Thailand must invest in its workers

Maurizio Bussi, Director of the ILO Country Office for Thailand

The world of work is undergoing major changes of unprecedented speed and scale.  Thailand, like other South East Asian countries, must face the challenges posed by these transformations head on.

In today’s economy, work carried out by women and men is being transformed by a set of complex and interconnected factors from technological innovation, aging societies  and pressures on welfare systems and  climate change, to labour migration, unpaid work and the evolving character of production systems and employment.

These changes are bringing high levels of uncertainty and anxiety particularly for workers and their families. And yet, the future of work is not pre-determined, either by technology or any other circumstance. The future of work will be the future chosen by the main actors in the world of work, typically governments, labour and business.

As a contribution to this vital discussion, the International Labour Organisation (ILO) launched the Future of Work Initiative which is the centrepiece of the ILO’s activities leading to its 100th anniversary in 2019.  Under this Initiative the ILO and its member States are working together to deepen their collective understanding of this transformation. This is critical to meet effectively the policy challenges and to advance the shared commitment to decent work for all.

The ILO’s Director-General Guy Ryder said “The ambition is not to mark the ILO’s centenary in a purely ceremonial way, but with a process that will help to guide its work for social justice into its second centenary.”

In the two decades since the 1997 Asian financial crisis left Thailand reeling, many of the country’s leading economists and industry insiders spoke about the need to move up the value chain, invest in innovation and offer global markets higher quality goods and services. We have seen some encouraging progress in important economic sectors such as tourism, medical services, social enterprises and in selected niche businesses.

However, the Thai manufacturing sector by-and-large has continued to rely on a model based on semi- and un-skilled labour with limited technological investment. This will be hard to sustain and the inertia is proving costly.

Thailand’s difficulties to accelerate investment in human capital and technological upgrading has seen countries like Singapore and South Korea surge ahead. While Thailand aspires to emulate a similar development trajectory, the reality is that other regional neighbours like Vietnam and Indonesia are catching up fast.

The good news is that the Kingdom’s policymakers recognize the need to propel the country headlong into what has been labelled as “The Fourth Industrial Revolution”, or Industry 4.0. To that end, Thailand has announced its Thailand 4.0 agenda, an economic model based on creativity, innovation, new technology and high-quality services.

No matter how you look at it, this is a tall order. Countries with deeper talent pools and higher productivity are capturing a growing share of manufacturing investment. Such losses are significant given that the manufacturing sector accounts for over 30 per cent of Thailand’s US$395 billion GDP and employs 6.2 million people.

For decades, investment in R&D has been modest at just 0.2–0.3 per cent  of GDP. Vietnam, by comparison, has set a target of 2 percent R&D spending by 2020. Typically only the biggest players in Thai industry have taken on the financial risk to invest in R&D to accelerate innovation. Thailand’s scarcity of advanced researchers remains a challenge.

As automation and the use of robots expand and more lights-out factories become the norm, a certain level of organic job loss will occur. ASEAN countries may be at particular risk. According to a recent ILO’s report on transformative changes across ASEAN countries, about three in five jobs in the region face “a high risk of automation”.

At the same time, demand for lower-skilled labour in Thailand has waned in recent years. Many of these workers will be unable to acquire the skills necessary to remain employable in the manufacturing industry of tomorrow. The result is the risk of increased informality and subsistence service sector jobs, leading to a decline in overall labour productivity and the threat of premature de-industrialization.

Thailand’s shrinking labour pool presents yet another challenge. The Kingdom’s birth-rate has fallen dramatically from seven children per woman in the 1970s to just 1.5 children today. It’s also the third-most-rapidly aging society in the world, making it one of the countries facing the daunting challenge of a shrinking labour pool coupled with a greying population.

To significantly increase the numbers of graduates with the ability and know-how to thrive in high-tech industries and multinational working environments, major reforms must be carried out in Thailand’s education system. The latest rankings of the Programme for International Student Assessment (PISA) 2015 has shown the difficulties faced by Thailand’s youth to effectively compete at both regional and global levels, particularly in science, engineering, technology and mathematics.  Indeed, the key to Thailand 4.0’s success lies in improving human resources by drastically reforming and improving the education system.

Thailand is at a critical juncture on its journey toward high-income status, and must evolve meaningfully if it is to bridge the gap with regional and global competitors. If Thailand’s policymakers are determined  in their commitment to transform the country’s economic model — and to do so sustainably in keeping with the its sufficiency economy philosophy  — legitimate progress toward this goal is going to require a candid and in-depth dialogue between government, labour and business on the future of work, the existing challenges Thailand is facing, and most importantly on collective solutions to shape a future guided by the principles of social justice and decent work for all.

Source:  ILO-ACTRAV Newsroom