The challenges are mounting for Thailand amid demographic shifts and limited gains from economic growth
The Thai economy expanded by 4.3 per cent in the third quarter of this year, the highest rate in four years, but unemployment rose 1.3 per cent from the previous year’s 1.2 per cent. The latter phenomenon is unprecedented amid economic recovery, underscoring a major shift in the country’s demographics and the growing negative impact of automation in various industries.
A breakdown shows that employment in the farm sector dropped 1.2 per cent, while non-farm employment declined 1.8 per cent, with industrial and manufacturing sectors recording a 4-per-cent drop. While farm jobs registered a significant drop, those in the services sector remained robust – especially in tourism and its related services. However, there were fewer manufacturing and construction jobs during the third quarter.
To boost competitiveness, the electronics sector, for example, has used more robots and automation in its manufacturing process, resulting in lower employment, and this despite an increase in the sector’s output.
According to the Bank of Thailand, there is also a mismatch of skills, as evidenced by a large
number of positions left unfilled by new graduates, whose qualifications may not meet employers’ requirements. In addition, Thailand is entering the advanced stages of becoming an ageing society, in which 20 per cent of the population will be 60 or older in just a few more years. As a result, the workforce’s replacement rate has nose-dived, since fewer workers are entering the labour market due to a relatively low birth rate, compared to those leaving the workforce.
Another factor at play is that the ongoing economic recovery has been mainly driven by the revival of export-oriented industries that focus on using new technology to boost efficiency, especially robots and automation systems, to replace workers. This lowers costs amid rising output, while avoiding the potential impact of rising wages.
Moreover, the government’s “Thailand 4.0” initiative to modernise the economy and society has resulted in the offering of various tax and other incentives to encourage industries to turn to more automation systems and robots.
It is by now clear that, if the government doesn’t quickly come up with a more comprehensive programme to address the negative consequences of Thailand 4.0, especially with regard to its impacts on the labour market, it will soon be too late to make the needed corrections.
One solution would be to offer more incentives to promote jobs in the services sector, along with new vocational training programmes. Besides tourism, hotel and related services, healthcare is a potential area for job creation, especially with regard to medical tourism and elderly care.
In this context, the demographic shift leading to Thailand’s advanced ageing population could be turned into an opportunity, because more workers will be needed to provide elderly care, not only to Thais but also foreigners living and visiting here.
However, other solutions will also be required to cope with the challenges of a higher economic growth rate but fewer jobs available in the traditional sectors.
Thailand is certainly not alone in grappling with this novel global phenomenon, in which digital and other disruptive technologies are at play and wreaking havoc on labour and other markets.