Case Study on Principle # 3 - Labour Principles
Freedom of association and the effective recognition
of the right to collective bargaining

Name of Company: Delta Electronics
Background & situational context
Between 1961 and 1995 Thailand increased its Gross National Product (GNP) per capita by more than 25 times in nominal terms.
After enjoying the world�s highest growth rate from 1985 to 1995, the Asian crisis in the late 1990�s affected Thailand and its
economic growth considerably.

The Gross Domestic Product (GDP) contracted by more than 10 percent and unemployment rose continuously.
The devaluation of Thailand�s currency, the Baht, reinforced this evolution.
However, the Thai economy recovered from this crisis in 1999 and
has been showing a remarkable growth since then.

Delta Electronics, founded in 1971, is a leading Asian supplier in the field of hardware electronics.
Headquartered in the Samutprakarn province in Thailand, Delta employs more than 11,000 people, and has
business operations and production sites all around the globe.

Delta Electronics plc. affiliates four subsidiaries, which are :-
Delta Networks, a major producer of networking products,
Cyntec, a high-tech company specializing in thin film technology and products,
Delta Optoelectronics, producing large size color LED display and polymer LED displays,
finally Yuasa-Delta Technology, a company manufacturing rechargeable batteries.

Its executive director, Anusorn Muttaraid proudly explains: �When you open your or any other computer,

I bet you will find our company logo on at least one of the hardware components.�
At the time of this case study, Delta Electronics was the only ISO 14001 certified company in Thailand and
enjoyed an excellent reputation in the fast moving electronics market.

Problem
Thailand is a founding member of the ILO, which, in turn, has been providing the country with technical assistance in order to
strengthen the capacity of employers� and workers� organizations in collective bargaining and dispute settlement, workplace
cooperation, social security, and wage issues.

Thailand counts 10 trade union congresses, but trade unions are rather fragmented.

In February 2000, the Thai Parliament passed the State Enterprise Labour Relations Bill, which allows organizing more than one
trade union in the same enterprise as well as joining any confederation of private-enterprise
trade unions, and includes the right to bargain collectively.

However, only 2 % of Thailand�s total workforce is unionized today, and collective bargaining is mainly carried out at the
company level rather than at the industry level.

In 1998, staff turnover at Delta Electronics was more than 8 % per month.
This high level of fluctuation did not only cause significant administrative expenses, but it also
led to high investment,recruitment and training cost and created an atmosphere of unrest.

Furthermore, sick leaves were at levels that were not satisfying at all.
In the middle of this, the company was trying to deal with the economic crisis of the late 1990�s.

Actions taken
In order to respond to these challenges and improve the company�s competitiveness, Delta�s management
decided to take active measures to improve employees� satisfaction and identification with the company�s business goals,
and to bring down turnover rates.

The Board of Directors knew that its skilled and well-trained workforce was a major competitive advantage, and,
in the words of one of the Board members, that �everything starts with motivation, minds and concepts�.

The management introduced a policy that strongly focused on �what employees want, not what employers think they might want�.
It actively encouraged the workforce to unionise, well aware of the advantages this could create with regards to opinion building,
reliable negotiations, decision-making, and improved communication.

It also helped the creation of a labour union with administrative and financial support.

One of the main reasons Delta Electronics encouraged the creation of the �Delta Labour Union� is the company�s management respect for
the workers� right to form and join trade unions.

Herein, Delta takes into consideration the Labour Standards (ILS) formulated in the
International Labour Conventions Number 87 and 98.

These Conventions are not directly addressed to employers, but to governments of member countries of the
International Labour Organisation (ILO), but they can, on a voluntary basis, serve as managerial guidelines and sources of policy and
strategy formulation at the enterprise level.

Results
The �Delta Labour Union� is now the first labour union in the EPZ (the industrial zone where the company is located), and has slowly,
but steadily increasing membership figures.

Tensions between workers� and employers� representatives have diminished significantly after it had been formed.

No formal collective bargaining procedure has taken place so far, but both parties meet on a regular basis to exchange views and ideas.

A newsletter is published every two months, a television program is produced, and the �labour committee�, consisting of
both union members and managers, meets regularly.

Additionally, the position of a Labour Relations Officer has been created, who follows up on complaints and questions.

Three years after initiating the unionisation initiative, Delta has improved its competitive position, almost doubled its
workforce, and gained new key customers.

The company has also successfully tackled the problems of high staff turnover rates and sick leaves.

The results are indeed impressive:
�Annual turnover is less than 3%, compared with almost 100% at the time the initiative started
�70% of the workforce is 100% present
�Employee satisfaction has increased dramatically.

By focusing on innovation and people oriented management, the company has created excellent conditions for
continuing growth and expansion now and in the future.