Thailand's economy, especially exports and employment, has felt the impact of the global gloom ignited by the US financial crisis. KASIKORN RESEARCH CENTER (KResearch) estimates that the country's unemployment rate may rise to 2.2-2.6 percent – around 850,000 to one million employees – losing their jobs. However, if the government lends a helping hand through the creation of new jobs or gives incentives to employers to retain their workforces, the number of unemployed in 2009 may decline to 730,000 – a jobless rate of 1.9 percent. The main casualties will be new graduates, informal laborers, temporary employees, plus those employed in tourism and export-oriented industries. The unemployment problem is expected to cost around THB40-50 billion in domestic spending (or around one percent of domestic consumption) in the year to come.
KASIKORN RESEARCH CENTER (KResearch) has recently conducted an analysis on the impact of the prevailing turbulence on employment in major manufacturing industries, including industries highly-dependent on exports, mostly are MNCs (multinational co-operations, affiliates, suppliers). We forecast that around 87,000-160,000 employees in the electrical appliance and electronics industry and between 12,500 and 20,000 employees now working in automobiles and parts industry will lose their jobs. Meanwhile, labor-intensive industries may encounter around 300,000-400,000 employee cutbacks.
In addition to employees in the affected industries, factory closures and massive layoffs will send repercussions to other related industries and the families of the unemployed. The government should thus implement effective and thorough measures to cope with the unemployment problem. So far, emphasis has been placed on budgetary spending to stimulate the economy and providing liquidity to SMEs, which would help employers directly and employees indirectly. However, these steps may be too little to spur sales and production, or unlikely to prevent employers from resorting to job cuts, and it is possible that some employees will not be paid severance pay at termination.
KASIKORN RESEARCH CENTER (KResearch) holds the view that to provide assistance to Thai companies or factories vulnerable to permanent closures amid the economic downturn, the government should consider such assistance as soft loans, tax reductions, assistance in market penetration and maintaining the Baht at an appropriate level. Moreover, proper mechanisms should be established to closely monitor the labor situation within the industries or factories that are prone to difficulty and render assistance in a timely manner. In addition, support measures should be introduced to cope with employees being made redundant and new graduates entering the labor market. Among the useful efforts that might be taken would be the establishment of a special loan fund, protection of the rights for workers who are made redundant without fair severance pay and training to develop labor skills. The government should also consider job creation projects in rural areas, particularly water resource management (irrigation work) for the agricultural sector to support a mass exodus of unemployed workers who will go back to their domiciles in rural provinces. Over the long run, the government should actively cooperate with educational institutions and the business sector to solve the problem of a shortage of skilled labor in the manufacturing sector.
Amid this economic downturn, businesses have inevitably been hurt by subsiding sales and surging costs. Some may resort to layoffs to cut expenses. In fact, laborers are considered a vital resource that is conducive to higher production. Producers may consider more flexible employment by adjusting work schedules in accordance with business conditions, instead of layoffs. Training should be provided to employees to equip them with new skills and technological awareness, which would in turn help ensure cost reductions for companies over the long-term (due to improved product quality and reduced production losses). This would eventually lead to efficient production and sustainable competitiveness, thus ensuring strengthened relations between employers and employees.
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