Economic and Social Upgrading in Global Value Chains: A Case Study of Thailand’s Electronics Sector

13 May 2020

This report spotlights Thailand’s electronics sector, which has adapted to global competition with technological evolution but still relies on low-skilled labour. It highlights the gaps and challenges in the sector and highlights the changes it needs to adopt for value chain advancement.

Thailand has played a significant role in the global electronics sector for over30 years. At present, due to intense global competition and technological disruption, Thai electronics firms are evolving to maintain their global competitiveness. This research project, based on interviews with 230 workers and semi-structured interviews with a range of stakeholders, found that Thai firms in the electronics sector are adopting more innovation and technology to increase their production. However, they continue to be heavily reliant on low-skilled labour in production as this allows them to remain competitive by offering low-priced products.

Most of the economic upgrading in firms takes in the form of functional upgrading. Firm size matters in the case of economic upgrading; larger firms are more likely to undertake economic upgrading. However, even when it comes to upgraded firms, there is evidence that technicians and managers are more likely to see their wages rise and to get promoted than workers in production lines.

The study also identified disparities between large multinational firms and smaller companies in terms of working conditions. Large firms tend to offer better conditions, including chemical storage, protective gear, and management systems, while small and medium-sized enterprises face challenges in these areas, leading to work-related health concerns. Despite the presence of the Labor Federation of Electrical Appliances and Electronics Workers , workers in the electronics sector struggle to voice their needs or form trade unions due to firms’ reluctance to establish trade unions.

The report stresses the need for Thailand to exert considerable effort in these areas to move up in its value chains.