The impact of globalisation on the textile and garment industry in Thailand

MAUREEN MURPHY, who works for Transnationals Information Exchange, outlines the struggle of Thai workers to organise for decent wages and conditions, job security and human dignity. It is vital that Australian workers mobilise to support their Thai sisters and brothers because of the burning need for justice. However, international cooperation is a two-way street as it can make moving plants offshore an unprofitable option for the bosses.

The past decade has brought unprecedented change to the textile and garment industry worldwide. There has been the shift in production from the developed world to the developing world; concurrently with a shift in production from the factory to the 'outworker', both in developed and developing countries. These trends can be seen clearly in the newly-industrialising economy of Thailand.

During the 1980s, Thailand embarked on a program of industrialisation, hoping to emulate the double-digit growth rates of the Asian 'tiger economies' of the previous decade. Central to the program was the rapid development of small manufacturing industries, notably, textiles and garments. Factories from Europe, North America and the Asian tigers relocated, attracted to the low wages, government tax incentives, and the tight control on trade union organising. A ready workforce was found among young rural women moving to the cities to find work.

Textiles and ready-made garments are the country's most lucrative export. For the past decade, Thailand has been the 10th largest supplier of garments to world markets. The garment industry employs roughly 850,000 workers, in 2,000 factories.

In recent years however, with the rise of local wages in line with increases in the minimum wage rate, the 'comparative advantage' enjoyed by Thai garment manufacturers has been eroded. In 1995-96, the Bangkok Bank estimated that the wage rate for garment manufacture in Thailand averaged US$0.63 an hour, compared to US$0.16 in Indonesia, US$0.24 in Sri Lanka, $US0.26 in China, US$0.33 in India, US$0.46 in the Philippines and US$0.56 in Malaysia.

As a consequence, the Thai textile and garment industry has developed high tech manufacturing in the past few years, aiming production at the high-end of the market. Nevertheless, many small to medium scale manufacturers have relocated production to China, Laos or Vietnam where labour costs are lower, Other factories are shifting production out of the factory to the home-based worker, or small-scale 'sweatshop'.

The history of the Eden Group is a revealing case study of the impact of globalisation on Thai workers. However, concurrently with the globalisation of industry, recent decades have also seen the globalisation of the labour movement and trade union organising.

The Eden Group - a case study of globalisation

The Eden Group is an Austrian-owned transnational company, part of the export-oriented garment industry of Thailand. It has subcontractors based in at least three other countries in Asia. In 1991, according to the company's business report, the Eden Group generated as much as US$70 million for that year alone. At its beginning, the company's profit reached US$2.4 million per year and from there, continued to increase every year. Since then, the Eden Group has rapidly expanded its business, in which a system of subcontracting has been used both within Thailand and abroad.

The company received numerous investment benefits from the Thailand Board of Investment. It was exempted from import taxes for imported raw materials and machinery. The Eden Group also received export quotas from the Thai Ministry of Trade and Commerce. In addition, the Eden Group adopted a sophisticated system of financial management by setting up a billing office in Hong Kong, instead of Thailand, so that it was able to avoid types of business tax as its actual gains were not declared to the Taxes Authority of Thailand. Since 1985, the company has also been transferring its capital and profits gained in Thailand to overseas, for re-investing in other businesses such as real estate.

The Eden Group produced for the European and North American market, under well-known licences such as Walt Disney, Looney Tunes and Power Rangers. At its peak, in 1987, Eden Group was one of the major garment industry exporters in Thailand, employing more than 4,500 workers, with 12-hour working days common to the workers.

Eden workers' union responds

A compliant company union existed at the factory until 1994, when TIE-Asia began working with a small group of Eden workers to establish a credit cooperative among Eden employees. Initial contact was made in informal settings, over shared meals after work, at venues near the factory. From this entry-point, discussions continued with the Eden workers, gradually turning toward their employment; wage rates, working conditions and company union.

A successful campaign against sexual harassment in the workplace was launched, and then late in 1994 union elections were held. Fourteen of the women who were participating in the TIE-Asia discussions, ran for leadership positions in the union, and won. The new Eden workers' union participated in union training and education programs organised in the following years by TIE-Asia and the Thai labour organisation, CLIST.

Subsequently, the union became more active, pressing for improved working conditions and wages. The union submitted a list of demands concerning the improvement of working conditions in the workplace and an agreement on dismissal. Workers received 145-150 Baht (US$6) per day. They also worked between 3-6 hours overtime each day. In the workplace, workers faced hazards such as dust, toxic chemicals in the printing department, and floods in every department.

Subcontracting begins

The union had also become aware of a subcontracting system practiced by the company since 1991, which was to lead to the dismissal of a large number of workers at the plant in later years. The union also investigated working conditions at the Eden Group's subcontractors, where exploitation of child labour and migrant workers was found. The practice of subcontracting enormously reduced the company's production costs, namely labour costs and machinery. More importantly, such a practice had the potential to destroy the collective bargaining system and the right to organise. At this stage, there were 1,950 workers employed at the plant, 200 of whom were casual and temporary workers.

In 1995, the union alerted authorities the company was passing its waste water into the canal surrounding the factory. Eden Group was then given a notice from the Industrial Factory Department warning the company to improve its water treatment system, which the company failed to do. In February 1996, the factory's printing department was closed by the authority, which was followed by the management ordering 52 women workers from this department to work in a sweatshop located two kilometres from the main factory.

The union found it was a private residence where 50 sewing machines had been transferred from the factory. The workers refused to move to this cramped sweatshop. Since it was not a legal operation, the union lodged a complaint with the management and informed the Government. It was revealed the company was planning to lay off many more workers, and force others to work in a network of private residences as subcontractors. The company later said it was facing bankruptcy, and would offer workers three months redundancy, only half the legal amount required by law.

Direct action

A union-organised protest of 1,000 workers outside the factory gates on February 24, was followed by threats of dismissal, then attempts by management to break union solidarity, when they offered a redundancy package of six months to the 50 workers from the sewing section, who were chosen to be moved to the home-based factory. The workers in question refused.

Fifty workers took a petition to the Ministry of Labour on February 28 requesting official intervention. The Ministry replied that nothing could be done but the matter would be looked into. Then, on March 1, 1996, 800 workers including union officials were given letters terminating their employment. The union and workers organised protests demanding government intervention to the management-union conflict. The Eden garment workers took their protests to the streets during the inaugural Asian - European economic summit on March 2, blocking the main highway from the airport into central Bangkok. After long negotiations involving the union, management and government officials, the company agreed to pay ten months compensation to the dismissed workers. The management also agreed not to dismiss any more workers. But by April 1996, only 650 workers remained at the Eden Group because the company had subcontracted most of its operations out to independent subcontractors and home-workers. During July-August 1996, the union approached the Eden Group management about an improvement of health and safety conditions in the workplace. The company refused to negotiate or consider the union's proposal. The union then lodged a complaint to the Safety Commission which on August 30 inspected the factory and issued a notice warning the company to improve safety conditions with such measures as providing fire extinguishers.

The company responded angrily, and after 15 days given to improve conditions, no progress had been made. The company also failed to pay the August wage to some 300 workers. The workers complained to the Labour Department and the local police office.

On September 13, 1996, the company dismissed 345 workers without paying wages or compensation. After the dismissal, there were only 300 workers remaining at the plant, who were doing quality control and packing work, two sections necessary for export. Most of the company's operations, including sewing work, had been subcontracted to independent subcontractors and home-based workers both within Thailand and China.

The Eden Group was subcontracting part of its operations out to small business owners. These subcontractors employed 10-20 workers to work in a sweatshop. The sweatshops are illegal, avoiding business taxes, labour laws, and social security laws. It was discovered that these sweatshops exploit child workers who are under 15 years of age, including illegal migrant workers from Burma and Cambodia.

From factory to sweatshop

From large-scale production in a factory with a strong workers union, to sweatshops: the company's products were now being made by child and illegal migrant workers who were not unionised nor protected by labour laws. The company declared great business losses and huge debt, as the reason to sell its machinery and lay off workers, without paying compensation to them. This excuse of bankruptcy was a lie.

Meanwhile, the labour laws fail to reflect the actual needs of workers. According to the law, an employer only has to pay an equivalent of six months wages as compensation to a dismissed worker. In reality, 6 months compensation is a very small sum that workers can hardly rely on. Aging women workers face an even more difficult situation than most, as they are often refused new employment.

The Eden Group is a transnational corporation seeking to employ cheap labour and make a quick profit through short-term investment. The company began subcontracting its operations out after the workers union became active and demanded better working conditions. A large number of workers, particularly women, lost their jobs and became unemployed. The company however, maintained a small operation in Thailand, in order to take advantage of export quotas and business tax privileges.

The campaign begins

What followed the September 1996 dismissals, then finally the dismissal of the remaining workers in December 1996, was a long, well-organised, international campaign to fight for compensation for dismissed workers. The campaign also sought to illustrate the impact of globalisation on these super-exploited Thai workers.