Production costs are causing five major Thai garment manufacturers to invest $50 million to relocate in Vietnam, where they can pay qualified workers considerably less and avoid Thailand’s anticipated 25% increase in minimum wage. The factories moving to Vietnam are expected to employ 24,000.
The Thai garment industry already pays above the minimum wage — about $1 an hour — to prevent workers from moving to the electronics industry. Vietnam’s minimum wage varies by region and tends to be about half the wages paid in Thailand.
The move continues a trend toward factories moving to Vietnam from China and elsewhere in Asia. Thailand now has about 1,000 fewer garment factories than six years ago and expects that number to drop in half again within five years — and Vietnam is a beneficiary.