Thailand 1999: Thai Workers in IMF Era (fwd)

[Robert Weissman <rob@essential.org>]

March 1999

         CENTER FOR LABOUR INFORMATION SERVICE
                            AND TRAINING (CLSIT)

                      Labour Situation in Thailand 1999
                          :Thai Workers in IMF Era

                            Somyot Pruksakasemsuk

             Centre for Labour Information Service and Training

Socio-Economic Situation

Thailand has rapidly become an industrial country after having double-digit
economic growth rate continuously throughout the 1980s. This made many
people believed that Thailand had become the fifth "tiger" of Asia. In 1996,
however, it reached a turning point when economic difficulties began to
surface and in 1997 it was clear that Thailand would go into a severe and
long-lasting economic depression. In other words, a newly developed country
has regressed into an under-developed country again. Worse than this, a
nation is losing its unique culture and history to become a part of the
globalised system which is dependent on the International Monetary Fund
(IMF) and World Bank. Fate of this country is in their hand.

Economic downturn in Thailand was a direct result of development of the
globalised system on at least two counts:

Firstly, it was a result of expansion of financial market and stock market
which seem to have no frontier. They have become a new force determining
movement of national economic system all over the world. They dictate
success or failure of economic development, creating an illusion of
successful economy. "Bubble Economy" as it is called is an economic and
financial system that expands from short-term speculation in the financial
market and real estate sector. It finally led financial institutions and the
real (manufacturing) sector in Thailand to collapse, and national and small
business to crumble.

Secondly, it was a result of expansion of the transnational corporations
(TNCs). Importantly through the progress of information technology, these
giant corporations can multiply their branches or create network to cover
the world. It is an emergence of global monopolistic capitalism which cut
through all national boundaries. Since 1961, the Thai government has begun
to actively promote foreign investment mainly by giving tax privileges and
providing infrastructure to export industries. Consequently, the country
lost much incomes in form of taxes from the TNCs. These TNCs more often than
not use modern technology and machinery instead of human labour resulting in
limited employment. They also import much capital and raw materials causing
much trade deficits every year.

These two factors together with defected political system led to the
economic downturn which spread to other parts of Asia and the world. The
economic crisis caused Thailand to lose its independence having to oblige to
conditions set by IMF, resulting in the country becoming a production base
controlled by the TNCs. A direct consequence is that the government has been
trying to suppress and restrict rights and freedom of workers. Particularly,
they try to strictly control labour/trade unions, resulting in labour unions
to lack power to bargain with the TNCs.

In 1998, total foreign investment in Thailand was US$ 7.6 Billion of which
US$ 2.1 Billion was in the banking sector. One-third of direct investment in
the non-banking sector came from Japan, followed by USA (17%) and Hong Kong
(9%). On the other hand, 47% of the foreign investment was in industrial
sector, followed by investment in trading through department stores (18%)
and in the financial sector, most of which was in leasing business (13%).

Privatisation of State Enterprises

A condition set by IMF in its rescue plan to Thailand is privatisation of
the state enterprises which would open way for TNCs to dominate Thai
people's way of life more than before. A good example is privatisation of
the Pharmaceutical Organisation of Thailand which has produced cheap
medicine for state hospitals which means that in long-term Thais would have
to buy medicine at very high prices. Another one is planned privatisation of
Electricity Generating Authority of Thailand. This privatisation would
enable TNCs to dominate key enterprises in Thai economy.

At present, there are 66 state enterprises employing 310,000 people. It is
estimated that if all of them are privatised, no less than 100,000 workers
would face retrenchment.

Unemployment in 1998

In 1997, more than 300,000 employees were retrenched as a result of the
collapse of various business enterprises. In 1998, 12,201 companies with
total register capital of 31,935 million Baht went out of business. TNCs
tried to cut back costs of production by adjusting the production
organisation to make it more flexible and small, using temporary employees
instead of permanent ones, and using retrenchment as a means to destroy
labour unions.

This retrenchment increased a total number of unemployed people to two
million or 4.79% of total labour force (33 million) in Thailand in 1998. It
is estimated that in 1999, unemployment would reach three million.

In addition, when retrenchment happened the employers tended not to observe
the labour law. For instance, the Central Labour Court disclosed that from
January 1 to December 15, 1998 there were 22,776 labour cases demanding a
total payment of 15,165,571,116.34 Baht of which 80 % were compensation
money. This implies that the retrenchment happened without workers being
paid proper compensation resulting in the affected workers exercising their
legal right through the Central Labour Court to demand for the compensation.

Workers who returned to agrarian community are also unlikely to do well
there either. From early 1999, Thailand has suffered a bad drought. A report
from the Ministry of Interior indicates that 4,463 villages in 911 Tambon
(sub-district), 140 districts, 22 provinces are now facing drought. In all,
2,526,890 people in 551,052 households are affected.

Crimes and Prisoners Increase

Rising unemployment added by bad drought unavoidably lead to various other
social problems directly affecting the underprivileged in Thai society. It
is estimated that number of poor people in this country would increase from
7 to 12 million in 1999.

Crimes and use of violence have increased. Crime against property in the
Bangkok metropolitan area increased by 10% in 1998. Total number of inmates
increased from 65,916 in 1988 to about 170,000 in 1998 and is estimated to
be about 220,000 in 1999.

More Children are away from School

Number of children in school in 1998 was considerably down from the previous
years. The total number of children taking up class beginning with grade 1
of primary education, grade 1 and 4 of secondary education, and grade 1 of
vocational education was 17.3% lower than the goal, meaning that up to
500,000 children did not go to school as the government had expected. In
1997, this goal was missed by less than 200,000 or 6.8%. This shows that the
economic crisis more than double number children who were away from school.
Vocational education suffered most as number of new students was 35% below
the target.

Violence and Poverty among Children

Office of Thailand Research Fund revealed results of a research "Children,
Youth and Family in Thailand" that there were 27.9 million Thai children and
youth aged 0-24 years old. About 1.3 million children aged lower than 5
years old suffered from malnutrition. Lack of ferrous and vitamin A caused
anemia and blindness to some of these children.

The research also revealed that although 9 out of 10 Thai children went to
primary school, in fact education opportunities were different between urban
and rural children and between children from families of different economic
status. 3 in 5 children did not continue studying to secondary level, and
only 1 in 20 youth studied continuously to higher level and tertiary
education. 3 out of 5 youth had to work to support their family. Those who
earned more than needed spent most of their incomes with little left to
save.

1 in 4 Thai youth had mental health problem. Being under pressure in their
life, they were likely to commit suicide or attempt to do it more than
people in other age groups. There was a spread of an adherence to wrong
attachment among female children and youth which reflected their tension and
anxiety. In addition, number of youth committing crime multiplied by several
folds. About 30% of them were caught in theft case while drug abuses was the
youth crime that increased at the highest rate.

Half of youth aged 13-24 years old went to the labour market. Working hours
of child and youth labour were over 40 per week.

The research also indicated that many Thai children were in `difficult'
conditions. For instance, figures from the Public Welfare Department (1995)
disclosed that among 8 million children aged 0-14 years old, more than
100,000 were abandoned by their poor parents; 350,000 were orphans; nearly
400,000 were street children and beggars; more than 400,000 were disabled
physically and mentally; and 200,000 were of the poor minority peoples.
About 5 children were abandoned in Thailand every day. A tendency was that
children infected with HIV virus would be increasingly abandoned. It is
estimated that now about 60,000 children are infected with HIV virus from
their mother. This figure is expected to rise to 200,000 in 2005. Hundred of
thousands would also become orphan when their parents die of AIDS.

The research added that many children suffered from maltreatment in their
family and society. Age of children being sexually harassed came down, so
did age of the harassers. When children were harassed, they were ignored and
did not receive help from the society. Moreover, children selling sex were
about 30% of adult prostitutes.

No Way Out: Suicide is Increasing

Doctor Yongyuth Wongphiromsarn, Director of the government Mental Health
Institute, said that in 1997 there were 600 pieces of news from various
media reporting suicide committed by Thai people, indicating a suicide rate
of 10 for a population of 100,000. He also adds that it is estimated that at
present the rate is increased to about 14-15 per 100,000 because of the
prolonged economic and social pressure.

Mr.Khamron Na Lamphun, a Deputy Minister of Public Health, reveals a survey
of people who lost their job which finds that workers who lost their job or
have less incomes concede to the situation as they can not see any new way
out. Doctor Somchai Jakkraphan, Deputy Director General of the Mental Health
Department, also discloses results of a study to find how many workers who
lost their job are depressed and feel hopeless. The study was conducted
twice in December 1997 and June 1998 from a sample of 1,000 workers in
Bangkok. It is found that 14% of the surveyed workers feel hopeless in
December 1997. This figure increases to 30%, or more than double, in June
1998. More alarming is that depression from job lost pushed 7% and 11.9% of
the workers to think about suicide in December 1997 and June 1998
respectively.

In Thailand now more than one million students are addicted to the `mad
pill' or amphetamine. Number of students who, due to the economic
difficulty, had no hope for the future and turn to temple or become Buddhist
monks has increase by 40%. Similarly, number of children who faced family
breakdown and have left home to become street children also increases by
40%. Rate of abortion is now about 300,000-400,000 cases per year or 3-4% of
women in reproductive age. It is estimated that there are about 1,000
illegal abortion clinics in Bangkok and surrounding provinces.

Women Workers in Difficulties

The Labour and Social Welfare Ministry's record of job termination which is
collected from complaints lodged by workers and visits made to workplaces
from January 1 to November 30, 1998, shows that 1,000 work places which
cover 22 kinds of business have terminated employment of 47,634 workers from
a total of 212,536 workers employed. Among workers faced with retrenchment,
57.29% or 27,294 are women workers (from a total of 123,241 women workers
employed).

Textile industry shed workers highest number of workers: 7,584 workers of
which 6,459 are women workers, in 17 workplaces lost their job. This is
followed by 71 workplaces in electrical equipment and electronic parts
industry which shed 5,482 jobs and 54 workplaces in motor vehicle, engine
and parts industry which shed 4,700 jobs. In fourth place are 77 workplaces
in unidentified business which altogether shed 4,739 workers.

>From this information, it is clear that more women workers had their job
terminated than their male counterparts. This is very much the case for
women workers who are 35 years old and over. It would also be difficult for
them to look for a new job as most factories would recruit workers only from
the age group of 18-25 years old. The women workers who lost their job have
more often than not gone into the informal sector, working at home in the
sub-contraction system which pay lower than the minimum wage guaranteed by
the labour law. They also work long hour, up to 16 hours a day. Some of them
have already turned to the sex industry.

Low Wages High Cost of Living

Inflation rate had remained at 10% continuously throughout 1997 and 1998 due
to an increase of the value added tax and of prices of petrol, the latter as
a consequence of the currency devaluation. In 1999, inflation has come down
to 3%. Added up, the past three years inflation has gone up more than 25%.
However, the official minimum wage was not at all increased in 1998.
Workers' real incomes therefore have decreased. At the same time, most
employers used the economic crisis as an excuse to substantially reduce
wages and welfare which costs them, resulting in much poorer living
conditions for workers. Workers then respond by working longer hour to get
enough incomes necessary for themselves and their family. In chemical and
garment industry, for example, workers work up to 14 hours a day.

Less Number of Labour Union

In 1998, labour (or trade) unions were clearly threatened by the employers.
In nearly all business where labour union existed, the employers proposed to
change employment conditions to create labour related flexibility. For
instance, workers were forced to work long hours and at high speed while
they were paid only at the minimum rate according to the labour law; bonus
and welfare they used to receive were also cancelled. This employment
flexibility is employers' one-sided condition, making Thai government being
like a servant to serve any wish of foreign capitalists.

In 1997, there were 968 labour unions in Thailand with a total of 270,276
union members which was only 3.3% of 8.2 million private employees in
non-farming sector. In that year, 104 labour unions were closed down, the
highest number since 1975, while only 57 labour unions were formed, the
lowest in the past ten years.

In 1998, 989 labour unions existed in the country; only 21 more than in
1997. This clearly reflects a decline of workers awareness of their rights
and benefits from labour unions in time of economic difficulties.

Also in 1998, a total of 1,794 cases of unfair treatment towards workers as
judged by the Labour Relations Commission were registered. Most of them were
about dismissal of union leaders and workers involved in making demands to
the employers. What they wanted was just that employers paying them
compensation and loss cost, instead of re-installment of job. This figure
means that in 1998, Thai labour movement lost 1,794 union leaders.

Tactics Used to Destroy Labour Unions

In time of economic difficulties, Thai workers bear full brunt of the
impacts. Those who can keep their job have developed a mentality to accept
the situation and a fear of job loss. This enables the employers to
undermine working conditions. In the past year, employers have used various
aggressive tactics to destroy labour unions as follows:

1. Use of external sub-contractors These employers distribute work that used
to be done in the factory to sub-contractors both company or individual
persons outside the workplace. This happens mostly in garment, artificial
flower and electronic circuit industries. They also use a package deal
system where temporary workers are brought in to replace permanent workers
and pay their wages through a brokering company according to the deal they
agree. These workers would not receive the kind of benefits enjoyed by
permanent workers and they can not join labour union. This kind of
employment is widespread in the export industrial zones.

2. Retrenchment Employers use economic difficulty as the reason for
retrenchment of workers, including union leaders, while most workers do not
object. These employers also change employment conditions, such as change
from two-shift system to three-shift system to cut costs over overtime
payment, and cancel bonus or pay it in several installments instead to just
one. All these actions are aimed to make employment conditions flexible and
weak as it is the employer who can one-sidedly change and set them.

3. Making a counter proposal This is a major tactic used by employers to
lower role and credibility of labour union, especially in medium and large
scale factories. By making a counter proposal, these employers also aim to
close down the workplace forcing workers to withdraw from labour union, or
to create a situation that pressure workers to go on strike illegally, so
that they can dismiss workers without having to pay compensation money
according to the labour law.

4. Temporary closing down the workplace and paying half the wages Employers
use a loophole in Article 75 of the Labour Protection Act which states that
employers can close down the whole workplace or parts of it temporarily when
there is a cause not beyond one's ability. In such case, the law states that
the employers must pay workers no less than 50% of wages the workers used to
receive on the day before work closure throughout the period that the
employers do not employ them. Employers use this measure to have workers
stop working and pay only half their wages. Many workers can not live with
this condition and resign. In some cases, employers order workers to move to
another location and when workers cannot follow, they would pay half the
wage according to the law which results in termination of labour union.

Workers' Consciousness and Group Formation

Most workers not only face difficulties from the economic downturn but also
have problems with their consciousness. They fear job loss and can not see
how they can fight against unfair treatment. They dare not form labour union
or make demands. Even if they have a labour union, workers often see that it
is the role of union leaders to solve problems for them. Labour unions in
most cases therefore lack power to bargain and to protect their rights and
interests.

Violation of workers' basic rights would be very severe while workers
themselves tend to accept such situation as they choose to have a job rather
than being unemployed.

At national level, the Trade Union Congress together with groups of labour
unions in various industrial zones have demanded the government every year
to solve the labour problems. For instance, a rally of more than 5,000
workers on September 1998 demanded the government to enact an unemployment
welfare law and to set up a special fund to give urgent assistance to
workers through vocational training. The government refused to accept this
demand.

Other demands include creation of a child care centre in factory and
community and establishment of a Work Safety Institute initiated by labour
unions and NGOs. There was no response from the government who claimed that
they did not have budget for it and were not ready to respond to the demand.

At present, there are 8 labour councils, 17 labour federation and 5 groups
of labour unions in the industrial zones. Some labour organisations tend to
be dominated by the government and therefore do not take actions making
demands to protect workers' interests.

Labour organisations which still play some roles include State Enterprise
Labour Federation, Workers Coordination Centre led by Mr.Somsak Kosaisuk,
Garment and Textile Labour Federation led by Mr.Sripho Wayuphak, Paper and
Printing Labour Federation led by Mr.Nikhom Tengyai, Trade Union Council led
by Mr.Pratheung Saengsang, and Women Workers Solidarity Group led by
Ms.Wanphen Premkaew. NGOs which play important role to support Thai labour
movement are Centre for Labour Information Service and Training, Arom
Phongpha-ngan Foundation and Friends of Women Foundation.

Workers Demands in 1999

In 1999 at local level, there will be more labour disputes concerning bonus
and pay cut in the outlining areas of the capital, such as Prapadaeng
district of Bangkok, Omnoi - Omyai districts of Nakhin Prathom province, and
Ayutthaya province. These demands will be made at factory level for the
rights and benefits they entitle according to the labour law. They would
therefore have little impacts on the political and economic situation of the
country.

At national level, demands from the labour movement will be focused on four
issues:

  1. opposition to privatisation of state enterprises which would begin to
     take place in 1999;
  2. opposition to retrenchment, demanding the government to set up a
     special mechanism for examining and controlling retrenchment to ensure
     that employers do not use it as an opportunity to destroy labour union,
     and to enact unemployment social security law;
  3. demand for establishment of child care centre in factory and community;
  4. demand for establishment of Work Safety Institute; and
  5. opposition to the government's draft of the new Labour Relations Act.

New Labor Relations Act:

Pleasing Foreign Investors, Controlling Labour Unions

Following IMF, this Thai government urgently pushed for enactment of the new
Labour Relations Act to convince foreign investors. Article 35 of the new
law gives more power to the government to control labour disputes. It states
that "if (the Labour and Social Welfare) Minister sees that an unsettled
labour dispute can be detrimental to national economy or harmful to national
security or opposed to peace and order of the people, the Minister has an
authority to order the Labour Relations Commission to ultimately decided on
the dispute".

This article has been criticised and rebuked by many people, reasoning that
it could be a tool for dictatorial regime to limit and control struggles of
workers because just seeing that way the (Labour) Minister is given power to
end the labour dispute. This authority can give the Minister legitimacy to
use absolute power in the wrong way. This law then is against the
constitution and public desire to decentralise power of the government, and
creates a new form of dictatorial state.

Similarly Article 36 states that "when the country faces security or serious
economic problems or when the state of emergency is declared, the (Labour
and Social Welfare) Minister has an authority to have any unsettled labour
disputes being ultimately decided by a group of people the Minister select
or appoint". This wide range authority given to the Minister, even in time
of economic difficilty such as nowadays, allows him end the disputes and
consequently limit negotiation and terminate labour unions' bargaining
power.

Article 42 states that "when the country face severe economic problem and a
declaration is made to forbid any increase of prices of goods and services,
the (Labour and Social Welfare) Minister has an authority to declare in the
Royal Gazette forbidding employees or labour unions to demand employers or
employer association to increase their wages and forbidding employers to
increase wages for employees".

It can be seen from this article that the government's Labour Relations Bill
will give absolute power to the government to forbid employers to increase
wages for their employees and forbid employees to demand for higher wages
from their employers. This provision will definitely please capitalists who
even today are trying to reduce wages and welfare they give to employees and
avoid observing labour law.

If this law comes into effect, in the time of economic downturn such as
nowadays when goods are expensive, workers who do not receive wages high
enough to cover their necessary expenses will have no chance to increase
their wages at all. It is a law so regressive as never been before which aim
to totally crush workers.

Moreover, the bill also control negotiation by requiring advisors of the
employees must register with the Labour and Social Welfare Ministry before
being able to support employees in their negotiation process or strike. The
new law will isolate workers, decrease their bargaining power because they
would be cut off from external support.

If the government really try to push for enactment of this law, labour
unions would come out to oppose it. The law would also receive strong
croticism or even condemnation from the International Labour Organisation.

Direction of the Thai Labour Movement

Although demands made by Thai labour movement in 1999 would mostly be within
negotiation framework and the right to strike according to the labour law,
some workers tend to refuse to negotiate under the law, such as the cases of
strike by Century Labour Union and protest against bonus cut by Metro and
Fair Textile Labour Unions.

In time of economic downturn, there is not much movement by most of the
labour unions. They tend to cooperate with employers. However, if
retrenchment is imposed or their rights and benefits they used to enjoy are
cut, actions will definitely take place without consideration of the law.
These actions are just a response to the pressure from their immediate
problems which have little impacts on the country's politics and economy.

Nonetheless severe unemployment problem and the government's failure to
solve this problem would be a catalyst pushing Thai labour movement to
campaign against the government. This may lead to social unrest and violence
as happened in Indonesia.

Major Labour Organisations in 1999

1. Trade Union Council of Thailand TUC is the first labour council in
Thailand; it was registered in 1976. TUC has played prominent role several
times in the past. At present, Mr.Pratheung Saengsang is its President.
Although it has internal problem as several factions are competing for the
leadership, it can still always present various problems faced by workers to
the government. It bases are in the Garment and Textile Labour Federation
and a group of labour unions in Samut Prakarn province. TUC promote
cooperation through the tripatite system (where employers, employees and the
government work together).

2. Workers Coordination Centre The centre was set up in 1996. It is an
independent labour group which work with pro-democracy organisations and
other groups of people campaigning for demiocracy. It bases are in labour
unions in industrial zones and state enterprises. Mr.somsak Kosaisuk is its
Secretary General. It works independently and links with other pro-democracy
groups.

3. Workers for Democracy Group It is an independent group of about 20 labour
unionists who adhere to Marxism. Its strong point is the Democratic Workers
Journal which comes out regularly to criticise other thoughts. The group
also present Marxist theory to the labour movement. It aims to form an
organised political party of workers with social democratic leaning.

4. Labour NGOs Group It is a group of development NGOs working on labour
issues with specific focus. Arom Phongpha-ngan Foundation plays academic
role to organise seminar and conduct research. Friends of Women Foundation
plays a role to support workers to form groups to solve their problems
through savings scheme or trading shop, for example.

5. Centre for Labour Information Service and Training CLIST is a development
NGOs which works to support labour unions in industrial zones. It has a
broad network with labour/trade unions and NGOs in other countries. It aims
to help build democratic labour unions at grassroots level and support
demands and actions by the labour movement.

Somyot Pruksakasaemsuk
Centre for Labour Information Service and Training (CLIST)
166/23 Natthakarn 3, Phaholyothin Road 52
Klong Thanon, Saimai
Bangkok 10220
Thailand
Tel: (662) 972 7035, 972 6385
(661) 822 9477
email: clist@loxinfo.co.th

Translated by Gawin Chutima
Development Support Consortium, Thailand