The FTI has just told the Labour Ministry that the electrical and electronics manufacturing sectors, which together have the potential to grow by 20 per cent over the next few years due to strong exports growth, are facing a serious shortage of skilled labour. To be exact, the demand for about 50,000 skilled workers in these sectors in the next two years will remain unfilled unless the Labour Ministry, Education Ministry and industrialists get together now to address the problem.

The share of exports in Thailand's GDP now stands at 65 per cent. Of this, products that require higher-skilled workers, including electronics and electrical goods and transport equipment and parts, account for 43 per cent of total exports.

The FTI proposes that the government set aside Bt273 million for skills training for new graduates from vocational schools and skills re-training for existing semi-skilled workers to meet specific requirements of various companies within the electronics and electrical manufacturing sectors. Companies that are in urgent need for higher-skilled workers include computer hard-disk manufacturers.

Under the plan, companies seeking higher-skilled workers have agreed to cover 25 per cent of the training expenses.

According to the FTI, the electronics and electrical manufacturing sectors will be left with up to 30,000 unfilled jobs at the end of this year unless the proposed training programmes get under way soon. Failure to meet the requirement for higher-skilled workers could compromise Thailand's export performance and undermine its global competitiveness - not to mention the country's growth prospects.

The FTI said the shortage could be attributed to the fast-growing automotive industry attracting workers away from the limited pool of higher-skilled labour, and also because of the tendency of the new generation to shun vocational education in favour of general education.

Thailand has seen it coming over the past several years as its exports-led economy continually moved towards higher value-added goods and up the technological ladder. But too little has been done to ward off this potentially debilitating problem as the country is now being squeezed out of traditional labour-intensive manufactured goods by other developing countries which offer much lower labour cost.

A recent World Bank report cited the shortage of higher-skilled workers as a key impediment to Thailand's advancement as a competitive manufacturing base. It said increased private investment, embodying improvement in technology, has been an important feature of Thailand's growth experience, as has increasing the education level of its workforce.

Much of Thailand's productivity growth achieved until recently has come from a re-allocation of labour from agriculture to manufacturing and services, but the room for increasing productivity in this way is very limited.

Other than the shortage of skilled labour, key problems that tend to discourage much-needed private investment include poor infrastructure services and an excessive regulatory burden. Improving infrastructure services can be done through careful planning and wise allocation of resources, and reducing the regulatory burden can be dealt with by rationalising existing rules. But ensuring that the country has a skilled workforce that is flexible enough to adapt to evolving labour market requirements is much more difficult to achieve.

The FTI initiative to get the Labour Ministry, Education Ministry and industrialists to collaborate to upgrade workers' skills in the electrical and electronics manufacturing sectors should be expanded to cover all major industries. The synergy from such public-private sector cooperation should put Thailand on the right footing to compete successfully in the global marketplace.