The Economy of the Future: How Long Will We Work?

It has been observed that the history of the working class is encapsulated by the struggle for the length of the working  day. After generations of struggle and suffering, the working day was reduced  from fourteen hours a day to an average of eight (of course, this is only true  in the developed countries – elsewhere, working days remain dreadfully and  dangerously long) and people can expect two days off a week, by and large. These  sacrifices have been bitter and genuine and are not to be given up lightly.

Read the full article here.

The Economy of the Future: Labour and Capital

The fruits of economic growth have been hugely and dangerously skewed towards  the owners of capital and away from labour in the last 30 years. Will this  persist into the future and, if it does, what would it mean?

Read the full article here.

Labour Note #1: Tablet Computers

The ICT Ministry has finally signed the deal with a Chinese supplier to order hundreds of thousands of tablet computers for free distribution to Grade 1 school children throughout the country. Delivering free computers was a manifesto promise of the Pheu Thai party which won the last election. What is the point of this policy?

Since 2001 and the election of Thai Rak Thai, the progressive forces in Thai politics have been seeking to reshape the labour market to take account of important changes in the international environment. Principal among these have been rising living costs, which has made it more difficult for Thai companies to compete purely in terms of low cost. The rise in importance of China and Vietnam as places where low labour cost manufacturing can take place has made this situation all the more apparent.

Over the last half a century or so, the Thai education system has been a dual system: children of wealthy parents can go to schools where they can learn English, advance to university and aspire to good quality jobs. The children of poor people, on the other hand, can expect just three years of secondary level education, which is just about enough to make them useful in factories or as migrant labour, especially if some particular skills are backed up with vocational training.

However, now that there is not so much need for low skilled factory work, people will need to be able to fit other kinds of jobs. All around the world, it has become evident that more and more jobs have an IT component to them – at the very least, people need basic computer and internet skills to interact with the world effectively. Meeting other people online will also help stimulate creativity and new thinking and this will be needed in the new labour force.

Currently, the digital divide in Thai society is perpetuating the dual education system which is no longer necessary or desirable in the future. Providing free tablet computers is, therefore, one means of helping to bridge the gap in future earning ability and indeed in society as a whole.

Cambodian Migrants in Thailand: Working Conditions and Issues

Announcing: Walsh, John and Makararavy Ty, “Cambodian Migrants in Thailand: Working Conditions and Issues,” Asian Social Science, Vol.7, No.7 (July, 2011), pp.23-9, available at: http://ccsenet.org/journal/index.php/ass/article/view/8797/7980.

Abstract: The significant differences in standards of living available across the Thai-Cambodian border are influential in encouraging large numbers of Cambodian migrants to travel for work in Thailand on a temporary or permanent basis. Demand for labour is generally in labour-intensive industries with low value added and the low wages provided act to depress overall earnings. This situation contributes to social tensions and means otherwise uncompetitive work is continued which would otherwise be discontinued because of lack of profitability. Using the findings from qualitative, in-depth interviews with 59 Cambodian migrant workers in Thailand, this paper investigates the types of work that Cambodian migrants are undertaking in Thailand and the conditions in which they live, which is partly determined by the type of work they undertake. Living conditions will in turn determine to some extent the ability of workers to modify their future prospects as remittances change their future prospects.

Keywords: Cambodia, Thailand, Migrant labour, Living conditions, Demand for labour

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.

Trotsky: The Organization of Labour

Russia, prior to the Revolution, was composed of large numbers of barely-educated serf-peasants trying to earn a living from the often unforgiving Russian soil. The Revolution was predicated on the vision of transforming the country into a leading industrial power.

Read the full article here.

The End of the East Asian Economic Model in Thailand

Thailand’s economic development since the 1950s has relied primarily on import-substituting, export-oriented manufacturing with competitiveness based on low labour costs. Those low labour costs have been ensured through bringing new entrants into the labour market from the rural agricultural sector (or from among the ranks of migrant workers) and by suppressing the ability of workers to complain, secure freedom of association, collective bargaining and so forth.

However, having reached middle income status through this method, the time has come for new methods. Unfortunately, the current government seems unable to understand this. Meanwhile, in Vietnam, a lower cost competitor continues to reap the rewards – as Thai economic development has progressed, it has inevitably led to generally increased incomes that erode the basis of competitive advantage. It is also (slightly) less easy for the state to use violence to silence troublesome labour leaders – although attempts are still made.

The industrial estate management company, Amata, has announced new plans to buy land in Vietnam to help establish the East Asian Economic Model there. Industrial estates provide decent infrastructure together with the expectation of some incentives from the state to encourage investors to locate their factories there. Being labour-intensive, such estates tend to act as magnets to attract workers and their families (there is often also a gender element) and this then has an impact on the living conditions of the accommodation centres and also the home towns and villages of workers. Vietnam will out-compete Thailand in providing low cost labour force for manufacturing – so too will Cambodia in due course, although the workers there will need some of the education necessary to prepare them for a life in the factories.

Japanese Car Sales up in Thailand; Production Unaffected by ‘Political Problems’

It’s an ill-wind that, in the absence of the international solidarity of workers, blows no one any good. After recent news that Chinese workers are increasingly likely to take industrial action owing to their very low wages and poor working conditions, it appears that Japanese investors will respond by withdrawing from the country and relocating to countries where the labour force is even more forcibly repressed – step forward, the Land of Smiles!

According to this Thai Labour Campaign story: “The annual salary for a Chinese Honda worker currently can run as high as US$4,500 to 5,500: about twice that of Indian workers, and 33 percent higher than Thai workers.”

As a reward for ensuring these low salaries through the relentless suppression of freedom of association, collective bargaining and, under the current Abhisit regime, freedom of speech, Thailand is to be rewarded by the opening of a third Mitsubishi factory where the environmentally-sensitive ‘global small car’ is due to be built and exported around the world.

In response to lies spread by the government-influenced media that political dissidence stifles economic growth, a spokesperson noted that: “Though some people are worried about political risks, such as demonstrations by the “Red Shirt Army,” Nissan President Ghosn made it clear that no dent had been made in the company’s production target due to the political unrest: moreover, its sales had actually increased.”

The Phnom Penh Post last week had a story entitled Cheap Labour Pays Dividends. After noting that some unions are considering strike action after the minimum wage in the garment sector was being raised by US$5 to US$61 per month, scarcely more than the US$2 per day definition of poverty followed by the World Bank, “Ministry of Labour and Vocational Training Secretary of State Oum Mean said it was important for Cambodia to take advantage of the new interest sparked by relatively low labour costs; otherwise, investors could “run away from us”, causing workers to suffer.

“We have many laws and regulations comparable to other countries to reassure and give confidence to these investors, especially given we have enough manpower [to support them] with low labour cost,” he said.”

Don’t the investor classes have enough ministries to support their interests without controlling the Ministry of Labour and Vocational Training as well? Apparently not.

Working Conditions of Cambodian Migrants in Thailand

I’ll be going to Phnom Penh for a couple of days next week to give a keynote speech on the paper which is in the title of this post which I wrote with Makararavy Ty at the UNIAP and other partners’ conference on migration and trafficking. This is the abstract:

The Cambodian and Thai governments have signed memoranda agreeing the number of Cambodian workers who will be permitted to be registered in Thailand, together with the provinces in which they are permitted to live and the type of activities for which they are permitted to be hired. Demand for labour is generally in labour-intensive industries with low value added. When conditions such as this occur in Thailand, it is common for low labour costs to suppress wages in the areas concerned generally (which then contributes to social tensions) and for otherwise uncompetitive work to be continued which would otherwise be driven out because of lack of profitability. This paper investigates the types of work that Cambodian migrants are undertaking in Thailand and the conditions in which they live, as determined by the work they undertake. This includes a consideration of the future of such working activities, a number of which are part of Thailand’s sunset industries, together with the implications for labour migration in the years to come. Although restructuring of Thai industry and competitiveness has largely stalled since 2006, there will be a need for this to restart and the understanding of the likely impact on migrant and domestic labour will be an important aspect of planning for the future. In addition, the conditions in which Cambodian workers live will determine to some extent their ability to modify their future prospects as remittances change their economic activities.

If anyone would like more details or to discuss this further, then please let me know. I’ll provide a report of the conference some time after I get back on Friday evening (not sure what kind of internet access will be available while I am there.