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Migrant worker shortage threatens key Thai exports, economic recovery

BANGKOK, July 30 (Reuters) - Thailand’s exports have been a rare bright spot in the struggling economy, but migrant worker shortages are threatening labour-intensive sectors, undermining a fragile recovery as the country struggles with its worst COVID-19 outbreak yet.

Even as global demand rebounds and this year’s 9% drop in the baht makes Thai goods more attractive, a lack of migrant workers is threatening exports as the economy already faces a tourism slump and sluggish domestic consumption due to virus containment measures.

Key exporting industries such as food and rubber production can rely on migrant workers for as much as half of their workforce, according to company and industry officials. Exports accounted for 45% of Thailand’s gross domestic product in 2020.

Thailand has about 3 million legal migrant workers, mostly from Myanmar, while there is demand for about 390,000 more, Labour Minister Suchart Chomklin told Reuters.

But strict enforcement of border controls and quarantines since the coronavirus began to hit Thailand harder in 2021 mean that labour migration has virtually ground to a halt, companies and labour activists say.

“They are jobs that Thai workers don’t want to do,” Suchart said, referring to labour-intensive factory work.

“We have talked about bringing in migrant workers, but it will be very difficult due to large numbers of infections.”

Some factory owners are responding to the labour shortage by offering higher wages and bonuses to attract Thai workers, but the incentives have not been enough to entice locals into lower paid, low-skilled jobs, even as the country’s unemployment rate hit a 12-year high this year.

“We’ve had quite a lot of orders. But because of not enough workers, we can only run at 75%-80% capacity,” said Suparp Suwanpimonkul, deputy managing director of S.K. Polymer Co., which makes rubber parts, including for autos and electronics, and exports 43-45% of its products, mainly to the United States.

Exporters worry that similar production cuts will mean exports may not even reach the 10% growth forecast by the Thai National Shippers’ Council for 2021, which is more modest than the central bank’s expectation that exports will grow at an 11-year high of 17.1% this year.

The central bank last month cut its 2021 growth forecast to 1.8% amid surging coronavirus cases, and stricter containment measures imposed this month could further weigh on this year’s outlook after the tourism-reliant economy shrank 6.1% in 2020.

Suparp, who is also vice chairman of the Thai National Shippers’ Council, said the labour shortage now has firms competing for workers, with many offering pay above the minimum daily wage of 300 baht($9.13) – paying 400 or even 500 baht.

His own company is trying to attract new workers with a six-month work bonus and a referral scheme of 500-1,000 baht per worker.

“But we still can’t compete with other factories,” he said.

The labour shortage has particularly hit lower-wage food, textiles, and some rubber producers, which together accounted for 20% of total shipments and brought in $27 billion in January-June 2021, compared with $44 billion for the whole of last year.

Thai electronics and autos makers, Thailand’s top two export sectors, are still booming because the higher-wage sectors employ a larger percentage of Thai workers, relying less on migrants.

At Surapon Foods, which produces frozen shrimp and chicken products and exports 80% of its goods, management has asked some of its 4,000 employees - of which more than one-third are migrants - to work overtime to meet export commitments.

“We are also short of workers but we can still manage,” Sriprasert Sriprawatkul, Surapon’s vice president of finance & accounting, told Reuters.

“But if we can choose, we would rather add more workers than paying overtime because it’s cheaper,” he added. ($1 = 32.85 baht) (Additional reporting by Kitiphong Thaichareon; Editing by Kay Johnson and Ana Nicolaci da Costa)