LABOUR

Companies get lean and mean

Watchara Pussayanawin,

Pranee Muenphangwaree

The Nation

BANGKOK: -- Many labour-intensive sectors have tried to adjust their operations to deal with the nationwide imposition of a Bt300 minimum daily wage. These efforts range from trying to trim logistics costs, to improving production efficiency, to hiring only skilled workers.

Tawee Piyapattana, president of Pacific Fish Processing Co, which specialises in the production of frozen seafood, said the company, which employs 3,000 staff, would not lay off people to cut costs but would focus more on trimming logistics expenses. It will also boost efficiencies in production and human-resource management.

It will not raise prices in the short term, which would risk loss of market share during a time of intense competition in the export market. Total export of processed seafood last year dropped 15 per cent amid tough competition from exporters in neighbouring countries.

The chairman of the Textile Industry Club of the Federation of Thai Industries (FTI), Somsak Srisupornwanit, said the shutdown of one textile company in Saraburi province was the result of declining purchase orders from foreign markets as Europe's economy slows. But he added that the minimum-wage increase had aggravated the company's situation: While its revenue fell, its labour costs rose.

The wage increase will also pressure manufacturers in remote areas to relocate their plants to urban areas to save logistics costs, or they could migrate to low-paying neighbouring countries. Therefore, it is possible that in the future the concentration of factories in Greater Bangkok and major cities will be denser.

However, Somsak does not expect to see a great number of factories closing down, as their owners will try all means to survive. The textile business is not limited to garment production but can supply products to different sectors, such as the fast-growing auto industry. He added at that in one car model, at least 40 spots in the body used textile material.

Car production in Thailand is expected to reach 2.6 million units this year.

If the textile makers begin to work more closely with other high-growth sectors or supply products to the fashion sector, they will have a chance to survive. Small textile companies can also seek subcontracts from bigger peers, he added.

FTI vice chairman Vallop Vitanakorn said textile plants would not abruptly shut down in reaction to rising labour costs but would first slow production and stop recruiting new workers. If they have to recruit, they will select only skilled labour. The plants that cannot afford the wage adjustment could move to less developed neighbouring countries such as Cambodia and Myanmar.

Sukit Kongpiyajarn, president of the Thai Garment Manufacturers Association, said after a meeting with members on the impact of minimum-wage increase that they would have to improve their production efficiency and control costs. If they pay overtime for 25 days, they will experience an additional cost of Bt1,600 per worker per month.

He expects it to become clear in the second quarter if the sector can survive. However, he noted that Thailand is not the only country trying to improve the incomes of its lowest-paid citizens. Vietnam has also raised labour wages by 18 per cent. If the garment firms can hold on for three years, the competition between Thailand and Vietnam will be on par.

-- The Nation 2013-01-04

These changes in practices are long overdue. Thailand actually has a labor shortage and has only been able to keep costs down using foreign workers. This is not sustainable and it makes more sense to improve production efficiency. Undoubtedly there will be some disruptions as inefficient low cost production moves to other countries but I question their value to the Thai economy.

Regarding "Tawee Piyapattana, president of Pacific Fish Processing Co, which specialises in the production of frozen seafood, said the company, which employs 3,000 staff, would not lay off people to cut costs but would focus more on trimming logistics expenses. It will also boost efficiencies in production and human-resource management."

I'd say trimming logistics expenses, boosting efficiencies in production and human resources management is a good think ... not a bad thing. Indeed, if Thailand wants to keep moving from a developing country towards a developed country it must do these things anyway. As to all the kicking & screaming of companies over the increased minimum wages .... I think they doth protest too much. And if they had any foresight they'd realize than in the long run they'd make more profits.

Still...roughly $9 a day??? so sad in an expensive place like BKK. No wonder so many keep filling the bars. Wait, what??? I can make 300 baht for a ten hour shift at KFC or shake my booty at a bar and make 2,500 in an hour? Where do I sign?

all thai companies should be improving their employees

productivity i know this is hard but can be achieved

with the right managers in place!

But there is going to be a lot more pain before it gets any where near better. Thai news today has it that many factories are laying off Thai workers and employing those from Myanmar, who of course do not come under the minimum wage scheme.......yet. So watch out, businesses may not be reducing their number of employees, but they WILL be replacing Thais with those from Myanmar. An interesting year ahead!

Not sure if many companies will get lean and mean, but I think many will get 'mean'!

Edited January 4, 201313 yr by GentlemanJim

But there is going to be a lot more pain before it gets any where near better. Thai news today has it that many factories are laying off Thai workers and employing those from Myanmar, who of course do not come under the minimum wage scheme.......yet. So watch out, businesses may not be reducing their number of employees, but they WILL be replacing Thais with those from Myanmar. An interesting year ahead!

Not sure if many companies will get lean and mean, but I think many will get 'mean'!

And that is the most egregious get out in the history of economics. What is the point in any law at all?

The premise of the story would make sence if it were not for the fact that along with the raise companys also get a tax break rendering the premise of the article absurd.

The corporate tax rate went from 30 to 23 percent to compensate for the increased wages ........ leaving that part out is quite convienient now isn't it ! lol

The rate drops to 20 percent in 2013

Just another hack job of one sided nonsense journalism and of course comments from people who evedently don't understand the full story.

Edited January 4, 201313 yr by MrRealDeal

But there is going to be a lot more pain before it gets any where near better. Thai news today has it that many factories are laying off Thai workers and employing those from Myanmar, who of course do not come under the minimum wage scheme.......yet. So watch out, businesses may not be reducing their number of employees, but they WILL be replacing Thais with those from Myanmar. An interesting year ahead!

Not sure if many companies will get lean and mean, but I think many will get 'mean'!

This just backs up what I've always said, the minimum wage should apply to everyone not just Thais. It would also have helped if this minimum wage had been brought in more slowly.

Tawee Piyapattana, president of Pacific Fish Processing Co, which specialises in the production of frozen seafood, said the company, which employs 3,000 staff, would not lay off people to cut costs but would focus more on trimming logistics expenses. It will also boost efficiencies in production and human-resource management.

What this means is, that staff will have to work harder, faster and probably longer to compensate for employing less staff, because companies will take on less employees to make adjustments for the wage increases and not lose out on profits.

So it`s all swings and roundabouts for the workers. I believe this new minimum wage increase will not benefit the employees, but only places more pressure on them in the work place.

Edited January 4, 201313 yr by Beetlejuice

Tawee Piyapattana, president of Pacific Fish Processing Co, which specialises in the production of frozen seafood, said the company, which employs 3,000 staff, would not lay off people to cut costs but would focus more on trimming logistics expenses. It will also boost efficiencies in production and human-resource management.

What this means is, that staff will have to work harder, faster and probably longer to compensate for employing less staff, because companies will take on less employees to make adjustments for the wage increases and not lose out on profits.

So it`s all swings and roundabouts for the workers. I believe this new minimum wage increase will not benefit the employees, but only places more pressure on them in the work place.

Which begs the most obvious question, why wouldn't a company do this anyway irrespective of the wage increase. Presumably working more effectively would have reaped them more profit anyway?

Edited January 4, 201313 yr by Thai at Heart

They lowered the tax rates enough so doing it slowly doesn't matter , if the posters actually knew what they were talking about they would know that most all thai corporations will profit from the changes as the increase in wages is less than the tax breaks they will get. For 2012 and 2013 the impact means that corporations will have increased profits not reduced profits due to the overall scheme ........ But my guess is ignoreing the facts makes for a better thread than understanding that this schme is a net benefit to the workers and the companys , as the workers get more and the companys also keep more because the lowering of the tax is in most cases more than the increase in workers compensation.

The idea that they will lay people off or have to make big adjustments or esentially do anything different is simply propoganda contrairy to the facts of the situation.

The reason the Thai stock market is doing well is because what I am telling you is true ..... if the opposite were true it would be doing poorly

Edited January 4, 201313 yr by MrRealDeal

They lowered the tax rates enough so doing it slowly doesn't matter , if the posters actually knew what they were talking about they would know that most all thai corporations will profit from the changes as the increase in wages is less than the tax breaks they will get. For 2012 and 2013 the impact means that corporations will have increased profits not reduced profits due to the overall scheme ........ But my guess is ignoreing the facts makes for a better thread than understanding that this schme is a net benefit to the workers and the companys , as the workers get more and the companys also keep more because the lowering of the tax is in most cases more than the increase in workers compensation.

The idea that they will lay people off or have to make big adjustments or esentially do anything different is simply propoganda contrairy to the facts of the situation.

The reason the Thai stock market is doing well is because what I am telling you is true ..... if the opposite were true it would be doing poorly

All true, and all well and good for those companies who are registered for paying corporate tax, so Toyota and many other large corporations may not bother. However, as I am sure you are fully aware, this country runs on the small business, the small industry, many of whom, wrongly, don't even pay anywhere near the tax that they should, but their employees all want the minimum wage now, and there are thousands of people flooding over from Myanmar to pick up their jobs. In the last month, the largest dim sum restaurant in our town that employs 40 staff has replaced 35 of those staff with workers from Myanmar. That is just one place in one town. We are seeing LOTS of construction workers from Myanmar and rubber farmers/farmers. It is at the low end where the trouble is going to start. Lots of Thais without jobs which are being given to Myanmar nationals. We can quote tax rates and stock markets till we are blue in the face but at ground floor level there IS trouble afoot, and how long that takes to spread to a national problem is anybodies guess.

It would help your case if you were not so condescending using phrases like "if posters knew what they were talking about", which can easily be changed for "I have some in depth knowledge on financial issues and ..." same result, your message gets over, but with an entirely different perception by the reader. There are some very skilled people on here in their own subject matter and there is no need to belittle people that may not be in the same area of expertise as you or anyone else.

I understand your point however my personal opinion is it's overstated , I think the number of employees working for large corporations is much larger then you I guess.

I guess we will have to wait and see what happens but it's been my experience that in all the min wage increases I have seen the doomsdayers have always turned out to be wrong , there is some small disruption and then things get back to normal.

I really can't envision a scenerio where Thai people tolerate losing their jobs for very long at all to illegal workers before something is done about it. It just seems contrairy to their attitudes and for example contrairy to the national anthem.

I foresee a few small problems overblown by the media and life as normal into the future , the normal correction is of course inflation which ends up eventually rendering the whole thing pretty much a wash in the end, which is why it all normalises eventually.

We can chat again in 2014 and see what happened.

Tawee Piyapattana, president of Pacific Fish Processing Co, which specialises in the production of frozen seafood, said the company, which employs 3,000 staff, would not lay off people to cut costs but would focus more on trimming logistics expenses. It will also boost efficiencies in production and human-resource management.

What this means is, that staff will have to work harder, faster and probably longer to compensate for employing less staff, because companies will take on less employees to make adjustments for the wage increases and not lose out on profits.

So it`s all swings and roundabouts for the workers. I believe this new minimum wage increase will not benefit the employees, but only places more pressure on them in the work place.

You've never worked in a modern production enviroment

Tawee Piyapattana, president of Pacific Fish Processing Co, which specialises in the production of frozen seafood, said the company, which employs 3,000 staff, would not lay off people to cut costs but would focus more on trimming logistics expenses. It will also boost efficiencies in production and human-resource management.

What this means is, that staff will have to work harder, faster and probably longer to compensate for employing less staff, because companies will take on less employees to make adjustments for the wage increases and not lose out on profits.

So it`s all swings and roundabouts for the workers. I believe this new minimum wage increase will not benefit the employees, but only places more pressure on them in the work place.

You've never worked in a modern production enviroment

Thank God, Buddha and Uncle Tom Cobbley and all, that I am retired and out of industry completely.

When I first started work, I never had the pressures placed on me as the young people have today. We had good working relationships with the bosses, good Union representation, our working schedules were well defined, company pension schemes and a job in those days was for an entire working life, usually starting as an apprentice and we worked our way up the ladder as a valued member of staff.

Today they want 18 to 30 year olds, on wages of school leavers, with 50 years experience, able to be on-call 24/7.

I truly feel sorry for my kids and the younger generations as a whole, because the workloads and pressures put upon them today are tremendous and that pertains everywhere, not only in Thailand.

how about triming the executive salery's and large bonuses and percks.

how about triming the executive salery's and large bonuses and percks.

As my boss used to say. "Because shit travels down hill."

Went to my wifes aunts restaurant today. She has been employing a couple of staff to help in the kitchen. Since just before New Year it has been only one.

A while ago she said that this is what would happen when the minimum wage was introduced and I would guess she is not the only one cutting back on staff.

Edited January 5, 201313 yr by edwinchester