Asia Times: China


	May 1, 2002	atimes.com

China

Chinese competition keeps neighbors' wages low
By Marwaan Macan-Markar

BANGKOK - The Thai government fears that China will draw away much-needed foreign investment from the country, but Thai workers have a different worry - that Chinese competition will pull local wages down further.

This shows the different reactions from government and laborers as China's economic power looms even bigger in Asia, at a time when countries are struggling to recover from export slowdowns. China, after all, is the newest entrant to the world trade club, making it an even more attractive investment destination and a foreign investor in its own right as well.

China's rise triggers a race for much-needed investment in Asia, competition that Thai labor activists fear is driving governments and businesses to lower costs to survive Beijing's economic might. Key among the labor-rights activists' concerns is the reluctance they see among companies in the export sector to consider a wage hike for the largely female labor force.

"We have been demanding a wage of 180 baht [about US$4.15] per day from the current amount of 165 baht, but the employers refuse," says Somyot Truksakasemsuk, president of the Bangkok-based Democratic labor Union Alliance. And of late, says Somyot, the excuse from the captains of trade in the Thai private sector has been that China has been capturing the export market through its low-wage manufacturing sector and Thailand cannot remain competitive with its prevailing wage scale. "They are not willing to listen," he adds. "China is their excuse."

According to Chinese labor law, the monthly minimum wage is $55, as against the $91 a Thai worker receives.

Equally troubling for Junya Yimprasert, founder of the Thai Labor Campaign, are discussions involving employers in the private sector and officials at the ministry of labor to replace the daily wage rate with an hourly wage rate - but with no guaranteed work hours per day. "The women will be vulnerable," says Junya, referring to the majority female workforce (an estimated 3 million women) in Thai factories that produce garments, toys and electronic items for export.

"Thai employers are using the presence of China as an excuse to demand for cheap and informal labor," she argues. "More women workers will then end up in the unprotected sector, working at home, and the employers will have no obligations, like social benefits, rights, for their workforce." Currently, women employed in Thailand's manufacturing sector are entitled to 90 days' maternity leave, sick leave and compensation if dismissed under the country's Labor Protection Act.

In one sense, the economic fears of the Thai government are not unfounded, given present assessments about the impact China will have on Southeast Asian economies such as Indonesia, Malaysia and Thailand. "The new trading opportunities for China will be mainly in labor-intensive manufacturers and participation in the labor-intensive segments of the production process of high-tech manufacturers," states a study by the United Nations Conference on Trade and Development (UNCTAD) released on Monday. "In these activities, competition among developing countries will tend to increase," adds the Trade and Development Report 2002. "Low wages have been an important factor in China's impressive export performance."

China's clothing industry, for instance, has more than 6,000 enterprises, according to the report. In 1999, it registered sales worth $22.1 billion and a profit of $746 million. Moreover, according to another report by the international development agency Oxfam, there are some 24 million assembly workers in China's special economic zones alone.

UNCTAD expects China's volume of trade to increase with more foreign direct investments (FDI) headed its way. "After hovering around $40 billion during the period 1996-2000, [FDI] rose to $47 billion in 2001." By contrast, all the countries in the Association of Southeast Asian Nations (ASEAN) managed to attract only $8 billion in 2001. These concerns have not been lost on China, whose Vice President Hu Jintao took pains during his recent trip to Southeast Asia to say that Beijing offers ASEAN countries lots of trade and investment opportunities as well and that it would cooperate with its neighbors.

Still, UNCTAD also sees countries such as Thailand becoming vulnerable to China's economic might. "China's constant growth in international trade could pose a problem for countries that have labor-intensive manufacturing," UNCTAD secretary general Rubens Ricupero said at the launch of the report in the Thai capital. The concerns expressed by Thai workers are "legitimate" and "coordination in the region will help avoid tensions", says Yilmaz Akyuz, the report's main author.

However, an International Labor Organization (ILO) expert wonders how much Thai labor rights will achieve on this front, given the country's low membership in trade unions when compared with neighboring countries. "There is only a small percent registered in trade unions in the private sector, about 1-2 percent of the employees," says Raghwan Raghwan of the ILO's East Asia office. "It is much higher elsewhere, like 12 percent in Malaysia and 25 percent in Singapore."

Even the political freedoms enjoyed by the Thais during the latter half of the 1990s did not spur interest in trade unionism, he adds. "There has hardly been an increase in real terms."

But activists such as Junya feel they have enough numbers to make a potent political statement during a public demonstrations planned for May 1. There, the predicament of Thailand's female workers attached to export-oriented manufacturers will receive top billing. "We want to express their concerns and their uncertainty in the current economic climate," she says. (Inter Press Service)