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BANGK_OK POST SOUR.CE PAOB

LABOUR

Central Trading uses

lean manufacturing NANCHANOK WONGSAMUTH

Two years ago Central Trading Co, a unit of the Central Marketing Group, paid its staff the daily minimum wage of 215 baht, which accounted for 20% of production costs.

Despite the increase to 300 baht on Jan 1, the company lowered jeans pro­duction costs by 7 million baht per year after it took advantage of projects by the Industrial Promotion Department to pro­mote lean manufacturing and maximise material utilisation.

Calling itself a medium-sized textile company, Central Trading has 650 employees working at its two factories. The company manufactures arid dis­tributes apparel products from brands such as Lee and Wrangler.

On average, staff receive wages of more than 400 baht per day, said Suphot Phawachittranon, assistant vice­president for production.

"Two years ago employees did not know how to use raw materials efficiently

. :

and also lacked teamwork skills," said Mr Suphot.

By improving the production process, the company lowered its defect rate to only 3% from 13% in 2010. It aims for zero defects this year.

The company has the capacity to pro­duce 6,050 pieces per day, of which 42.5%

Employees making jeans can complete more than one process now, meaning Central Trading actualy spends less on wages despite the daily rninloom wage hiM. NAtntND(

WtHJSAMJTH

are jeans, 23.5% are shins and 12% are pants.

"In the past, one employee was needed for each unit, so if we wanted to produce 50 shirts, we needed 50 people. Now one employee can do at least two pro­cesses on average. This Jowers the num­ber of people needed from 50 to about

30 per production line," said Mr Suphot. The Industrial Promotion Department

said the industries that have been affected the most by the minimum wage hike are labour-intensive manufacturers with­out substantial profit margins including the textile and garment, furniture, service and construction sectors.

The wage increase is pushing their labour costs up to 25-28% of total pro­duction costs.

Sirirat Chitseree, deputy director­general of the department, said although many small and medium-sized enteJ;­prises (SMEs) are con§idering raising their prices by at least 18% to cope, this is unlikely to work, given the fierce com­petition in the market.

The department expects at least 3,000 businesses to panicipate in its projects this year as they try to find · ways to survive the wage hike.

She said the department will work with SMEs nationwide on projects that lower production costs, man~ge energy 11C:P....an.rl o-han_,..,... .,.. ____ ,.....,::.,: . ....... -----

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1 0 FEB 2013 DATE __________________________ ___ NEWS ID .

BA-NGKOK POST ~0 PAGE

Wage hike needs help in transition phase

The 300 baht minimum wage policy the Pbeu Thai Party campaigned on which has been implemented across the country since Jan ~ is. one _ of the most contentious issues in Thailand today. On the one hand, there are those who say it will be a death knell for many labour­intensive businesses and fon:e investors to look to neighbouring countries to set up new operations. Then there are those who. point

out that as the cost of living rises, the lower economic sectors are getting squeezed the hardest, and there has not been a significant minimum wage increase for a very long time. .

Much of the difficulty with implementing the policy has to do with the fact that it is a relatively large increase to impose suddenly, and 'it also puts pressure on employers to raise wages across the board, as more siJ.Iled employees expect to earn more than inexperienced new hires. At the end of the day, however, it's hard to defend the assertion that 300 baht is too much for a full day's work. The fact is that the 300 baht minimum wage has been signed into law and backing away from it now would be disastrous in terms of social discontent and erosion of trust in government.

Therefore a report in yesterday's Business section, "Central Trading uses lean manufacturing" was encouraging. The report says that over the past two years, . Central Trading Co, which manufactures mostly brand name jeans, increased workers' daily average wages from 215 baht to more tttan 400 baht per day through projects initiated by the Industrial Promotion Department max:intise efficiency and ensure that raw ~terialsare utilised properly. Supbot Phawachittrar.on, assistant vice-precident for production,-said: ~'Two·years ago employees did not know how to use raw materials efficientiy and IWo lacked teai_llwork skills." The greater effidency has resulted in lower production costs, which hac: en:ililed the company to ~ wages.

Increased efficiency is a doubl~::-edged sword. howeVer, as it might also lead to staff cuts. If, on ~ other hand, increased efficiency is used to increase production, it should translate into greater overall profits as well as higher wages, and'all without layoffs.

The jury is still out on which way Thailand is headed, and clearly the government and private enterprise need to work together closely to promote the latter scenario.

There have been disturbing reports of layoffs at SMEs attributed to the higher minimum wage, to which the government has responded with a · series of measures including tax exemptions and lowered tax rates, as well as loans.

About a week after the wage hike was imposed nationwide, Democrat Party lead~ Abhisit Vejjajiva said the government was not doing enough to help SMEs, and he mzy be rigtlt about that. However, he Was incorr~ to

liken the minimum wage policy to the_ri<=!-pledgirig scheme, as reported in the same article. As fellow Democrat and fonner finance minister Korn Chatikavanij pointed out, the evolution of the rice-pledging scheme under the Pheu Thai government is proving disastrous. as "every grain of rice is now acqUired by the government_.at 40% above the market price". Mr Korn made the observation in a thought -provoking article in yesterday's Bangkok Post based on a speech he gave at a UN High-Level Meeting on Beyond Populism, in Rabat, Morocco last week. He gave examples of "good" and "bad" populist policies. The former included free education and free basic health care, while the latter included free tablet computers for first graders as well as the rice-pledging scheme. Interestingly, Mr Korn made no mention ·of the 300 baht minimum wage, but a livable wage is just as important as education and health care in terms of basic human needs. The transition period in implementing the 300 baht minimum wage may be painful, but it will be worth it.

There are si~ns that this transition ruav not he as rough as some fear

because of Thail;md's strong fundament<il attraction for investors. Last month Songpol Chevapanyaroj, executive vice-president of Kasikornbank, said that more than 1,000 medium-sized Japanese companies are planning to expand their business and invest in Thailand this year, the highest number: for seven years. Obviously these companies are aware of the minimum wage increase. A$ explained by Mr Songpol: "Thailand in Japanese companies' eyes has completed facilities and infrastructure for operating business, and the country is a gateway to A$ean. Start-up companies are able to run businesses rapidly here." ·

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MIGRANT WORKERS

Ministry hopes for US trafficking list upgrade PENCHAN CHAROENSUTHIPAN

The Labour Ministry hopes the nation­ality verification (NV) of migrant workers will help improve the country's standing on the US human trafficking watch list.

The ministry feels the NV will help lessen the problems of human trafficking after it agreed to extend the process for another three months from Dec 14.

Employment Department director­general Prawit Khiangpol said the gov­ernment was hopeful the counoy's status on the US watch list would improve as migrant labour problems are being tackled.

Thailand is on the US government's Tier 2 watch list in the Trafficking in Persons Report. The US will review the country's status this month.

Pakphum Sawaengkham. a labour activist in Samut Sakhon, said the NV extension would help solve human traf­ficking as illegal migrant workers passing

the process would become legal workers and enjoy social welfare benefits.

However, he said some migrant workers were not paid their wages and so they had no money to pay for the NV process.

Many migrant workers have fallen prey to human trafficking gangs and this pushed the country onto the Tier 2 watch list.

Mr Prawit said the department has opened 12 verification centres across the country to facilitate the NV process. They are in Samut Prakan, Samut Sakhon, Surat Thani, Songkhla, Pathum Thani, Rayong, Kanchanaburi, Khon Kaen, Chiang Mai, Chiang Rai, Tak and Ranong.

He urged employers hiring illegal migrant workers to submit lists oftheir migrant workers, employment contracts and employers' leners to the department by March 16.

After the documents are filed, the migrants will be issued temporary

passports before undergoing the NV process, he said.

There were concerns from some labour advocates that the 120-day exten­sion period may not be enough.

Mr Prawit spoke during a seminar on migrant workers ' employment registra-tion in Bangkok yesterday. .a

The seminar was jointly held by the department, the International- -Labour Organisation, the International Organ­isation of Migration and the Migrant Working Group.

Aemasho, an activist and represen­tative for Myanmar workers, said labour exploitation was a serious issue.

Adisorn Kerdmongkol, a senior policy adviser to Thailand-based International International Rescue Comminee which assists migrants and cross-border refugees, said the 120-day extension period would not be enough for the NV process as the number of unregistered migrant workers exceeded 1 million people.

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MYANMAR URGES THE SPEEDING UP OF MIGRANT WORKER REGISTRATION AS DEADLINE APPROACHES

SUPALAK GANJANAKHUNDEE 1HENATIONO~SUNDAY

MyanmaryesterdayurgedThailand . to speed up registration ~fmigrant workers from the country, with 1 million of them and hundreds of thousands of their children still undocumented as the deadline nears.

Myint Thein, Myanmar's deputy labour minister, was in Thaiht.nd yesterday to monitorprogressofthe goverJ;J.ment's scheme to register millions of migrant workers. .

Thailand, together with th~ Myanmar authorities, is in ,_the · process of collecting documerirltto verify the workers'nationality. the deadline is in mid-March.

The original nationality-verifi­cation deadline for migrant work­ers expired last year, but the Cabinet extended the date, allowing them to submit documentation by March 16. . =- <->~Thailand set up one-stop service centres in major cities throughaut

the country _ to facilitate the process. Myanmar has dispatched offi­cials to 11 of the centres, Myint Thei.n told a press conference.

Some 1.2 mil­lion migrant . workers from Myanmar have been registered so far. Myint Thein estimated that 1 million more have no documents.

The nationali-

Myanmar wants Thai · authorities. to issue special entri~~as · for children who accompan~ordepend on parents working in Thailand. Officials say issuing such a· visa for children could take weeks.

children ·. could take weeks.

"We would like children who are dependent· on parents working in Thailand to have documenta­tion so that authorities can provide protec­tion · and social welfare for1:hem," Myint Thein said.

It is estimated that _ migrant worke·rs , · in Thailand are accompanied by

ty-verification centres have the capacity to provide service to 500-1,000 migrant workers per day.

some 200,000 children, he said, noting that half of them are of scho.ol age.

"Wewantthem to be able to con­tinue their edu{'ation. If they have documents, they will have a chance

Myanmar wants Thai authori­ties to issue special entry visas for . children who accompany or depend on parents working in Thailand. Officials say issuing such a visa for

to be educated," he said. · · The fdyanmar minister sa.id_toe -··

txpe~_ of olitainip.g .d~t,ffienta- -

tion in Thailand was too high for Mymmar migrant workers. Many of them have to pay as much as Bt15,000, according to Myanmar Ambassador to Thailand Tin Win.

Basically, migrant workers have to pay Btl,SOO or Bt3,600 for a one­year or two-year work permit, · respectively, according to the Department of Employment. ·

Thailand has opened ~me-stop · service · centres for registering migrant workers, collecting docu-

- ments and contacting Myanmar authorities to verify nationality and obtain necessary documents, . he said.

"This process is not expensive for the workers, but many of them have to pay private brokers," he said. "We don't know how private brokers intervene in the .process aDd take such a large amount of money from the workers,"-Tin Win said.

The ambassador urged the Thai . authorities to monitor the process and find a solution to reduce work­ers' expenses.