Textile industry plans to relocate to avoid minimum wage hike effect


BANGKOK, 11 June 2012 – The Federation of Thai Industries (FTI) has revealed that the textile and garment sectors have decided to relocate their production bases to neighbouring countries, while indicating that many factories in Thailand are currently facing a labour shortage problem, both a result of the 300-baht minimum wage hike policy. 

FTI Secretary-General Sommart Khunset said that the FTI and various industrial sectors are rushing to develop the potential of workers in neighbouring countries to accommodate the relocation of their production bases from Thailand, given many entrepreneurs have decided to set up their factories abroad as a way to avoid the impact of the 300-baht minimum wage hike, which will be implemented nationwide in 2013.

Thus, the FTI suggested that industries requiring a large number of manual workers, such as the garment and textile industries, should modify their production plan either by effectively reducing initial cost, especially in energy, or adding more machinery to reduce the workforce, compensating for the higher labour cost. However, they will eventually be forced to relocate to a country with lower production cost if the burden becomes to much for them to bear.

Apart from the higher energy cost and minimum wage hike, the country’s industrial sector is also facing a shortage of workers despite the government’s move to raise labour wage, especially in Ayutthaya province. Tens of thousands of workers have moved to work in the 7 pilot provinces where the minimum wage hike has been implemented. Meanwhile, many others have moved to Chonburi and Rayong where a large number of factories have been set up to avoid the problem of flooding.

Entrepreneurs, therefore, have been forced to hire immigrant workers instead of Thais. Meanwhile, large-scale enterprises have raised the daily wage to as high as 350-400 baht as incentives to attract workers. However, the FTI is most concerned that SMEs will suffer, given workers will be drawn in by the high daily wage offered at large factories, which will eventually lead to a shortage of labour workforce for the Thai SMEs in the near future.