Priced out of prosperity

Priced out of prosperity

Rising living costs across the country are outpacing the government's ability to adapt minimum wage rates

Shortly after the bell sounds, the open-air canteen of the garment factory on the outskirts of Maha Sarakham town starts to fill up. The workers get in line as they chat and eye cheap eats, welcoming a moment of midday rest after working for four long hours in the morning.

in focus: Workers in a garment factory in Mae Sot, Tak. The province is a part of a special Thai-Myanmar border economic zone. PHOTO: POST TODAY

Thirty minutes is as much as Lek Jittra, a 30-year-old factory worker, can manage for her lunch break.

"I don't have time to go around doing other things during the day," she says, munching down her food. "It's not an easy job, not an easy life. But I no longer question my fortune. I will work in factories for my whole life."

Her eyes never stray for too long from the canteen clock. Twice, she asks her friend seated next to her what time it is. The afternoon shift will start soon, followed by three hours of overtime. This means she'll be out of work by 8pm.

Ms Jittra will need all her focus -- she and the 57 workers in the garment-cutting department have a daily target to meet. They must spread and cut around 20,000 metres of fabric in length that will make 30,000 sport shirts for a recognised international brand.

If she hits the daily target, she gets double the payment of the regular daily wage. Failure to do so means earning only 305 baht per day, a rate that barely allows Ms Jittra to cover all her bases, from feeding her elderly mother and two children, and ticking off her long list of household expenses -- not to mention her kids' education and car maintenance.

On New Year's Day of 2013, former prime minister Yingluck Shinawatra's cabinet launched the "300-baht minimum wage policy" across Thailand, marking a historically high daily wage hike, with around 30 to 80% of wages rising across several provinces.

For nearly two decades before the hike, the wage rate was either frozen or even lowered at some points -- this in spite of the steady rise of living costs seen across the country.

Ms Yingluck's wage policy stirred a conversation about the truth of how workers' low wages can easily expose them to poverty, while wealthy employers profit off their cheap labour.

But since the wage hike of four years ago, life has improved very little for many workers.

This is in part attributable to the global economic slowdown, which has seen Thailand's exports plummet. Labour wages have barely budged, with only five baht added to Ms Jittra's daily wage over the past four years. Meanwhile, household debt has risen to a 10-year high.

The workers I spoke with in the factory canteen all spoke of facing financial struggles, as did many taxi drivers and informal workers that I also met with in Bangkok.

But the country GDP is still increasing, even with a flat rate of 3.2% last year. Government representatives speak of "successful growth" in spite of its lack of translation on the ground.

"Economic digits look very positive from how the top [administrative-level figures] view it," says Piboon, 45, a snack vendor at a canteen, whose sales have declined in recent years. "But it's actually getting worse for workers at the bottom of the production chain. I'm not sure if people at the top can see what's really happening down here."

The only way workers can secure a sufficient income is through hitting daily targets, doing overtime and minimising expenses. Some female workers report to suffering from cystitis, a form of bladder inflammation, from holding in urine to avoid disrupting productivity.

When calculating the time spent not only working but commuting from home to the factory, Ms Jittra estimates that she spends an average of 14 hours working every day.

She has never worn a piece of clothing she has made herself. They cost nearly half of her monthly income.

The gap between the rich and poor continues to widen in a national quest to rebuild the Thai economy, once the high-achieving Asian tiger.

HITTING THE LIMIT

"There's no need to tell you what [Thailand's] GDP growth digits will be," said Deputy Somkid Jatusripitak, a former economist, speaking at the opening ceremony of Digital Thailand Big Bang, a digital and technology exhibition, on Sept 22. "It will certainly improve. We must be confident. There is nothing to fear any more."

His confident statement follows a reported 13.2% export growth recorded in August, here compared to the same period last year. This marks the highest export growth rate over the last four years. These years have been tough on Thai exporters as the export growth rate has remained stuck between 0.7% and 2.1% from 2015 to last year.

The recent figures seem to indicate an improvement for Thailand's GDP, but Mr Somkid proceeded to make a point in his speech that could give people cause for concern.

Equality is decisively worsening in Thailand. Last year's Global Wealth Report ranked Thailand as the world's third most unequal country after Russia and India. Fifty-eight percent of Thailand's wealth is controlled by one percent of its people.

In a report released by Oxfam Thailand early this year, 10% of the country's richest people were found to earn 35 times more than 10% of society's poorest people.

On Oct 2, in a step towards closing this gap, Gen Prayut Chan-o-cha's government launched the welfare card scheme for 11.7 million low-income earners. With the card, they can get free bus and train rides, and purchase basic goods between 200 and 300 baht per month.

But the plan has been criticised for failing to disclose a more long-term solution to the inequality issue, while overlooking the fact that the wealth gap is caused by broader economic structures that do not distribute inclusive growth.

According to the World Bank's 2015 figure, around 68.93% of the Thai GDP depends on the export of goods and services. The figure is a remnant of the 1980s' industralisation period that made Thailand one of the five "Asian tigers".

The annual GDP growth rate reached 13% at the peak of the period's economic boom.

However, a high level of dependency on exports puts Thailand at risk in the global economy. The Thai economy has also never made a real comeback from the 1997 financial crisis, debilitated by not only faltering growth but a political climate marked by instability.

Mr Somkid's economics strategy team are attempting to tackle the issue by shifting the economic structure away from weak industrialisation towards digital innovation.

The government's new economic vision, referred to as Thailand 4.0, is focused on developing the country's capability as a digital innovator to drive it out of the middle-income trap. Heavy technological investment in the robot and aviation industry, as well as mega infrastructure projects, have been strongly promoted under this new plan.

But a fact of industralisation remains -- a heavy reliance on cheap labour in spite of rising living costs.

Several wealthy companies still depend on cheap labour in the export sector. Profits tend to go largely towards company heads, while low-paid workers remain at risk for poverty.

According to a 2015 figure of the National Statistic Office, more than 3.7 million people work in the manufacturing sector and factories, many of which receive a minimum wage rate.

"Labour is perceived in terms of production factors rather than human being terms," says Cholnapa Anukul, research manager for Just Society Network. "So they must come with a cheap cost.

"When labourers have to work overtime every day to earn enough to live, they lose the chance to improve their skills and capacity, and miss many opportunities in life. This is why the competitive capacity of Thailand is low. We only focus on keeping production factors cheap rather than getting into real competition."

The World Economic Forum lowered Thailand's overall ranking from 31 in its Global Competitiveness Index 2014-2015 edition to 34 out of 138 countries surveyed last year.

Education and skill levels are also low, with the former ranking at 84. The current workforce skill level is ranked at 83.

Despite the promise of the new plan, Ms Cholnapa says that large companies' preference for cheap labour will not go away any time soon.

Furthermore, workers will have limited space to climb in the company as "there is always a ceiling there."

Recent economic policies reflect a preference for cheap labour, such as the state promotion of labour-intensive industries that require low-paid workers in 10 new special economic zones located in several Thai border towns.

Other policies have opened channels for business conglomerates to extend profit, such as the government's invitation for major companies to invest in the new Eastern Economic Corridor project or participate in the Pracha Rat project.

But none of these policies directly address social welfare and low-wage workers' salary.

At a press conference for the Thai Labour Solidarity Committee held on Sept 8, a group of low-wage workers stated they felt they had no power to negotiate a more reasonable salary with employers and government panels.

The group argued that a 300-baht daily minimum wage would not cover living costs. They proposed a daily rate between 600 and 700 baht instead, which is enough to support a worker and two family members and thus, complies with the International Labour Organisation's minimum wage convention standards.

According to the convention, the rate should apply to all type of low-wage labourers regardless of their specific job. After one year, labourers should also see their wage increase every year.

However, the proposal was rejected by the government and private sector straightaway.

"Please understand that we need investment," Prime Minister Prayut Chan-o-cha told the media. "[The government] is persuading people to invest in Thailand. If they find out about this [raising minimum wage,] it's all over.

"We need time. When the economy has progressed with more revenue and profit, wages will automatically increase."

MINDING THE GAP

When looking at Boa Chantana, a 28-year-old low-paid factory worker from Maha Sarakham province, her style doesn't bear any discernible difference from an urban middle-class person. She wears a face full of make-up and blue-coloured contact lenses.

She owns a mid-range smart phone, though she is still paying it off in monthly segmented amounts to sellers.

Her husband, a worker at a different factory, does car installment. They have two children, aged two and five years old, whose future education will need to be paid for.

"My wage is currently only enough to cover food, but hardly covers family costs," says Ms Chantana who works overtime six days a week. "Things have become more expensive in recent years. My wage can't catch up."

Food and property is cheaper to purchase in her small hometown than in big cities, but brand names like 7-Eleven and Tesco are increasingly pushing local retailers to resign. The prices have not been adjusted to accommodate rural living costs.

Costs concerning the internet, phone and transport are not any cheaper in rural areas. Similarly, tuition fees, student uniforms and books tend to cost the same across most contexts.

This means that the lower payments for rural workers do not always add up to the impression of cheap living outside of Thai cities had by some urban, bureaucratic elite.

Da Rattana, a 44-year-old single mother and low-wage worker, says half the mothers in the factory spend roughly half of their expenses on funding their children's education.

"No one wants their children to have the same difficulties as they have had," says Ms Rattana. "Most of them worked low-paying jobs their whole lives because their parents couldn't afford to fund their studies.

"I'm aware that it's almost impossible to get a better wage. But if we can have good social welfare, like free education until the higher levels, perhaps our children can have the opportunities that we missed out on."

For several workers, precarious financial status is the norm at every month's end. Getting a loan is a common option, and informal loaners view this opportunistically for business.

After a work day, informal loaners make a habit of waiting for workers in front of the factory that Ms Chantana is based at. From there, they approach workers and try to persuade them to take a loan with 20% interest rate.

Ms Chantana accepts high interest rates as she has no credit to take loans from the bank. She has debt from her parents who borrowed money from a financial institution, alongside informal loaners to pay for farming factors like fertilisation, and finally, her siblings' education.

The Centre of Economic and Business Forecasting at the University of the Thai Chamber of Commerce reported in April that the household debt of low-paid workers increased by 10% from last year. About 97% of workers owe debt.

Despite their clear financial hardships, these workers are technically identified as "middle-income people".

Last year, the Thai government set the poverty line as those who make a monthly income of less than 2,667 baht -- a criteria that encompasses only 5.8 million people, or 8.61% of the population. This figure falls well below international organisations' estimation of Thailand's poor demographic.

In a World Bank report from 2014, 7.1 million Thais were estimated to live in poverty, while 6.7 million were teetering on the poverty line. These people were concentrated in the North, Northeast and Deep South.

The socioeconomic gap between Bangkok and the rural areas is widening, particularly in measures of household income, consumption, skills, education and productivity levels.

"With a 300 baht daily wage, all [low-paid] workers are considered a middle class," says Somchai Phatharathananunth, a lecturer at the Department of Sociology and Anthropology at Mahasarakham University. "The poverty line isn't practical as it makes the number of poor people in Thailand seem less than reality."

His study "Rural Transformations and Democracy in Northeast Thailand," published in the Journal of Contemporary Asia last year, finds Thailand's socioeconomic disparities are worsening.

For example, the income gap between the richest 20% of the population and the poorest 20% increased eight-fold throughout the 1970s, then around 12-14 times throughout the 2000s.

Inequality between urban and rural areas is pronounced in the Northeast, and part of the reason behind the 2010 red-shirt protests, with demands centred on democracy and equality.

However, the reality of inequality is often downplayed by the media and urban elite who depict the protest's participants as ignorant and lured by Thaksin Shinawatra's populism. Mr Somchai suggests, however, the movement shows that the inequality issue is real and critical.

He further said that one must bear in mind that Thai economy is now neoliberal, with mega-projects like special economic zones reducing investment barriers for ultra-rich investors.

Local business owners are affected in several ways, from soaring land prices to living costs.

Social welfare policies have not adapted to these changes, according to critics.

"In these circumstances, people with wealth at a certain level will have channels to gain more wealth," says Mr Somchai. "Only the rich can get richer. The poor get only scraps of benefit that offer them little improvement in their overall financial status."

With prospects for a pay rise looking dire, low-paid workers must find alternatives to stay financially afloat.

Ms Chantana has one idea: "I spend about the equivalent of my one-day wage to buy underground lottery tickets once a month. I can only depend on luck now."

She shrugged. "Of course, I want to own some business, perhaps invest in coin-operated washers. But I must admit the fact that for now, this is as far as I can go."

Her tone conveys some humour, but tells of a darker truth -- the distance between her hopes and current conditions.

sealed deal: A worker prepares shrimp at a seafood factory in Samut Sakhon province. Exploitative practices in the seafood and fishing industries have come to light over the years. PHOTO: Apichart Jinakul

going big: Japanese investors on a tour of the Eastern Economic Corridor, below. The project entails the creation of special economic zones spanning 30,000 rai in three eastern provinces. PHOTOs: Pornprom Satrabhaya

Pornprom Satrabhaya

new look: A worker puts on decoration in front of a shopping mall in Bangkok. Low-wage workers struggle to keep up with rising living costs in the capital city and elsewhere in Thailand. photo: SEKSAN ROJJANAMETHAKUL

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