East Asian Labour Market Regimes in the Context of Global Economic Crisis: Do the Advanced Nations Offer Trajectory Paths for Those Following?

I presented this paper at the XIIIth Annual International Conference of DPSR on Saturday successfully enough. Here is the abstract:

The global economic crisis caused by an improperly regulated financial sector giving way to excessive risk-taking behaviour has led to a worldwide crisis of austerity and of lack of jobs. The situation in East Asia is somewhat different from that in the western world in that finance bubbles had already been burst in the 1997 crisis and lessons learned from that. Nevertheless, developing East Asia is still dependent on western markets as destinations for exports as domestic markets remain insufficiently developed to absorb production of goods and services. In this situation, states such as Thailand, Vietnam and Cambodia look to examples from elsewhere in the region concerning the means of transforming themselves from being part of the factory age, which limits growth at the upward end of the middle income range, into the higher income range of economies. Examples include the Republic of Korea, Taiwan, Singapore and even to some extent Malaysia. This raises the question of the extent to which the examples of those other states, in which labour market management has passed further along a familiar trajectory, offer practical examples that can be applied in the developing states that follow behind them. Issues of relevance in this case include wage and compensation issues, management of unions and the freedom of speech, association and collective bargaining, as well as the interaction between the education system and the labour market. This paper examines the cases of economically advanced East Asian states in terms of labour market development with a view to considering how those examples might be applied in those countries which now follow.

Keywords: labour markets, economic crisis, East Asia, Thailand, Korea

Economic Development and Democracy

People who fail to learn the lessons of the past, it is occasionally observed,  are more or less doomed to repeat the mistakes of the past. In the case of  economic development, it should be better known that this was achieved in most  western countries in non-democratic and largely inhumane conditions. In western  Europe, for example, it was created on the back of the exploitation of workers  in the factories that produced the goods that were then exported to overseas  markets – overseas markets forced open in colonies at gunpoint.

Read the full article here.

Remittances and Development

Owing to the uneven distribution of resources and opportunities around the  world, people will inevitably migrate to different regions and countries in  search of better income and standard of  living for themselves and their families.

Read the full article here.

What Is Vocational Training?

Countries that are at a comparatively early stage of economic development tend  to rely on drawing low paid unskilled workers into the emergent industrial  sector. Typically, this takes place in factories located in Special Economic  Zones (SEZs) of some sort but there are other possibilities.

Read the full article here.

Demographic Change and Sustainable Economic Development: Employment Perceptions of Older Workers in Thailand

Announcing:

Walsh, John and Sittichai Anantarangsi, “Demographic Change and Sustainable Economic Development: Employment Perceptions of Older Workers in Thailand,” Economics and Organization of Future Enterprise, Vol.1 (2011), pp.1-13, available at: http://www.orgmasz.pl/wydawnictwo/files/jofeco_1.pdf.

Abstract

Thailand has risen to the ranks of middle income countries largely through application of the East Asian Economic Model, which is based on export oriented manufacturing based on low wage cost competitiveness. Social and educational institutions have been established to support this model and also to ensure that members of elite and ruling classes reserved better opportunities for themselves and their offspring. Consequently, the Thai labour market displays very weak labour rights, incremental salary increases based on age and entry level wages set by educational qualifications. These factors have made older workers less popular in the non-professional sectors of the labour market. When economic conditions are poor, then older workers tend to suffer more and are generally less able to adapt to changing job market conditions. However, as the Thai population begins to age, these factors will have to change as well or else problems of elderly unemployment and poverty will intensify. As part of the effort to understand the need for changes to combat these future events, research was conducted into the perceptions of older workers in Thailand through qualitative interviewing. The possibility of creating new employment opportunities in entrepreneurial sectors was considered, in addition to job opportunities in the formal sector. Society must absorb the lessons and implications of an increasing number of older people and fewer younger people if economic and social development are to progress on a sustainable basis in the future.

Human Security and Workers in Thailand’s Post-Factory Age

I’m announcing this again because the full text is now available online:

Walsh, John, “Human Security and Workers in Thailand’s Post-Factory Age,” paper presented at the Critical Connections Conference (August 18^th-19^th, 2011, Chulalongkorn University, Bangkok), available at: http://www.humanrights-mu.org/attachments/article/88/John_Paper.pdf.

Abstract:

Many of the conventions and regulations introduced by the International Labour Organization (ILO) and similar agencies aimed at protecting workers in countries around the world are intended to protect workers in economies making the transition into the factory age. As predominantly rural populations become involved in large-scale manufacturing, that is, there is the need to protect them in the workplace in terms of health and safety measures, working hours and workplace rights in situations they had not previously experienced. Additionally, important rights such as collective bargaining and freedom of association had not been of such relevance in the agricultural setting. Now that Thailand has reached middle income stage, its future economic growth will depend on a successful transition from the low labour cost factory manufacturing paradigm to higher value-added industrial and service activities and, eventually, the widespread use of the knowledge-based economy. Such changes reconfigure the relationship between many workers and their employers and between the triumvirate of government, employers and employees. The reconfiguration will have elements based on power, time and space and, consequently, require new instruments and regulations to try to ensure that exploitation events are minimized, that income inequalities are not increased and that social mobility, such as it is, is not further constrained by structural issues emerging in the labour market. This paper examines the need for new measures to protect workers in the post-factory age based on the specific conditions existing in Thailand and on the international context of the industrially advanced world. Recommendations and practical lessons are drawn from the analysis.

Demographic Change and Sustainable Economic Development: Employment Perceptions of Older Workers in Thailand

I have been informed by the editor of the acceptance of this paper:

Walsh, John and Sittichai Anantarangsi, “Demographic Change and Sustainable Economic Development: Employment Perceptions of Older Workers in Thailand,” Economics and Organization of Future Enterprise (2011, forthcoming).

Abstract:

Thailand has risen to the ranks of middle income countries largely through application of the East Asian Economic Model, which is based on export oriented manufacturing based on low wage cost competitiveness. Social and educational institutions have been produced to support this model and also to ensure that members of elite and ruling classes reserved better opportunities for themselves and their offspring. Consequently, the Thai labour market displays very weak labour rights, incremental salary increases based on age and entry level wages set by educational qualification. These factors have made older workers less popular in the non-professional sectors of the labour market. When economic conditions are poor, then older workers tend to suffer more and are generally less able to adapt to changing job market conditions. However, as the Thai population begins to age, these factors will have to change as well or else problems of elderly unemployment and poverty will intensify. As part of the effort to understand the need for changes to combat these future events, research was conducted into the perceptions of older workers in Thailand through qualitative interviewing. The possibility of creating new employment opportunities in entrepreneurial sectors was considered, in addition to job opportunities in the formal sector. Society must absorb the lessons and implications of an increasing number of older people and fewer younger people if economic and social development are to progress on a sustainable basis in the future.

 Keywords: demographic change, employment, labour market, older workers, Thailand

Labour Market and Corruption Issues in Chiang Rai, Thailand

Announcing (I have posted this before but the full text is now online):

Walsh, John, “Labour Market and Corruption Issues in Chiang Rai, Thailand,” Review of Economics and Business, Vol.3, No.2 (2010), pp.253-68, available at: http://www.rebs.ro/issues/pdfs/6.pdf#page=253.

Abstract: Lack of application of the rule of law in Thailand has various negative impacts on labour market and business environment. Lax policing of minimum wage legislation and unknown numbers of migrant workers contribute to depression of wages as whole and reduced incentives to add value to production. Instead, short-term competitiveness through low labour cost manufacturing is prioritized. Although individual transactions which may be deemed corrupt are small scale in nature, they appear to be repeated very regularly and therefore have a significant impact upon the income generating possibilities for local workers and for their future prospects, not to mention the overall competitiveness of the country. The corrupt activities also lead to lower levels of safety in the workplace and for such issues as collective bargaining and freedom of association. The paper attempts to identify the major issues involved and some possible solutions.

Keywords: Labour market, Corruption, Thailand

JEL Codes: J24, D73

Es bleibt alles beim Alten – Tourismus und menschenwürdige Arbeit

Announcing: Walsh, John, “Es bleibt alles beim Alten – Tourismus und menschenwürdige Arbeit,” Südostasien, Jg.27, No.1 (2011), pp.31-3.

Available in all good book shops and so forth (and also here).

Labour Shortages

Despite changes in the economy, the principal sector in Thailand remains manufacturing and, as ever, it is suffering from a current and projected future shortage of labour. The shortfall of skilled and unskilled workers may be as much as 200,000 workers, according to this story in the Bangkok Post.

The reasons given for the shortage include the preference by workers for entering the service and tourism sectors, although this seems a little illogical. Manufacturing work is generally a stable and long-term occupation with wages set at well over minimum wages in some sectors (but not all sectors – factories I have visited pay just a handful of baht of minimum wage per day and this is considered sufficient to keep workers loyal). Meanwhile, tourism and service sector jobs tend to be low paid, with long hours and threats of seasonal or cyclical redundancies. Both tourism and manufacturing jobs tend to be spatially defined – that is, people have to move to particular areas to find the jobs, by and large.

One particular problem is that Thailand produces too few qualified vocational students and too many not terribly useful university graduates without meaningful workplace skills – who are then paid more because of their qualifications entering the market place – as well as too many unskilled workers. Incentives exist for companies to use unskilled workers to produce goods and services which are kept competitive as a result of various rents available (e.g. through using industrial estate space). There is also a lack of serious planning (or even thinking) about the needs for the labour market in the future.

To make up the shortfall, business spokespeople inevitably call for more imports of foreign workers – which will inevitably include many unskilled (and usually poorly educated) workers from Burma and Cambodia who can be paid very low wages and intimidated into giving up what few rights they have for freedom of association and freedom of speech. If the 2015 ASEAN agreement on greater freedom of movement for labour does go ahead, then problems will be exacerbated as greater rights for migrant workers are not likely to be extended in most countries involved.