The ASEAN agreement to implement the ASEAN Economic Community (AEC) in 2015 is a rational approach in order to be the largest economic development in the developing world (Asian Development Bank (ADB) 2010; Austria 2012). However, it seems likely to have both beneficial and negative aspects. Although a GDP per capita of Thailand is in the fourth rank among ASEAN countries, competitiveness of its workforce may be insufficient to compete with others (Deutsche Bank 2013; Chongphaisal 2011).
The free flow of skilled labor and investment in the AEC policy can bring opportunities and threats to the Thai workforce. The former can lead to a chance for Thai workers to work in other ASEAN countries. The latter can bring about production bases that may create job placements and decrease the Thai unemployment rate. However, there are many threats for the Thai workforce such as a lack of English proficiency, inadequate education, low productivity of the Thai workforce and cultural barriers.
This study will analyse the external factors affecting the Thai workforce, estimate their competency and recommend effective ways to enhance their performance by evaluating AEC literature, AEC information of the Thai government and private sector, and AEC news bulletins.
Definition of Regional Integration
Balassa (1967), the Hungarian economist, concludes that economic communities lead to a decrease of trade barriers and an increase of beneficial economic aspects. Due to free mobility of economic factors between countries, international general markets spontaneously create demand for additional unification in terms of politics. Additionally, Luo (2008) says that economic community depends on reciprocity between members by sharing their resources. The community cannot exist if one alliance bows out.
Ten members of the ASEAN unanimously decided to establish the AEC by 2015. A single market and production base of the AEC will bring about free flow of goods, services, investment, skilled labor, and free movement of capital among its population of 600 million people (Deutsche Bank 2013; KPMG 2012; Petri et al 2012).
Austria (2012) asserts that there are three predominant reasons to establish the AEC. First, extension of regionalism around the world has generated many rivals. Hence, setting up the AEC is an obvious answer. Another important reason is enhancing its competitiveness. Finally, A strong economic community is required to maintain the reliability to other regions.
Opportunities for the Thai workforce
Movement of professional labor to other countries
According to KMPG (2012), the free movement of skilled labor will open up greater opportunities for the Thai workforce to work in other ASEAN countries. CITS (2012) reports that followed by Mutual Recognition Arrangements (MRAs) of the AEC, there are seven professional type of workers who can work across ASEAN alliances (Engineers, Nurses, Architects, Qualified Surveyors, Medical Practitioners, Dental Practitioners and Accountants). It is interesting to note that the whole picture of potential of Thai professional workers is in the leader group of ASEAN. For instance, the medical practitioners’ potential is in top ranking in ASEAN. The architects’ ability is the first rank in ASEAN, and Thai nurses have the best ability (CITS 2012).
On the contrary, the Economic Intelligence Center (EIC) of Siam Commercial Bank (2011) reports that from 2015 onwards, it seems likely to be short of professional workers in Thailand owing to free flow of workers. For example, income of accountants in Malaysia and Singapore is threefold in comparison with in Thailand. This is likely to lead to a high movement of Thai accountants to other ASEAN countries. Apart from that, practically, the free flow of labor may be difficult. The laws of each country possibly hinder
movement of labor (EIC 2011; Thailand Development Research Institute (TDRI) 2012).
Promoting job placements and increasing the Thai employment rate
KPMG (2012:9) reports that the free flow of investment will form “regional and global production bases”. According to the National Economic and Social Development Board of Thailand (NESDB) (2012), GBP 6.2 billion is the amount of foreign direct investment in Thailand in 2010 and it tends to increase every year. These can increase job placements and the Thai employment rate (KPMG 2012; Thaiautoparts 2012). Thaiautoparts (2012) predicts that in 2017, more than 300,000 workers would be needed for the Thai manufacturing sector. 90 % of staff would come from vocational schools.
It has been argued that free flow of skilled labor can be a two-edged sword owing to an entrance of foreign labor (KPMG 2012; Thaiautoparts 2012). It is possible for companies to employ incoming labor who have higher ability and English proficiency. As a result, job placements and the Thai employment rate may not increase as expected.
Threats for the Thai workforce
In 2015, low English skill will become a huge obstacle for Thai employees to communicate with foreigners and other ASEAN members (CITS 2012; KPMG 2012). EF English Proficiency Index 2011 in ASIA (cited in Bangkok Bank 2012) indicates that Thai English proficiency in ASIA ranks 42 and its level is defined as very low. Moreover, Director of CITS, Pisanwanich (cited in The Nation 2013) says that the Thai workforce will be in a difficult situation. An example of this is that foreign workers have the same performance as Thai workers but higher level of English skills such as nurses. CITS (2012) highlights that nurses from Singapore, Brunei, Malaysia and the Philippines can fluently speak English. Thai labourers should improve not only English skill, but also other languages such as Chinese since this language is widely used in many ASEAN members (such as Malaysia and Singapore) (Chongphaisal 2011; The Nation 2013)
Although the number of Thai educated people is gradually rising every year, there is still a high proportion of uneducated people and these groups are get less benefits. More importantly, an undeveloped education system is due to resistance of Thai Ministry of education (Thai-AEC 2012). Research also shows that The Thai educated people are often employed to do “clerical and service jobs” (EIC 2012:1). In addition, graduation does not manifest the qualification that businesses need. Practically, employers have found that staff’s knowledge from school cannot be applied.
Many companies have resolved this problem by setting up own universities or schools. For example, in Thailand, Panyapiwat School that was founded by CP ALL public company limited provides vocational training. Graduates are invited to work in 7-eleven (EIC 2012). According to ASEAN Secretary-General, Pitsuwan (cited in Thai-AEC 2012), it is vital to reform Thai education in order to gain the advantages of the AEC including stop rote learning and support critical thinking.
EIC (2012) states that if Thailand cannot enhance productivity of labourers, Thai workers may not compete with others. In 10 years, while a GDP of Thailand has increased by 53%, the productivity of workers has increased by merely 27%. At the same time, despite the same size of workforce, the ability of Vietnamese labourers has gone up by 61%, whereas China has surged by 157% (EIC 2012). This shows the low productivity of Thai workers. In addition, if any businesses still use out-of-date technology, it may lower their worker productivity (EIC 2012:1). However, support from the Thai government should not only make the standard of professional qualification but also help an education sector (Chongphaisal 2011; Thaiautoparts 2012).
Cultural Barriers and Social Acceptance
Thai-AEC (2012) states that most Thais generally believe that they are superior to other ASEAN members. This can generate a hindrance for cooperation among ASEAN workers. A classic example is an ethnic and religious conflict between Thai Buddhist and Muslim in southern Thailand that has continued for over a decade. Besides, Pitsuwan (cited in Thai-AEC 2012:1) suggests that we have to respect “cultural pluralism”. Recognition of different cultures will transfer a high value to societies that speak Lao and Khmer, because learning cultures and languages of other neighbours are productive ways to form good relationships (Thai-AEC 2012).
Recommended measures to the Thai workforce
It is clear that the Thai workforce should urgently enhance their competitiveness before the AEC. Here are useful recommendations that Thai workers can follow. First, both professional and general labor must not only improve English Proficiency, but also develop other languages. Next, general labor must improve their basic knowledge, working skills and performance to be at the same level as others. Third, cross-cultural acceptance should be promoted in Thai society so as to enable Thais to work in multinational conditions. Finally, the Thai workforce should require understanding of the benefits and effects of the AEC.
Recommended measures to government and business
It is the responsibility of Thai government and private sector to improve the competency of the Thai workforce. More imprtantly, cooperation of government and private sector is imperative. Here are the instrumental recommendations for government and business. Firstly, it is time to reform the Thai education system by Ministry of Education. Secondly, the Thai government, education sector and private sector should collaborate to analyse and determine demand and supply in the labor market. Thirdly, the Thai
government needs to standardise professional qualifications to equate with international standards. Finally, businesses would have to continually set up training for their staff.