Labour shortage in
Thailand's textile
industry
Thai firms looking to
invest in Burma, Laos and Bangladesh
By Jon Fernquest 
While
most industries lost jobs during the global
economic slump,
Thailand's textile industry has had a growing labour
shortage! Thailand's agriculture sector has become more lucrative and drawn Thai employees out of textile mills and back to the farm, according to today's article.
Or maybe it's just that Thailand has moved up the value chain and textiles is no longer a viable industry for the country.
The same thing happened to Japan and Korea in the past.
Thai wages are too high to make Thai textiles competitive in international markets.
Instead of closing up shop Thai textile producers are looking to expand overseas to Burma, Laos and Bangladesh.
A Thai-Burmese "special economic zone" in Mae Sot where a lot of textile producers have operations may alleviate the situation somewhat (Read article).
Article begins after vocabulary:
textiles - fabric
made by weaving or knitting (See Wikipedia)
global economic slump - when the world economy slows down and people make less money, more unemployment
labour shortage - not enough workers at the going wage
lucrative - profitable
drawn X out of Y - taken X from Y (and put them some other place)
textile mill - a large factory producing textiles
moved up the value chain - start producing goods and products with higher value added (that don't just rely on widely available commodities and cheap labour)
viable industry - an industry that can continue to exist, continue living
closing up shop - stopping operations (business, manufacturing)
looking to do Y - planning to do Y in the future
alleviate the situation - make the situation better, improve
global economic slump - when the world economy slows down and people make less money, more unemployment
labour shortage - not enough workers at the going wage
lucrative - profitable
drawn X out of Y - taken X from Y (and put them some other place)
textile mill - a large factory producing textiles
moved up the value chain - start producing goods and products with higher value added (that don't just rely on widely available commodities and cheap labour)
viable industry - an industry that can continue to exist, continue living
closing up shop - stopping operations (business, manufacturing)
looking to do Y - planning to do Y in the future
alleviate the situation - make the situation better, improve
Garment firms look abroad for help
Labour shortage and cheap workforces key7/10/2009
The garment industry in Thailand sees no future or prospect for new investment due to severe labour shortages, with all eyes on investments in neighbouring countries with cheaper labour for producing exported goods, says the Thai Garment Manufacturers Association (TGMA).
Burma, Laos and Bangladesh are among the countries where the TGMA is encouraging members to invest, said Vallop Vitanakorn, the TGMA secretary-general.
garments - clothing
abroad - in a foreign country, outside of your home country
prospect - the possibility that something will happen in the future prospect for new investment - the possibility for new investment in the future
shortage of Y - not enough Y to meet needs
severe labour shortages - don't have nearly enough labour to meet needs
all eyes on - everyone is watching Y to see what happens next
Thai Garment Manufacturers' Association (TGMA) - (See website)
encourage - give energy to continue doing activity, motivate, give confidence
abroad - in a foreign country, outside of your home country
prospect - the possibility that something will happen in the future prospect for new investment - the possibility for new investment in the future
shortage of Y - not enough Y to meet needs
severe labour shortages - don't have nearly enough labour to meet needs
all eyes on - everyone is watching Y to see what happens next
Thai Garment Manufacturers' Association (TGMA) - (See website)
encourage - give energy to continue doing activity, motivate, give confidence
Of the 1,600 factories in Thailand's garment industry, at least five are moving to foreign countries, where low-wage workforces are plentiful, with planned investments of 200 million baht each. Those five are among the 80 large-scale garment factories located in the country.
"We would call this period a labour crisis. Right now we have a shortage of 50,000 to 60,000 people in the industry, and it should definitely reach 60,000 by next year," said Mr Vallop.
A main contributor to the shortage is the fact that prices of agricultural products have been increasing, shifting labour from the garment sector to farming, he said.
Thailand has 400,000 people working in the garment industry.
Still, he warned investors about drawbacks in neighbouring countries. For example, sanctions are imposed on Burma by the United States and the European Union. Meanwhile, Laos has a population of only 6.3 million, limiting its workforce, said Mr Vallop.
workforce - all the
people who work for a company or in an economy
low-wage workforces - economies and countries that have cheap low cost labour
plentiful - lots available
main contributor to Y - the main thing causing Y
drawbacks - things or features that make less acceptable, disadvantages
sanctions - punishments
sanctions are imposed on Burma - Burma is punished
low-wage workforces - economies and countries that have cheap low cost labour
plentiful - lots available
main contributor to Y - the main thing causing Y
drawbacks - things or features that make less acceptable, disadvantages
sanctions - punishments
sanctions are imposed on Burma - Burma is punished
Japan as new market
The garment industry is expected to decline by 10% from last year with a value of US$3.3 billion, said Mr Vallop. Although orders in the fourth quarter will come from Europe and the United States, the industry next year is expected to grow by 5% and will focus on Japan. Mr Vallop said Thailand's garment exports were not particularly focused on Japan in the past, since most of the orders were small lots, and that Japan was serious about high-quality products."At the start of the financial crisis, the government looked for a new market for us. While we can't compete with countries like Bangladesh and those in the Middle East, our main target apart from Europe should be Japan," he said.
Japan currently imports 84% of its garments from China due to the short transport distance, the abundance of raw materials and cheap labour. However, this is going to change because Japan believes it is risky to invest so much in China, said Mr Vallop.
In order to increase Thailand's garment market share in Japan, Thai business operators need to understand Japanese garment trends, he said.
a lot - a group of
things
small lots - small groups of things
raw materials - a basic substance or material used to manufacture things in a factory
abundance of raw materials - lots of raw materials
Japanese garment trends - the kinds of clothes that are popular with people in Japan
small lots - small groups of things
raw materials - a basic substance or material used to manufacture things in a factory
abundance of raw materials - lots of raw materials
Japanese garment trends - the kinds of clothes that are popular with people in Japan
Japan's Ministry of Economy, Trade and Industry provided a budget of 11.5 million yen to support advisers to come to Thailand and offer help to factories.
Japan currently imports $22 billion worth of garments, but only 1.2% or $270 million from Thailand. The number is expected to increase to 5% by 2012, which will increase Thailand's exports to Japan from 8% to 30% of the total garment market, or 1.1 billion baht.
Mr Vallop said it was not only a labour shortage but also better corporate income tax rates offered by other countries that have led to the crisis. Thailand imposes 30% corporate income tax across the board.
Japan's Ministry of Economy,
Trade and Industry (MITI) - the Japanese government
agency responsible for Japan's export-driven growth after World War II
(See Wikipedia)
budget - the plan for spending during a period of time within a company or organization
advisers - experts who tell managers and decisionmakers what they should do
a budget of 11.5 million yen to support advisers - 11.5 million yen to be given to provide advisers
income tax - tax paid on the money that a company or person makes (income)
income tax rates - the percentage of income paid as tax
corporate income tax rates - the percentage of income paid by corporations
corporations - a large company (registered with the government as separate legal entity, owned by many shareholders) (See Wikipedia)
across the board - applies to everything
budget - the plan for spending during a period of time within a company or organization
advisers - experts who tell managers and decisionmakers what they should do
a budget of 11.5 million yen to support advisers - 11.5 million yen to be given to provide advisers
income tax - tax paid on the money that a company or person makes (income)
income tax rates - the percentage of income paid as tax
corporate income tax rates - the percentage of income paid by corporations
corporations - a large company (registered with the government as separate legal entity, owned by many shareholders) (See Wikipedia)
across the board - applies to everything
(Source: Garment firms look abroad for help, Labour shortage and cheap workforces key, 7/10/2009, link)
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