Political parties face tough balancing act in labour market

The latest statistics show an overall improvement in Thailand’s labor market, nearly returning to the pre-COVID level, but questions remain about the availability of well-paying jobs.

Unemployment fell to 1.15 percent in the fourth quarter of 2022, from 1.23 percent in the third quarter, compared to 1 percent in the fourth quarter of 2019, prior to the COVID-19 outbreak.

Full-year unemployment rate in 2022 averaged 1.32 percent.

Growing non-agricultural sector

Unemployment has been decreasing among the jobless with work experience, as well as among those new in the labor market, according to the National Economic and Social Development Council (NESDC), a state-run think tank.

In the fourth quarter of 2022, 39.6 million people were employed, a 1.5 percent increase year on year, attributable to a 3.9 percent growth in the non-agricultural sector.

The revival of the tourism industry has boosted employment in hotels and restaurants, the wholesale and retail sectors.

Employment in transportation/storage and manufacturing increased as entrepreneurs remained optimistic about future economic prospects.

Employment in the agricultural sector fell by 3.4 percent due to flooding in the South and labor relocation, according to the NESDC.

High labour demand in tourism

The rapid recovery of tourism has led to labor shortage in hotels and related services. In 60 provinces, hotels, accommodation, restaurants, and shops still need approximately 10,000 workers, according to the NESDC.

Foreign tourists are projected to hit 28 million this year, a giant step closer to the 40 million who visited before COVID-19.

Wages have increased at a decelerating rate, up 4.3 percent to 15,416 baht a month for employees in the private sector and up 3.6 percent to 13,946 baht a month on average for workers in general. Workers are also facing pressure from the high inflation.

New graduates

Of the country’s 460,000 unemployed people, 230,000 were new graduates. Young people are facing difficulty in finding jobs, as companies are cautious about hiring inexperienced workers. They are, however, opting to retain skilled workers amid the global economic slowdown.

Another issue is technology disruption that has led to fewer openings for inexperienced workers.

“The overall low unemployment rate looks good as Thailand’s unemployment rate is among the lowest in the world,” said Lae Dilokvidhyarat, an economist specializing in labor economics at Chulalongkorn University.

But the more important question is: do they have adequate income to make ends meet? Or, do they have to work for extended hours in order to earn adequate income? Lae poses. “Do they have decent jobs? Do they work with dignity?”

Re-skilled or up-skilled training could help workers earn a higher income.

There are, however, problems in training. Workers tend to lose their income during training because of their absence from work. Many employers do not want to invest in training as they are worried about their employees changing jobs, making their investment futile.

Lae said that when government agencies organize training courses, they should also provide financial support to workers. At the same time, the government may need to compensate companies that send their employees for training.

Political parties on wage hike

In the run-up to the general election in May, political parties have pledged re-skilling or up-skilling of workers through training programmes. For example, Chart Pattana Kla Party has promised re-skill training and increasing foreign language skills for students and also creating 500,000 jobs for senior citizens.

Pheu Thai Party has promised to give scholarships to vocational students to train abroad. It has vowed to promote soft power activities supporting people to develop related careers, such as chefs, designers, song writers, script writers, and YouTubers.

The party has also promised to increase the daily wage to 600 baht per day from about over 300 baht today.

Business communities have voiced strong opposition to increasing the minimum wage.

Wage hike fiasco

The ruling Palang Pracharath Party has had a bitter experience of failing to meet its promise made in the previous election when it vowed to increase minimum wage to 400-425 baht. In October last year, the coalition government raised the minimum wage to 328-354 baht depending on provinces, up from 313-336 baht.

Faced with criticism for failing to fulfil its election promise, the party blamed COVID-19 and argued that the government was working with the private sector on a wage hike for skilled workers in line with inflation and workers’ productivity.

On January 31, the Cabinet approved new wage rates for semi-skilled and skilled workers ranging from 465 to 715 baht per day in 17 professions, covering industrial engineering, mechanical engineering and services. But they must first pass a standardized test in each profession.

The party is not campaigning on increasing the minimum wage for the upcoming election.

Lae said the minimum wage should be considered as social security, making workers’ lives better and work with dignity. However, political parties have to juggle the risk of a wage hike making businesses unviable, forcing their closure, he said.

Source: Thai Public Broadcasting Service (Thai PBS)