Subcontracting in rural areas of Thailand

This study describes a subcontracting system widely practiced in rural Thailand - arrangements by parent firms to have individuals undertake part of the production process at home. The author begins by reviewing the subcontracting system in four industries (ready-made garments, knitting, fish nets, and silk), and then uses data from a larger study of non-farm employment in rural Thailand to explore the relationship between subcontracting and other rural activities. Advantages and disadvantages of the subcontracting system are discussed. Among the former are increased flexibility of working time; the provision of technical, marketing, and financial assistance by parent firms; reduced overhead costs; and the increased availability of rural employment. Disadvantages include loss of government control, loss of control over the production process by parent firms, and the risk that parent firms may exploit rural workers. Finally, a review of the key characteristics of subcontracting leads to recommendations for ways in which business and government might promote subcontracting.