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The workers pay the bill for the Thai financial crisi: Frionor wages are at the absolute minimum

Of the roughly 300 employees at Frionor Thailand, about half receive the country's minimum wage of 162 baht (less than USD 5) per day. Since September 1997, they have had no raise in their wages, whereas the same period has seen inflation of about 15% due to the Asian financial crisis. There is no trade union for the employees.
Artikkelen er mer enn to år gammel. Ting kan ha endret seg.
Of the roughly 300 employees at Frionor Thailand, about half receive the country's minimum wage of 162 baht (less than USD 5) per day. Since September 1997, they have had no raise in their wages, whereas the same period has seen inflation of about 15% due to the Asian financial crisis. There is no trade union for the employees.


By Øyvind Eggen
Norwatch

The Frionor factory in Thailand, recently visited by NorWatch, is located in a so-called export processing zone (EPZ) just outside of Bangkok. About 270 women and 30 men are employed at the factory, rinsing and packaging seafood for export to Australian and European markets. About 30% of the production end up in Scandinavia, and products from Frionor Thailand are found in many Norwegian refrigerated counters.

The male workers at the factory do the heavy manual labour, while the women stand at the production lines shelling prawns, rinsing fish, shells and squid before the products are frozen. On the look of it, the working conditions are not very different from how they would be at a similar factory in Norway, except the working hours are longer; eight hours, six days a week, with overtime from one to two days a week. These working hours are identical to the legal maximum as laid down in the Thai labour laws.

General manager Mulhern does not have the exact figures, but his estimate is that "about half" of the workers receive 162 baht per day. This is the legal minimum wage in the Bangkok area. Wages are calculated by working days, and no pay is given for days off. Workers with long experience receive up to 25% more, he explains, and those with leadership responsibilities even more. However, the workers do have a bonus agreement, which secures them pay for one extra month per year. This bonus is formally agreed on, in effect giving the workers 13 months worth of pay for 12 months of work. Such bonus agreements are common in Thailand.

Dependant on expensive loans
- I have to borrow money to be able to pay for my family's expenses, says a woman who has been working at the factory for more than twenty years.

A section leader at Frionor, herself receiving more than the minimum wage, says she has doubts that any worker with a family could get by with the minimum wage without borrowing money.

- The pay is sufficient as long as we help each other out every now and then, when someone is in trouble. But still most have to borrow money to get by, says another woman.

In Thailand, borrowing is a common way of financing daily expenses. Following the financial crisis, this has become more common, because desperation drove many into short-sighted solutions. Banks hesitate to give loans to workers on the minimum wage, and if one cannot get loans from friends or family one often turns to loan sharks organised in networks similar to the Mafia. These charge from 5 to 20 per cent interests per month. Other employees say that it is possible to manage, as long as one tries to save money, and does not have a big family. Many, but far from all, also have working spouses, which is very helpful. The general manager agrees that the workers are having a tough time.

- Never before have I seen the workers borrow as much money as now. I guess 162 baht now is less worth than the 75 baht the workers got 12 years ago, he says, adding that also demands on consumption have increased. Today people expect to have refrigerators and television sets. In Thailand this is seen almost as basic needs, whereas people in many other countries manage well without them, Mulhern says. Other Norwegian employers in Thailand pay their unqualified workers more.

- I have spoken with my employees about their salaries. We agreed that 230 baht per day was the minimum required for people to live reasonably well, says Sverre Golten, managing director of a company called Thai Works. Thai Works has 45 employees, and produces equipment used for making fishmeal. In addition, his workers get twice as long paid holiday, 24 hours of insurance and a private 'health insurance scheme'. Until recently, the company was owned by Atlas-Stord, but now Sverre Golten is personally the major owner.

- My impression is that it is common for foreign companies to pay their unqualified labour about 25% more than the minimum wage set by the laws, says Bjørn Naglestad of Jotun Thailad.

The labour movement on its knees
162 bath is the absolute minimum wage any private employer may pay his workers in the Bangkok area. A committee with members from the local authorities, the workers and the employers, agreed upon this amount in 1997 by. Even at the time this minimum wage was settled, many were of the opinion that it was very low. However, reflected in the low figure, was the fact that Thailand at the time was obviously heading towards a deep financial crisis, but how deep, no one knew. Therefore, the authorities and employers had mutual interest in the lowest possible labour expense. The employee representatives occupy 5 of 15 seats in the committee, and the labour movement is generally very weak in Thailand. Hence, their views were more or less neglected in these negotiations. Since then inflation has been at least 15% annually, and the rise of the cost-of-living index has been the same. Many argue that the actual costs of living have increased even more than this because the prices of certain basic commodities have increased more than the average 15%, and because a number of public services have been cut. For example, following the advice of the International Monetary Fund (IMF) and the World Bank, Thai parents now have to personally pay for a part of the expenses of having their children attend school.

High costs of living
In Thailand the costs of living are higher than any of the neighbouring countries, and generally high for a so-called 'developing' country. A number of people NorWatch has talked to agree that it is possible to manage on the minimum salary as long as one is alone, lives cheaply and saves whatever one can, but not if one has a family to support. A regular price for a one-room flat is about 1500 baht per month, i.e. more than a third of the salary. A two-room flat would cost from 2000-3000 a month. If one is to reside more cheaply than this, it is necessary to take up living together with others or build a house in the slum area. In the Frionor canteen, lunch alone costs 15-20 baht, equalling about a tenth of the daily wage. If a worker should want to serve meat for dinner at home, a cheap alternative would be to buy a live hen for about 70 baht.

- The minimum wage is not a fair salary for a day of work, and it mirrors the fact that the labour movement in Thailand is so weak that it has no say in the negotiations regarding minimum wages. The salary is not sufficient to live from for a worker with a family, says President Pratueng Saengsak of the Labour Congress of Thailand.

NorWatch made a request to talk with the workers at Frionor alone, and was granted, albeit quite hesitantly, licence to do so. However, the general manager kept within a few metres distance, and took due note of whom we were talking with. Also, he wanted to select the people we should talk with. After a while, he interrupted and said:

- That's enough. You're making me nervous.

NorWatch, as well as the translator, who has knowledge of the local conditions, feared that the workers did not speak freely about everything, because of the presence of the boss, and because he might trace citations down to a few persons. Therefore, we went to the company canteen at lunchtime, to talk with other workers there. However, after half an hour, the general manager found us out, became furious and drove us off the company premises.

No trade union
There is no trade union on the Frionor factory. When questioning the employees about why this was so, we got different answers;

- If we were to have a trade union, it would mean that some workers would have to spend time doing trade union activities in stead of working together with us, which would have left the others with much more work, one employee explains. Another, who has moved to the area from the countryside, says she has heard of trade unions before, but that she does not quite know what it is.

According to Mulhern, there is close contact between the workers and the management, in spite of there being no trade union at the factory. About ten years ago, the general manager personally took the initiative to establish a "workers committee" in which the management and the workers may discuss various issues. The members of the committee are not elected by the workers; they are appointed by the section leaders of the company. Examples of what is discussed at such meetings could be problems with alcohol and drugs at the workplace, what would be suitable for general manager Mulhern to give his workers as 'Christmas presents', whether any workers take drugs at work and what one can do about such things. The committee has not discussed issues regarding wages.

- If times get better, we might consider asking for somewhat higher wages, but at the time we do not want to 'bother' the management with such questions, one employee explains.

- I'm like a father to them

Mulhern stresses that he is not opposed to trade unions.

- On the contrary, I would promote it. I was the one who took the initiative to the 'Workers Committee', remember? But it depends. If there were too many activists doing work that could harm the interests of the factory, I would not approve of it.

- Would you allow the workers to spend some of their time at work doing trade union work, without imposing increased work burdens on the other staff?

- If the Working Conditions Act demanded this, then I would have permitted it. However, if I was the only employer to give my workers time off to do trade union work, then I would not allow it; no, most definitely not.

- But you have to remember that the culture surrounding the running of a company differ widely between here and Norway. The factory is one big family, and I am like a father to the workers. They often turn to me with their problems, be it economical or personal, Mulhern says.

The employees give a favourable picture of Mulhern; they say he is a fair man with whom it is possible to talk. But in spite of many having economical troubles, none of the workers would consider asking the boss for higher wages, and even more out of the question, engaging in a strike. In Thailand, wages are a matter of the employer's discretion. The workers seldom have any say, the trade unions are extremely weak and strike is very seldom employed as a means towards better working conditions.

- Would replace them
- Imagine, hypothetically, that the workers demanded a raise of wages of 20 baht per day, and threatened to go on strike if their demand was not met. What would you do?

- I would replace them. At least if this was happening only in my factory. If the workers at the other factories in the seafood production industry were also on strike, then things would be different. As a matter of fact, I think they should do that, Mulhern says, stating industrial competition as the reason for not giving his workers higher wages:

- I compete with 130 other factories in Thailand alone, and there is a fight for economical margins. If wages at my factory were higher than at my competitors', I would lose out in the competition, he says.

According to Mulhern's estimate, the costs of labour make up "well below" 10% of the costs of production, making it an even less proportion of the price paid by the Western consumer. The economic surplus from the factory represents about one and a half per cent of the total turnover.

- I suppose the financial crisis has made the labour expenses even cheaper, relatively speaking, since the local currency has been devalued, and the sales are made in foreign currencies. But the workers are worse off than before. Should not they receive a share of the profit?

- Yes, if you consider labour expenses in isolation, they have become lower. However, competition is just as strong as ever, and we do have a loan taken up in hard currency that has to be served.

- Also, you have a famous brand name, which could possibly enable you to charge a little more for your products, and in that way secure your workers slightly higher wages?

- The brand name is of little importance, price is decisive. You should not think this industry is very profitable, as a matter of fact, it is a struggle for survival.

Fewer breaks
The workers do their work standing up, and are allowed only one break per day. The break is not counted as working time, and is added to the daily eight paid for working hours. Earlier, the workers had two ten-minute breaks in addition to half an hour lunch-break.

- We convinced them that they would be better off with a longer lunch-break. Imagine the mess when 300 workers were having a break simultaneously, Mulhern says.

There are no chairs for the workers to sit on to rest their feet and back, not even in periods of low activity, waiting for new raw material.

- I suppose we could have let them sit, perhaps also while working. But with all those chairs, it would have been "one hell of a mess", Mr. Mulhern says.

- I have never heard any workers complain about the working conditions, he adds.

According to Mulhern, there are only limited disciplinary problems. There are some instances of drug abuse, absence from work and fighting. Mostly it is the men who create trouble, according to Mulhern.

- If it was up to me, I would employ only women. They are much easier to deal with.

On one occasion, two workers were sent home for three days because of fighting, and 4-5 employees have been fired, charged with amphetamine abuse, explains Mulhern. This might not be completely in line with the Working Regulations Act, Mulhern admits, but the dismissals were made after consulting the Workers Committee, which agreed with the decision.

- If they were not guilty of amphetamine abuse, they could have taken me to court. As long as they didn't sue me, I take it as a sign that they were in fact guilty.

TV-surveillance
Mulhern has installed cameras all over the factory, the TV-control screen being in his office, so that he is able to continually monitor the workers.

- The reason is to be able to monitor if any drug abuse is going on, Mulhern says to NorWatch.

If that is the case, the TV-screens are hardly very efficient in preventing drug abuse as such: drug abuse in Thai factories is mostly all about amphetamine, which is often used to tackle a high pressure of work. In Thailand, this drug is sold in the form of tiny pills that can be hidden just about anywhere, and eaten without any risk of being seen on a TV-monitor. Also, there are intermediate leaders and quality control staff inside the production area, directly monitoring the workers all the time, whose tasks include that of disclosing drug abuse.

The workers are allowed six days of holiday per year, and up to 30 sick days, provided a doctor's certificate can be procured. If a woman gets pregnant, she is allowed 90 days maternity leave, half of which is paid for by the state, the rest by the company itself. This is exactly corresponding to the minimum requirements laid down by the law. After the 90 days period, it is most usual that a grandmother or other relative takes care of the child while the mother is at work, but to people who have moved in from the countryside - a who constitute a large group of workers - this may often prove difficult.

- Would you grant one of your workers longer maternity leaves without pay, if she asked for it?

- No, in that case, I would find it more natural that she quit her job. However, most of the workers return before the end of the 90 days, to make extra money. The welfare offers at the work place are limited to the canteen, which was built by the factory. However, it is run by a private enterprise on a strictly commercial basis. Once a year, the workers go for a trip, and there is also an annual party. Previously, the annual party was marked by the election of a "Miss Frionor", but as time has gone by, most of the women workers have married, and then they are no longer eligible for the title.

A good sign that the workers are happy, is that they don't quit, Mulhern says. When the factory moved from an entirely different part of Bangkok some years ago, he thought many would quit due to the longer distance to their workplace. But no one quit as a result of the factory move. The employees are transported free of charge from the old workplace to the new factory, so they are not required to move themselves. The travelling time is about 45 minutes. 

Workers in Thailand
A combination of Thai political history and today's political situation makes it very hard for the labour movement to have their interests heard. Merely 3,3 per cent of all employees in the private sector outside of agriculture are organised. Workers extremely seldom go on strike, and strike as a means of fighting a conflict is worked against, amongst others, by the law.

The trade unions are under strong pressure, especially after the onslaught of the financial crisis, and there is a general consensus that fighting for workers' rights is conflicting with the main national development goal: economic growth.

The Working Regulations Act provides the workers with fairly strong protection against dismissal and with legally required welfare arrangements. However, when it comes to wages and wage negotiations, the law offers little support. The legal minimum wage in the private sector is agreed upon by a committee consisting of representatives from the authorities, employers and employees. In this committee, the authorities and employers have a mutual interest in keeping the wages to a minimum. The legal minimum wage has not been increased since September 1st, 1997, just after the financial crisis had struck the country. Since then, the costs of living have increased by 15-25 per cent.

Norwatch Newsletter 10/99