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January 30, 2009

Thailand: Japanese firms send staff back home to cut costs
Amid the rising global economic slump, some Japanese firms operating in Thailand have sent Japanese staff back to Tokyo to cut cost.

Japanese firms are the largest foreign investors in Thailand, with up to 7,000 firms established in the country. Most of them are in the automotive, auto parts, electronics and steel industries.

According to a recent joint survey in Japanese companies by the Japan External Trade Organization (JETRO) and Japanese Chamber of Commerce, Japanese firms expected lower sales and earnings for 2009, the website by The Nation newspaper reported Thursday.

Hence, some companies were reducing both of production and labor costs, said Munenori Yamada, JETRO president.

"In particular, some companies have already sent Japanese staff back to Tokyo. This is the first cost-cutting measure to decrease expenses, amid a tough (environment for) business growth this year," the website quoted Yamada as saying.

Apart from that, other measures included releasing contract labor after experiencing a drop in incomes, or not to re-negotiate new contracts with existing staff, or providing early-retirement programs, Yamada said.

Also, introducing early-retirement programs and cancellation of overtime and cutting working days to five or even three days per week were adopted, the website reported.

Moreover, due to the poor economic outlook, some companies were considering to lay off full-time employees, Yamada said.

In such cases, all Japanese firms would consult with the Thai Labor Ministry to ensure that statutory compensation would be paid to those laid off, Yamada added.

"It clearly shows that this economic crisis is worse than the 1997 crisis. The survey of Japanese corporations showed dramatically deteriorating sentiment among Japanese businesses in Thailand," the website quoted Yamada as saying.

During the 1997 economic crisis, the Thai unemployment rate was 4.4 percent or up to 1.4 million.

In mid-January, the Bank of Thailand forecasted that for 2009 in the worst case scenario the country's unemployment rate would rise to 3.7 percent or around 1.4 million people, including new graduates and farmers after cultivating.

On Wednesday, the Thai cabinet resolved to extend the unemployment compensation period for laid-off workers from six months to eight months.

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