―How is your temporary staffing business currently performing in Thailand?

We have been one of the top performers in the temporary staffing business for Japanese-affiliated companies in Thailand for the past several years. Our activities are primarily focused in the Chonburi and Rayong provinces, which are key areas for the automotive industry. While there has been much discussion about Japanese automotive manufacturers withdrawing from these regions, there is also a trend of companies shifting production bases to other countries and promoting local production and consumption. Additionally, Chinese companies are increasingly establishing a presence in Thailand, particularly in the EV sector, leading to a rapidly changing production environment. To adapt to these changes, we plan to expand our client base to include Chinese companies and other manufacturing sectors beyond automotive.

―What factors are causing the decline in production in the Thai automotive industry?

The decrease in domestic demand can be attributed to several factors. One key issue is stricter loan regulations, as many Thais are multiple borrowers, leading to an increase in non-performing loans, particularly auto and housing loans. Additionally, the decline in market share of Japanese brands is partly due to the introduction of subsidies for EVs in Thailand. However, exports to Australia, the Middle East, and the United States are performing well, suggesting that a certain level of automotive production will be maintained.

―Could you tell us about your company’s staffing scheme in the Thai manufacturing industry?

In Thailand, the number of workers requested for manufacturing temp staffing can sometimes exceed 100 at once. We manage the recruitment and placement process within approximately five days. For recruitment, we provide an online registration form and maintain recruitment booths in the Chonburi and Rayong provinces. We primarily attract job seekers in their late teens to late twenties who have relocated from rural areas in search of work.

Regarding staffing contracts, we generally offer annual agreements, but we also accept short-term staffing requests. The staffing fees typically include the base salary, overtime pay, and allowances for temporary staff, with a service charge added. Since Thailand does not have staffing laws like those in Japan, we operate under contract terms based on the Labor Protection Act.

As a side note, Thailand, like Japan, is experiencing a trend of declining birth rates and an aging population, raising concerns about a potential labor shortage in the future. Similar to Japan, I believe the number of foreign workers in Thailand will increase to fill the gap left by Thai workers. Additionally, while labor disputes may be less familiar in Japan, they occur somewhere in Thailand every year as the bonus month approaches, often initiated by full-time employees of companies. Temporary staff do not participate in these disputes or labor-management negotiations, highlighting the ongoing need for temporary staffing in this context.

―How are you responding to such changes in the market?

There has traditionally been a high reliance on labor-intensive staffing at manufacturing sites in Thailand. However, recently, there seems to be a decline in the number of Thai workers in manufacturing roles. In particular, jobs that are considered “3Ds” (dirty, dangerous, and difficult) have very low retention rates among Thai workers. To address this, we recommend the use of foreign workers for companies struggling with stable staffing and employee retention.

Additionally, to mitigate the pressure on profits from rising wages for full-time employees, there is an increasing need to shift towards automation. We propose automating office and indirect operations through digital transformation (DX). Specifically, we utilize Robotic Process Automation (RPA) to reduce human errors and automate routine tasks, thereby improving efficiency. As productivity for each individual becomes increasingly important, we believe that ongoing investment in workforce training and TPS improvement consulting is essential to support our clients.

―Are there any differences between recruitment by foreign-affiliated companies and Japanese-affiliated companies for manufacturing temp staffing in Thailand?

There are notable differences in salary levels and the speed of recruitment decisions between foreign-affiliated companies and Japanese-affiliated companies in Thailand. In recent years, for example, Chinese manufacturers tend to offer higher salaries upfront. It is not an exaggeration to say that salaries for managerial positions can be double those of Japanese-affiliated companies. Regarding recruitment speed, Japanese-affiliated companies often experience delays due to the need for approvals from headquarters and multiple rounds of communication, whereas Chinese companies make decisions more quickly and provide results promptly.

On the other hand, Japanese companies are known for their commitment to nurturing and managing employees. Individuals who seek steady career growth and development often prefer working for Japanese-affiliated companies. Even if someone initially transitions to a foreign-affiliated company to gain experience, it is common for them to return to a Japanese-affiliated company due to differences in work styles, interpersonal relationships, and workplace pressures.

―What measures should Japanese-affiliated companies take in the future?

In addition to salary, Thai people also value benefits such as bonuses, pension savings, and medical insurance. For small to medium-sized Japanese-affiliated companies, it can be challenging to offer high salaries comparable to those of foreign-affiliated companies. Therefore, improving benefits is essential. This could include organizing seminars for skill development, providing employee trips, hosting company events, and increasing the number of public holidays. We are often asked by our clients to investigate the situation of neighboring companies.