Burma Thai Garment Factory Investigated by Starbucks After Illegal Wages Exposed

A Myanmar migrant works in a garment factory in the northwestern Thai town of Mae Sot May 24, 2007. / Reuters

MAE SOT, Thailand—Garment factories in Thailand that supply to global brands such as coffee giant Starbucks and sports gear maker Bauer Hockey are under investigation after an expose found workers illegally underpaid in a region described as a “black hole.”

The Thomson Reuters Foundation interviewed 26 workers—all migrants from neighboring Myanmar—employed at four factories in Thailand’s western region of Mae Sot who said they were paid less than the daily minimum wage of 310 Thai baht ($10.15).

Located 500 km (310 miles) from the capital Bangkok, Mae Sot is the main entry point into western Thailand and a trade hub home to hundreds of factories and tens of thousands of migrant workers seeking to make money to send back to their families.

Most of the 26 workers told the Thomson Reuters Foundation they did not receive wage slips at work yet the MAP Foundation—a non-profit that supports Burmese migrant workers—said it had gathered dozens of their pay slips showing illegal underpayment.

Some of the workers said they produced aprons for Starbucks – and provided photos of the garments that can be seen worn by baristas at its cafes in Thailand—while others worked at a factory that makes clothing for the US-based Bauer Hockey.

The expose raises questions about Thailand’s ability to inspect garment factories and protect workers across the country—and a senior government official said he was aware many of those working in Mae Sot were being unlawfully underpaid.

Starbucks said it was investigating the findings while Bauer Hockey said it had asked its supplier to look into the matter.

Both companies said they required their suppliers to comply with local laws on issues including compensation for workers.

“The supplier in question has denied these allegations,” said a Starbucks spokeswoman. “We take these claims seriously and are conducting a full investigation.”

The Starbucks’ supplier could not be reached for comment.

A spokesman for Bauer Hockey said it had asked the factory in question to investigate and “take all necessary action to immediately bring its compensation practices within compliance.”

A representative for the factory in Mae Sot supplying Bauer Hockey said it provided many benefits for workers, such as free housing, and covered half of the cost of their work permit fees.

The government has been planning to send a taskforce to inspect factories in Mae Sot, said Somboon Trisilanun, deputy director-general of the Department of Labor Protection and Welfare, which implements labor laws and performs inspections.

“We have to admit Mae Sot is a black hole because there are many garment factories that are very hard to inspect,” he said.

‘Under the radar’

Mae Sot, a district in Thailand’s Tak province that borders Myanmar and is also part of a special economic zone (SEZ), has 430 registered factories—40 percent of which produce garments and textile—employing about 44,500 workers, government data shows.

The Tak Province Office of Labor Protection and Welfare said it aimed to inspect 260 factories this year and so far about 50 owners have been ordered to comply with labor laws or risk fines as high as 20,000 baht and/or up to a year in prison.

Since 2016—according to its latest available data—the office has filed 26 lawsuits against companies over issues from not paying the minimum wage to compensating fired workers. Most of these companies ended up paying fines, the office said.

But MAP Foundation estimated only half-a-dozen or so factories in Mae Sot paid minimum wages based on their research and interviews with workers who were reluctant to complain for fear of being fired or factories closing and losing their jobs.

“I see Mae Sot as not part of Thailand,” said Sutthisak Rungrueangphasuk, a case manager at MAP Foundation. “It’s like an area that is not protected by law.”

The Federation of Thai Industries (FTI) in Mae Sot said all of its 130 members in the region—predominantly medium and large factories—paid their workers the minimum wage.

The introduction of a nationwide daily minimum wage in 2013 has seen wages in Tak almost double from 162 baht.

But the wage hike meant many factories now deducted housing, food and work permit costs from workers’ salaries—in violation of labor laws—whereas they previously provided such services for free, said Siwanat Petchsringoen, FTI’s manager in Mae Sot.

Most of the factories that have flouted labor laws—which require employers to pay workers their full salary upfront—are small or medium sized and often fly under the radar, he added.

“We are not able to control all (the factories), but we’ve been communicating about this (issue),” Petchsringoen said.

Kunchit Manowarangkoon, head of the Tak Province Office of Labor Protection and Welfare office, said it was hard to inspect smaller factories operating on a short-term basis and with few workers. But he denied the MAP Foundation’s claim that less than 10 percent of factories in Mae Sot paid the minimum wage.

Three workers from one factory, however, said they received less than the minimum wage before deductions were taken.

At another factory—a Chinese-owned establishment that makes foam mats—three workers said they were forced to sign two pay slips—one showing their actual pay of around 4,000 baht a month, and another stating that they earned the minimum wage.

Trapped

Seamstress Theingi said she earned about 80 baht for a 15-hour day of making children’s clothes and aprons for Starbucks.

The Burmese migrant, who did not give her real name for fear of losing her job, said she and most of her colleagues only had one day off every 45 days. Thai labor laws require workers to be granted one day of leave for each working week.

“I thought Thailand would be better than Myanmar, but when I arrived it was not what I expected,” she said at a dormitory near the factory where workers were packed into tiny rooms.

“I have felt unhappy and discouraged, but I have to bear the brunt or else I won’t have anything to take back home.”

Many Burmese workers in Mae Sot, such as Phyo Oo Naing, feel trapped and powerless to change their situation with migrant workers not allowed to form labor unions to seek higher pay.

He has had to twice borrow money from his family back in Myanmar to survive, does not receive any overtime pay, and last month was only given 15 days of work at his foam mat factory.

“I feel taken advantage of,” said the worker, who did not give his real name for fear of reprisals. “I want to go back to Myanmar, but now I don’t have enough money to travel home.”