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Report

20 Jun 2022

Author:
Miwa Yamada, Institute of Developing Economies Japan External Trade Organization (IDE-JETRO),
Author:
Naomi Inoue, ILO CSR Consultant

Thailand: ILO publishes new report analysing Japanese vehicle parts manufacturers' implementation of CSR policies in supply chains in Thailand

[ Responsible Supply Chains in Vehicle Parts Industry Case Studies and Challenges ] 20 June 2022

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The automotive-related industry in Japan is one of the core industries with 5.42 million workers, constituting over 8.1 percent of the total workforce in Japan (2018) [...]. Among them, 686,000 workers are employed in companies supplying the automotive-related industry. The Japanese automobile manufacturing industry has been expanding globally, with production increasingly being outsourced in different countries- many of them being located in Asia. More specifically, production plants in Asia are responsible for 50 percent of four-wheeled vehicles, and more than 70 percent of two-wheeled vehicles on a global scale.

Among them, Thailand has the third largest number of local production plants for Japanese automobile manufacturers in Asia, after China and Indonesia. In Thailand, the automotive industry, including automotive supplier industry, accounts for approximately 12 per cent of the nation’s GDP, with an estimated workforce of over 700,000 workers. From the perspective of the total labour force of 37.95 million, this accounts for approximately 2 per cent. The automotive industry has accordingly secured its place as one of the ten key industries in the national strategy, ‘Thailand 4.0.’ The Thai car industry is thus highly important for Thailand, and an essential business partner for Japan. This spans across various roles in the supply chains of Japanese finished car makers, including procurement, component production, assembly, sales and export.

There are increasing expectations for enterprises involved in the industry in terms of responsible business conduct, requiring Japanese vehicle parts manufacturers to fulfil their commitments in CSR (Corporate Social Responsibility) through the implementation of socially responsible labour practices.

This study is based on the outcomes of a survey run among 814 companies in ASEAN, Southwest Asia, Western Europe, and Africa.[...] It assesses how Japanese vehicle parts manufacturers implement their CSR policies in their respective supply chains in Thailand, with a focus on employment and labour issues, in order to analyze initiatives, challenges and good practices. Furthermore, these businesses practices are analysed within the framework of the principles of the ILO’s Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy(MNE Declaration). This study aims at enhancing companies’ awareness and understanding of CSR throughout the automotive supplier industry, and to promote sustainable and inclusive growth of the industry in both Thailand and Japan. This document provides a number of policy recommendations for companies, governments, workers’ organizations and other relevant actors to advance CSR and RBC, which is key to maintain and enhance their competitive advantage and competitiveness in today’s economy. In addition to the ILO MNE Declaration, the survey conducted under this study also followed the guidelines of the OECD Guidelines for Multinational Enterprises; and the UN Guiding Principles on Business and Human Rights, thus enhancing policy coherence on key international instruments on CSR.

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