the sector is currently looking to hire 40,000-50,000 new workers given that the automobile industry has planned to increase its annual production goal to 2.1 million cars.