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Published on March 27, 2008

The service sector accounts for nearly half of aggregate production and 40 per cent of employment in Thailand. It is also the dominant source of new job creation. Between 2000 and 2005, employment expanded by 2.6 million in the service-producing industries compared to 1.6 million in the industrial sector, the paper said.

According to the paper, services are frequently disparaged as a source of low-wage, low-productivity jobs, and they are characterised as industries with limited opportunities for growth and innovation. Government policies in many emerging economies have consistently been directed at promoting the growth of industry, often at the expense of services.

Thailand's national statistics paint a sobering picture of the performance of the service sector in recent years. Labour productivity fell sharply

during the 1997-98 financial crisis and has remained stagnant ever since.

The generally poor productivity performance of the sector in recent years raises concerns about its potential to be an engine for future gains in the real wages and living standards of Thai workers.

However, it is unclear whether these estimates reflect accurate growth in service productivity, or are a result of the low quality of available data on service-producing industries in Thailand. The report reviews the methodology for computing productivity and applies that methodology to various levels of the economy. It also measures the productivity performance in greater detail for four service industries, which can then be used for benchmarking purposes against other countries.

Finally, it examines the procedures for measuring output and productivity in the service sector and suggests areas that are in need of improvement.

The Nation