Structural Adjustment and International Migration: An Analysis of the Thai Clothing Industry

Abstract

This paper examines the structural adjustment process using evidence from the Thai clothing industry, with a view to informing the policy debate about international migration. The analysis is based on in-depth interviews with 50 clothing firms in Thailand during November 2009–February 2010. The key finding is that not all firms opt to hire unskilled foreign workers. The differences in company characteristics between firms that hire foreign workers and those that do not are clear. The latter are likely to be relatively large in size (in terms of both employees and sales), perform better and actively undertake upgrading activities. The former are typically struggling to maintain their profit margins, are relatively small and do not adequately invest in upgrading activities. Interestingly, hiring foreign workers is not the first response of firms, but reflects a tightening in the labour market and the fact that these companies have not yet successfully undertaken process upgrading. Allowing unskilled foreign workers in on a temporary basis with appropriately designed measures would be a win–win solution for labour-importing and exporting countries, as well as for the migrants themselves. The paper raises concerns about imposing one-size-fits-all policy measures in managing the flows of unskilled foreign workers.