Thailand needs to prepare its workforce for the digital revolution, emphasizing the importance of digital skills and readiness in the face of technological advancements, according to an SCB report.
The labor market in Thailand shows structural weaknesses including a slow recovery in labor productivity, a shift towards lower-skilled work, and declining wages.
The report also highlights the success of Singapore in prioritizing workforce skills and lifelong learning, serving as a model for Thailand’s potential transformation.
Key Takeaways
- The labor market in Thailand is facing structural challenges exacerbated by the digital revolution, requiring urgent adaptation from workers, businesses, and the government to remain competitive in the global landscape.
- Thailand’s labor market has shown rapid recovery from the COVID-19 crisis, but underlying structural weaknesses persist, such as a shift in workforce distribution and declining productivity.
- Thailand needs to prioritize digital skill development and lifelong learning, drawing inspiration from Singapore’s successful approach in preparing its workforce for the digital age.
During the COVID-19 crisis, the Thai labor market quickly recovered and supported labor migration within various production fields. The unemployment rate almost doubled during the pandemic but has since fallen below pre-COVID levels to just 0.5% in 2023. Additionally, the number of people insured in the social security system has risen to near pre-COVID levels of 11.6 million.
Half of the workforce operating outside the formal system
But he majority of Thai workers are employed in low-value manufacturing fields, with over half of the workforce operating outside the formal system. The Covid-19 pandemic caused many workers to leave their jobs in the industrial manufacturing sector. Although the situation has improved, the proportion of industrial workers continues to decline. Additionally, informal work in sectors such as Health and Social Work Services, Wholesale, Retail, and Transportation lacks social security system protection.
Thai labor productivity is recovering slowly
Thai labor productivity is slowly recovering, indicating that the quality of Thai labor has not yet returned to pre-COVID levels. The growth in productivity was only around 1% in 2023, compared to an average annual growth of 4% in the 5 years before COVID-19. The Covid crisis has had long-term effects on wages and productivity, as workers who transitioned to different fields are struggling to re-skill for their previous jobs, and some are taking on lower-skilled positions.
Thai workers’ wages have decreased despite higher education levels
Thai workers’ wages have worsened despite higher education levels. The Thai wage index has decreased by an average of -1% annually in the five years before COVID-19, and has further dropped to an average of -2.5% annually since the pandemic. This reflects that the overall Thai workforce has higher education levels but lower average wages, especially in the service sector. However, the wage index has increased in service sectors with high output value per person, such as finance, insurance, utilities, arts, entertainment, and recreation. This is due in part to the focus on technology, electronics, and creativity in these sectors.
The rapid transition to the digital revolution
The Thai labor market is facing several challenges due to the rapid transition to the digital revolution. This transition is important as it will significantly change the future work landscape, transcending geographical boundaries. Adapting to this change presents an opportunity, while ignoring it poses a threat to the workforce, potentially leaving them behind without awareness. The digital divide worsens social inequality and hinders the country’s competitiveness.
In the 2023 World Digital Competitiveness Ranking report by the International Institute for Management Development (IMD), Thailand has been ranked 35th out of 64 countries, showing an improvement from its 40th position in 2019. The country has shown progress in three dimensions: technology (15 out of 27), manpower (41 out of 43), and readiness for the future (42 out of 50). However, Thailand lags behind in science and technology employment (57) and education/training (52) for future readiness. Additionally, the country ranks lowest in government capability to prevent cyber threats (58), tablet availability (57), and software piracy (56).
Read More : SCB EIC brief / พลิกระบบพัฒนาทักษะ เพิ่มมูลค่าตลาดแรงงานไทยในยุคดิจิทัล | SCBEIC
