Workers to feel pinch of grinding economy
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Workers to feel pinch of grinding economy

Experts forecast year ahead will see jobless rate double as factory orders decline, placing pressure on state welfare

Workers in a pickup truck head off to work along Surao Khlong 1 Road, better known as Kip Mu Road, in Min Buri district of Bangkok. Post Today
Workers in a pickup truck head off to work along Surao Khlong 1 Road, better known as Kip Mu Road, in Min Buri district of Bangkok. Post Today

Workers' wages won't stretch very far this year amid a protracted economic slowdown that will hit pockets hard, say experts and labour leaders.

"Save wages to pay off debts and work overtime to make ends meet", is advice that sums up the outlook for workers this year.

However, the reality may be even gloomier than forecast.

Although the slowdown will be gradual and the economy is not predicted to slide into crisis, workers will bear the heaviest brunt from shrinking incomes, according to economists.

Workers generally depend on the daily minimum wage and overtime. But with the economy stuck in low gear, many employers are cutting back on overtime, leaving staff with only their basic wages to live on.

Most are paid the minimum daily rates or just slightly above. Without the prospect of overtime pay to take home, workers are bracing for serious financial hardship in 2020.

Businesses and factories are instructing their staff not to work long hours or on holidays. Some companies have asked them to work on every other day or even suspended operations altogether due to dwindling orders from customers.

Though the minimum wage is set to be hiked today, the increase is small and will not make life easier for workers who count on clocking up as many overtime hours as possible to pay expenses.

The new minimum daily wage ranges from 313 baht to 336 baht. The highest rate announced by the National Wage Committee is 336 baht and covers Chon Buri and Phuket, falling to 335 baht in Rayong, and 331 baht in Bangkok and surrounding provinces.

The lowest of 313 baht covers the far South provinces of Narathiwat, Pattani and Yala.

In the broader picture, the economy is experiencing drag from the ongoing trade war between the US and China as well as the strong baht, which has broken the 30 baht per US dollar threshold.

Tanit Sorat, vice-chairman of the Employers' Confederation of Thai Trade and Industry (EconThai), warns the global economy will not recover any time soon.

The recovery could take from three to five years, meaning Thai authorities must be fully prepared to counter impacts during that time.

Businesses and their employees must set up joint internal teams to monitor the labour situation closely and work together to mitigate effects of the economic decline, added Mr Tanit.

He said that more than 1,000 companies closed down last year, and closures are predicted to exceed that number this year with the unemployment rate likely to double last year's figure.

Mr Tanit added that more businesses shuttered last year than was actually recorded. Some companies stopped operating but did not report their closure to authorities.

"No owner wants to shut down or suspend their business unless they find themselves at the end of their tether.

"They will naturally explore belt-tightening options to survive, like reducing overtime or working hours," he said.

But ailing companies usually send out a distress signal by invoking Section 75 of the Labour Protection Act, which permits them to pay workers 75% wages during liquidity troubles, provided the companies continue to function.

Meanwhile, companies receiving fewer orders are being forced to scale back production, meaning workers often have to take days off without pay.

Mr Tanit said key indicators of a country in recession including high employment, lower exports and a fall in imports of raw materials and machinery needed to expand production.

He said that right now, the raw material and machinery import numbers do not look good, which shows business confidence is ebbing.

Larey Youpensuk, president of the Federation of Thailand Automobile Worker's Union (TAW), said digital disruption is increasing unemployment.

"Technology and artificial intelligence have replaced workers. The unskilled are being made redundant because technology can perform production-line tasks better than people.

"At the same time, fewer auto parts for petrol and diesel engines are being produced because more cars are running on electricity, and they use 10 times fewer parts to build than combustion engines. That is bad news for the automobile industry, where hundreds of thousands of workers could be put out of jobs," he said.

Mr Larey said many workers in automobile factories need to pay off credit card debts and home mortgages. They need sufficient, steady income from overtime pay to sustain their lives.

A 45-year-old worker at an auto parts company in Chon Buri said his firm entered Section 75 operation in September and cut overtime.

"Before September, I took home about 18,000 baht a month, including overtime. Now, I'd be lucky to make 8,500 baht a month, and no OT," he said.

"More than 40 workers were laid off and some of them were aged 40 or over. They are just too old to be looking for new jobs," he added.

Apinya Sujarittanan, director-general of Department of Labour Protection and Welfare (DLPW), said production in several industries has plunged as orders dry up.

In 2019, unemployment peaked in July when more than 190,000 people were jobless. They included people who were laid off, resigned or whose employment contracts had expired. The figure dropped to 174,000 people in October, he said, citing information from the Social Security Office (SSO).

Of the number of jobless, employees who resigned made up the largest average monthly portion at 77% while those laid-off accounted for about 16%.

Mr Apinya said the SSO's jobless figures were accurate because people applied immediately for unemployment benefit and compensation from the office once they were out of a job.

On the other hand, the DLPW figures focused mainly on laid-off workers. The department is the front-line agency dealing with complaints from laid-off workers locked in legal disputes with their former employers over pay and compensation.

He admitted the number of companies now invoking Section 75 was a concern. The suspension or shut down of businesses is having far-reaching effects not only on more than 87,000 workers but also on their families.

Mr Apinya said that industries most affected by the slump in orders are auto parts and electronic component manufacturers.

"Other businesses at risk of having to retrench and lay off workers are construction, hotels, and automobiles," he said.

Manas Kosol, president of Confederation of Thai Labour (CTL), said many companies have failed to offer severance pay to their employees after making them redundant.

The laid-off workers then turned to the employee welfare fund under the DLPW for assistance. The fund now has 221 million baht in its coffers, which are being quickly drained by the many applying for aid. Mr Manas said the fund needed an injection of around 1 billion baht in order to extend adequate benefits to the jobless.

Labour permanent secretary Suthi Sukosol said various parties are designing measures to tackle rising unemployment while the ministry will appoint working groups to regularly assess the labour situation.

The number of jobless in the first quarter of this year is estimated to be 50,000, double the figure in the same period last year. Mr Suthi promised to ask the SSO to increase unemployment welfare benefits and compensation, as called for by labour leaders.

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