BANGKOK -- Although global demand is recovering substantially, Thailand's labor-intensive food processing industry, which relies heavily on migrant workers, is struggling to regain momentum and is unlikely to boost exports due to labor shortages caused by a persistent COVID pandemic.


After the pandemic's severe third wave began early this year, many migrant workers, mostly from Myanmar, had their work permits expired and were forced to go back to their home countries. The Thai government also sealed the border to prevent infections. A large number of workers found it impossible to enter Thailand, creating a labor shortage for Thai businesses.


According to Supant Mongkolsuthree, chairman of the Federation of Thai Industries (FTI), Thailand is forecast to be short of around 500,000 migrant workers. "Some labor-intensive sectors have felt the heat of the labor shortage, but the most serious one was in food sector," Supant said.


The Thai economy has been highly dependent on migrant workers, particularly in sectors that rely on low-wage manual labor that Thais refuse to do. Before the pandemic, the country had around 3.2 million migrant workers, of whom 80% were from Myanmar and the rest from Cambodia and Laos.


But almost two years into the pandemic, the number has dropped by 27% to 2.3 million, causing a serious labor crunch in the food industry, according to the Ministry of Labor.


Tanit Sorat, vice chairman of the Employers' Confederation of Thai Trade and Industry, said the labor shortage has pushed daily wages up to about 500 to 600 baht ($15 to $18), well above the minimum daily wage of 300 baht, rising production costs.


The hardest-hit area is Samut Sakon Province, just southwest of Bangkok, which faces the Gulf of Thailand and is a center of the country's fishing industry. The thousands of migrant workers there play a key role in producing seafood for export.


With limited workers, food processing companies have to either reduce overall work hours or pay more overtime to ramp up production, Apisit Techanitisawad, president of FTI's Samut Sakon chapter, told Nikkei Asia.


"Running short of migrant workers forces us to operate lower than our capacity, and that cuts opportunities to sell and export more food products at a time that demand is rising globally," Apisit said. "As one of the world's major food exporters, now Thailand is missing a chance to revive food export due to labor shortage."


Thai food exports were worth 980 billion baht ($29.4 billion) in 2020, and the kingdom set this year's export target at more than 1 trillion baht. "But this year's export target of 1 trillion baht is [not] quite realistic now because of the labor shortage problem," Wisit Limluecha, president of FTI's food unit, told the Nikkei.


The worker crunch is getting more serious, and that has triggered smuggling of illegal migrant workers. Border patrol police say they usually arrest dozens of migrant workers being smuggled into Thailand every day. Some of those arrested said they had paid up to 20,000 baht to human trafficking networks to help them cross the border and seek better work opportunities in Thailand.


The problem has raised another concern: importing another wave of COVID. Since illegal migrants enter without vaccination documents and are not quarantined, Thai authorities have reacted by sealing border areas even more tightly, making the labor shortage more serious.


The FTI and the Thai Chamber of Commerce (TCC) have raised concerns, demanding the government negotiate with neighboring countries to promote the lawful movement of workers, particularly from Myanmar, to fill the demand for workers in the Thai fishing and food industries. But ensuring safe entry into the kingdom, with vaccination and quarantine, would cost employers around 20,000 baht per person.


Labor Minister Suchart Chomklin last month said the ministry is in talks with Myanmar authorities to create a memorandum of understanding to improve the movement of migrant workers and expects to meet the demand for labor in the food sector by the year's end, when food export orders are normally at their peak.


Analysts and businesses are, however, of the view that the process of labor importing is unlikely to improve so soon.


"Importing migrant workers legally is the only solution we have now, because everything will be done safely to prevent further pandemic that would destroy the Thai economy at the end," said Wisit of the FTI.


Analysts said it would take a few months to solve the labor shortage, as the government has not yet concluded talks with neighboring countries. "To import migrant workers by the end of this year is quite impossible," Tanit said.


Moreover, it takes up to 14 days of quarantine before newly entered migrants can start working in factories.


"I think it would take three months from now, and the Thai food sector would have to wait until March next year to get a solution and start importing migrant workers to meet demand," said an analyst at the Kasikorn Research Center.


Thai food exports fall short due to migrant labor shortage -
Nikkei Asia