Heavy blows to economy warned if protest prolonged
January 31, 2014 00:00 By The Nation
If the political travesty is prolonged, it would definitely have a devastating effect on the economy and labour market, Yongyuth Chalamwong, research director for labour development at the Thailand Development Research Institute, warned yesterday.
The TDRI and most economists believe that economic growth would likely be restrained by the political unrest, sluggish exports, and weak domestic demand, investments and state expenditures this quarter before gradually picking up in the remaining three quarters of this year if the political situation improves. The employment prospects for holders of college degrees would worsen, while demand for technically skilled workers still exceeds supply, according to the TDRI. The problem is more with the shortage of skilled workers than the supply of low-skilled workers, which is being met by migrant workers from neighbouring countries.
Gross domestic product growth is projected at only 3-4 per cent this year. GDP growth of less than 4 per cent could result in an increase of over 1 percentage point in the current unemployment rate of only 0.7-0.8 per cent.
It the political and economic situations do not change for the better in the next six months or year, the labour market would be in tatters, especially in the sensitive industrial (production/assembly) and service (hotel/restaurant) sectors.
The political mess would lead to a delay, or drop, in foreign investment, which would become apparent in the second half of 2014 to 2015. Foreign investors could shift their investment projects or relocate their factories to other countries in this region. This would hurt the Thai labour market considerably, especially the 300,000-400,000 workers in the electronics assembly industry.
However, the vehicles and components, or large-scale industries, are unlikely to experience much problems since they have well-established networks or production bases in many foreign countries that could help soften the impact by absorbing surplus skilled workers when needed.
Service workers are highly vulnerable as most of them are seasonal or migrant and many depend on foreign tourists to earn supplementary income, especially during the high season.
For this year, the shortage of skilled workers is expected to continue and unemployment to be similar to last year. The politically-induced economic slowdown would force SMEs to adapt quickly and postpone hiring. New college graduates entering the labour market next quarter will still have difficulty finding jobs like in past years.
The labour market still needs skilled workers, but it is dependent on a favourable political and economic environment. The political uncertainty means people who are currently employed should be ready for possible lay-offs, or reduction in income, while new college graduates may have to acquire additional job skills or education while waiting to be hired, or opt for self-employment or an independent type of job.