As Thais suffer and watch foreign investors flee their country for other Asian nations which offer cheaper labour forces, they are getting a taste of how little respect globalisation has for the rights of working people.

By Teena Gill

June 1999

Bangkok: Every time Nangnuth, a 38-year-old unemployed Thai, sees Mickey Mouse or Donald Duck on a poster or on television, she sees red.

This has nothing to do with the lovable cartoon characters themselves. It's just that her ex-employer - the Austrian-owned Eden Group - manufactured a range of children's fashion products for the American multinational corporation, Disney.

In mid-1996 Eden sacked Nangnuth and 700 others after they protested against its strategy of cutting jobs and subcontracting to cheaper workers in rural Thailand and abroad. They were also demanding better working conditions.

When the Thai authorities tried to intervene the company simply packed up and left the country, leaving a debt of millions of dollars to former employees and local raw material suppliers.

'I worked there for 10 years and somehow never believed that a foreign company would cheat us so blatantly,' Nangnuth complains, sitting in her sparsely-furnished home near the now-deserted factory site on the Vibhavadi-Rangsit highway north of Bangkok.

'The Eden Group's behaviour is a classic example of how little respect the process of globalisation has for the rights of working people,' says Chin Thaplee, chair- man of the National Employees Council, a federation of Thai private sector trade unions. Many commentators blame Thailand's current high unemployment on the Asian financial crisis. They say the roots of the financial crisis lay in the path of global integration followed by Thailand.

'Foreign investors first poured money into Thailand to take advantage of its cheap labour and when countries like China and Vietnam opened up with even cheaper labour they started moving out in droves, creating conditions for an overall loss of international confidence and the subsequent financial crisis,' says Lae Dilokvidyarat, a labour economist with Bangkok's Chulalongkorn University.

According to the World Bank, since the start of the crisis in mid-1997 unemployment has risen by over 50%. By the end of 1998 there were an estimated two million jobless Thais out of a total workforce of 30 million.

Using cheap labour worked well for several years for foreign investors, especially in the labour-intensive garment, footwear and toy manufacturing industries. Investors from Europe, North America and other Asian 'tiger' economies queued up, drooling at Thailand's low wages, tax incentives, and tight controls on trade union organising.

But by the mid-1990s the steady value of the Thai baht against the US dollar and rising minimum wages meant Thai labour had become too expensive for global operators. A 1995-96 study by Bangkok Bank estimated that wages in the Thai garment manufacturing industry averaged US$0.63 an hour, compared to $0.16 in Indonesia, $0.24 in Sri Lanka, $0.26 in China, $0.33 in India and $0.46 in the Philippines.

As a result, many manufacturers moved shop: some to China, Laos or Vietnam, others to home-based workers and rural 'sweatshops' and yet others to migrant Burmese labour working along Thailand's western border.

Among them was the Eden Group. It employed more than 4,500 workers at its height in 1987. By 1996, just before it closed down, it had less than 1,000 workers. Most of the jobs had already been subcontracted out.

Such labour policies can have a long-term effect. According to a recent ILO (International Labour Organisation) report, excessive reliance on poorly-paid and poorly-trained workers, restricted union activities and the absence of social safety nets have meant that Asian countries have been unable to deal with the social fallout of the financial crisis.

'The crisis has revealed serious shortcomings in Asian labour market institutions and practices,' says the report.

In Thailand, the loss of regular employment has also had a cascading effect on the informal labour market, particularly among migrant workers, with several hundred thousand workers sent back to their homes in neighbouring Burma, Laos and Cambodia.

The ILO report points out that before the Asian crisis, most countries in the region had not signed up to even basic ILO conventions, such as the Right to Organise and Collective Bargaining (1949), Against Discrimination of Employment and Occupation (1958), Equal Remuneration (1951) and Minimum Age (1973).

The ILO is now pushing Asian governments to introduce unemployment insurance, coupled with benefit schemes and training systems for retrenched workers.

The International Confederation of Free Trade Unions (ICFTU) says one of the key lessons of the crisis is that governments, employers and international institutions must formulate laws and set up the bodies to ensure proper social partnership between labour and capital.

'The recent riots in Indonesia demonstrate what may happen when such factors are missing,' says an ICFTU report. The trade union body warns that in 1999, as enterprises attempt to regain profitability by slashing workforces, social tensions even in relatively stable countries like Thailand are bound to worse.

In Thailand, as in Indonesia, less than 10% of the total workforce is unionised, which makes consensus hard to reach.

'Economic policy-makers have been the chief culprits in unleashing globalisation on unsuspecting workforces,' says an ICFTU official in Bangkok. 'It may finally take the wrath of the unemployed masses bringing down smug governments to change the direction of industrialisation.'

He says change is needed to make the economy more sympathetic to the long-term needs of domestic populations - not just foreign investors. - Third World Network Features/PANOS

About the writer: Teena Gill is a correspondent for Panos Features, where the above article first appeared (1 May 1999).