Can Corporate Codes of Conduct Promote Labor Standards?
Evidence from the Thai Footwear and Apparel Industries

Over 80% of the labor force in the footwear and apparel industry in Thailand are female. Over 80% of these women are unmarried. Employers favor unmarried women because they are easier to exploit and to dismiss and because employers want to avoid giving paid maternity leave. [1] Previously, female employees were asked to give urine samples when applying for jobs so that applications from pregnant women could be rejected. Job applicants are still asked if they are married. Often, if new workers, who are recognized under law as regular employees only after a four-month probation period, became pregnant, they are fired.

In the footwear industry, male laborers usually work in outer sole production which requires lifting heavy molds and pressing hot rubber. Men also work in cutting and packing. Workers in these areas of the production process receive 20 to 30 baht (US$ 0.57 to 0.89) per day more than other workers. Thus, male workers generally earn more than female workers. Some women apply to work in these areas, so that they can earn higher wages. Siam Unisole (which is a subsidiary of the Wongpaitoon Footwear Company), in addition to manufacturing footwear, produces outer-soles and rubber pressings, and supplies both Wongpaitoon and their own manufacturing division. Because of the heavier work involved Siam Unisole employs a greater ratio of men to women. However, 65% of the work force is still female. [2] In Wongpaitoon, female workers comprise 82% of the labor force.

Siam Unisole employees in the stitching line. This photograph was taken after the introduction of personal protective equipment.

The Bangkok Rubber Group is located in Ayuttaya Province, just outside of Bangkok. Workers there come mostly from the nearby districts and provinces. The minimum wage in Ayuttaya province is 130 baht (US$ 3.50) per day, lower than the Bangkok area which is 162 baht (US$ 4.38). As the Wongpaitoon Group manufactures in the Bangkok area, the minimum wage there is 162 baht per day. [3] Many of the areas where workers produce footwear are not in Bangkok proper, and thus the minimum wage is lower. Despite this, the cost of living is similar to that of Bangkok Overtime pay and bonuses are crucial for workers because regular wages are very low. Pan Asia Footwear assured its clients in its annual report in 1998 that, due to the economic recession in Thailand, there would be no further increase in the minimum wage in 1998. [4] The company was right. The minimum wage has remained the same for the past 18 months even though consumer prices have increased dramatically.

Although the facilities are in urban areas, most workers in Wongpaitoon group are from villages in the remote provinces, especially in the Northeast region of Thailand. Workers are generally poorly educated. In Siam Unisole, 57% of workers completed primary school. Only 35% have an education to the secondary school level. Education attainment among workers in Wongpaitoon is also low; 65% finished primary school; 25% completed M 3 [grade 9] and only 4.7 % completed M 6 [grade 12] at the secondary school level. [5]

As footwear producing does not required high skill, many workers seek initial employment in the industry to develop their skills for better paying jobs in other manufacturing sectors, especially in the electronics sector. According to management, one of the biggest problems in the footwear industry is high employee turnover. High employee turnover has an impact on the quality and quantity of production. This is different from the apparel industry where manufacturers normally terminate workers just before their four-month probation period is complete so as to avoid contractual obligations to workers. Although footwear manufacturing does not demand highly skilled workers, it is necessary for workers to develop shoe production skills. New workers need to receive some job training. Apart from productivity considerations, the high rate of turn-over among a capital scarce segment of the population, indicates that working conditions are poor and health hazards are great. If workers were minimally satisfied with their working conditions and their income, they would not resign. Since the economic recession, employee turnover has diminished. Large numbers of workers have been laid-off, especially in labor intensive industries such as garment and textile production. The Ministry of Labor and Social Welfare estimates that at the end of 1999 there will be approximately 2.36 million people, 7% of the total labor force, unemployed. [6]

In both the Bangkok Rubber Group and Wongpaitoon Footwear Company, the majorities of the workers are under the age of thirty and have been working in the factories for fewer than three years. In Siam Unisole, for example, over 60% of workers are between 20 and 25 years of age. Of the total work force at Siam Unisole, 61% has worked for less than 1 year, and 22% of workers have only 1 to 3 years' experience. In Wongpaitoon, 55% of the workforce is between 20 and 25 years of age. More than forty percent have been with the factory for less than 12 months. At the closing of the Piyavat factory, workers were transferred to Wongpaitoon Footwear Company, bringing the proportion of workers with more than five years at Wongpaitoon to 22%.

Footnotes:

1. Under Thai labor law, mothers who are regular employees are entitled to 90 days of paid leave, shared by the Ministry of Labor and Social Welfare and the employer.
   
2. Siam Unisole's workers report sheet for 22 April 1998.
   
3. This minimum wage rate has been in effect since 1 January 1998.
   
4. Pan Asia Footwear, Annual Report 1997, 7.
   
5. Wongpaitoon's workers report sheet for 16 February 1998.
   
6. Arom Pongpangan Foundation, "Workers Comply with Government, Reducing Unemployment to 1.01 million," Labour Review, (April 1999), 24, citing Krungthep Thurakit [Business Bangkok], (31 March 1999), 11.

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