Lower revenues could lead to lay-offs next year

This is the finding of a new survey by the University of the Thai Chamber of Commerce.

Sixty per cent of 800 respondents surveyed over five days last week said they expected a drop in revenue this year, while 66 per cent from the service sector said their revenue would definitely fall.

Despite decreasing oil prices and benefits to exporters from depreciation of the baht, hikes in interest rates and the feared tsunami effect of the global financial crisis have created difficulties for business growth.

The survey found more than 18 per cent of respondents were "highly worried" about the global

financial crisis, 48 per cent were "moderately concerned", and 32 per cent had little concern. But only 1.9 per cent were completely unconcerned.

Global problems are expected to affect the Thai economy and local businesses next year, said Thanawat Polvichai, director of the university's Economic and Business Forecasting Centre.

The university expects Thailand's unemployment rate to rise from 1.7 per cent now to 2.6 per cent next year, as Thai businesses lay off workers because of lower export orders and declining domestic spending.

Although the survey did not find any businesses preparing to lay off employees in the current quarter, it is possible 1 million labourers will be laid off next year if the Thai economy plunges to only 3-per-cent expansion, the university said.

If the unemployment rate rises to 4 per cent, that will be a danger signal for business growth, because Thailand's unemployment rate rose to 4.4 per cent during the 1998 financial crisis, and in that year the economy shrank 10.5 per cent.

Thanawat said some businesses were already showing ominous signs by cutting overtime and maintaining or even reducing bonuses and extras for employees.

Hotel and restaurant workers will be among the first groups laid off, because of slowing growth in the tourism sector, he said.