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Increasing Demand for Skilled Workers in Thailand in the Era of Globalization

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Title: Increasing Demand for Skilled Workers in Thailand in the Era of Globalization


1
Increasing Demand for Skilled Workers in Thailand
in the Era of Globalization
Ruttiya Bhula-or
Prepare for The International Development
Economics Associates (IDEAs) workshop
on "Development Experiences and Policy Options
for a Changing World 3-5th June, 2007 Tsinghua
University, Beijing, China
2
Outline of the Presentation
  • Facts and Trends of Increasing Demand for Skilled
    Workers
  • Objectives of the Study
  • Fact Findings
  • Concluding Remarks

3
Facts International Comparison
1. Facts and Trends of Increasing Demand for
Skilled Workers
Employment Growth of High-skilled and Low-skilled
Workers Average annual growth rates
Note 1.High skilled workers are defined here
as those in the following occupational groups
Legislators, senior official and managers
(ISCO-88 Group 1) professionals (ISCO-88 Group
2) technicians and associate professionals
(ISCO-88Group 3). All remaining occupational
groups are classified as low-skilled. For
Germany, ISCO-88 Group 1 covers legislators and
senior officials only and ISCO-88 Group 3
excludes teaching associate professionals so that
highskilled workers are underestimated. Source
Colecchia, A. and G. Papaconstantinou (1996)
1996., "The Evolution of Skills in OECD Countries
and the Role of Technology", OECD Science,
Technology and IndustryWorking Papers, 1996/8,
OECD Publishing 25
4
1. Facts and Trends of Increasing Demand for
Skilled Workers
Facts Thailand
Employment Growth of High-skilled and Low-skilled
Workers Average annual growth rates during
2001-2005
Source Author calculation raw data of Thai
Labor Force Survey (the third quarter)
Note 1.High skilled workers are defined here
as those in the following occupational groups
Legislators, senior official and managers
(ISCO-88 Group 1) professionals (ISCO-88 Group
2) technicians and associate professionals
(ISCO-88Group 3). All remaining occupational
groups are classified as low-skilled.
5
1. Facts and Trends of Increasing Demand for
Skilled Workers
Facts Thailand
Average Growth Rate of Employment Classified by
Skilled Groups 2001 -2005
White-collar high-skilled (WH) Legislators,
senior officials and managers (Group
1),Professionals (Group 2), Technicians and
associate professionals (Group 3) White-collar
low-skilled (WL) Clerks, service workers (Group
4), Shop market sales workers (Group
5) Blue-collar high-skilled (BH) Skilled
agricultural and fishery workers (Group 6), Craft
related trade workers (Group 7) Blue-collar
low-skilled (BL) Plant machine operators and
assemblers (Group 8), Elementary occupations
(Group 9)
Source Labor Force Survey (the third quarter)
during 2001 -2005
6
1. Facts and Trends of Increasing Demand for
Skilled Workers
Facts Thailand
Average Wage Per Month Classified by Occupations
(Baht)
Source Author calculation raw data from the
Labor Force Survey during 2001 -2005
7
Empirical Studies about Increasing Demand for
Skilled Workers
1. Facts and Trends of Increasing Demand for
Skilled Workers
Most Studies supports Skill- Biased Technological
Change (SBTC)
As technological advances are continuously
introduced into the labor market the
high-skilled workers will be in demand to serve
these advances.
  • Berman, Bound, and Griliches (1994) US
  • Berman, Bound and Machin (1998) Ex. UK, US, Aus,
    Japan
  • De Laine, Laplagne, and Stone (2000) Aus
  • Sasaki, and Sakura (2005) Japan
  • Sánchez-Páramo and Schady (2002) Argentina,
    Brazil, Chile, Colombia, and Mexico

8
Empirical Studies about Increasing Demand for
Skilled Workers
1. Facts and Trends of Increasing Demand for
Skilled Workers
Due to the skilled complementarity
  • The linkage of technical and skilled workers ?
  • its relation to the skilled complementarity.
  • Many studies have examined the correlation
    between various measures of technology and worker
    skills.
  • Berman, Bound, and Griliches (1994) skill
    upgrading or the increase in the wage share of
    white-collar workers is positively related to two
    aspects of technology computer expenditure and
    research and development.
  • Baldwin et al. (1995) examined the factors
    influencing a firms decision to train using
    Canadian statistical surveys. Skill requirements
    increased in between 47 and 59 per cent of firms
    adopting new technologies, while only a
    negligible number of firms reported reduced skill
    requirements.

9
Empirical Studies about Increasing Demand for
Skilled Workers
1. Facts and Trends of Increasing Demand for
Skilled Workers
Remarks SBTC possibly comes late.
  • Berman, Somanathan, and Tan (2005) does not
    explicitly support the SBTC in the case of India.
  • The reason is the matter of time.
  • While the 1980s was a period of falling skills
    demand, the 1990s showed generally rising demand
    for skills, with variation across states.
  • The increased output and capital-skill
    complementarities are claimed to be the best
    explanations of skill upgrading in the 1990s.
  • As the economy underwent a sharp reform and a
    manufacturing boom in the 1990s, raising the
    possibility that technology absorption
    accelerated.

10
Objectives of the study
2. Objectives of the Study
  • 1) To investigate the changing trend of skilled
    workers in the labor market
  • 2)To explore the pattern of demand for high
    skilled workers before and after the arrival of
    globalization to Thailand by calculating the
    within-sector effect (implies SBTC) and the
    between-sector effect of each skilled labor
    market. The estimated results will be compared.

11
3. Findings
When Globalization has begun in Thailand
Identify When we call the arrival of
globalization
Net Flow of Foreign Direct Investment
(Millions of Baht)
After
Before
Apparently the beginning of Globalization
The most recent data available on Thai Labor
force Survey
Note 1) The figures cover investment in non -
bank sector only. 2) Direct Investment Equity
Investment plus loans from related companies.
Since 2001, 'Reinvested earnings' has been
incorporated into direct investment as well. 3)
From April 2004 onwards inputs for private
financial flow data are obtained through data
sets electronically. Source Bank of Thailand
12
3. Findings
Overview
Structural Changes of Thai Economy by Sector
GDP share classified by sector
1983
2005
Source National Economic and Social Development
Board (NESDB). The data of the third quarter.
Available online http//www.nesdb.go.th/Portals/0
/eco_datas/account/qgdp/data4_06/gdp2006q4.xls
The authors grouping
13
3. Findings
Overview
Structural Changes of Labor Markets by Sector
Employment share classified by sector
1983
2005
Source Thai Labor Force Survey
14
3. Findings
In-dept details Pattern changes
Decomposition
Decompose the Aggregate change in the share of
high skill workers into the within industry and
between industry is shown in (1). Where
i 1, 2, ,n industries. the share
of high-skilled workers employed in
industry I the share of
employment in the sector to the total
employment
Compare before and after the arrival of
globalization to Thailand.
15
3. Findings
In-dept details Pattern changes
Decomposition
The change in the total share of high-skilled
workers due to shifts in employment shares
between sectors with the different proportions of
high-skilled workers. So called BETWEEN EFFECTS
represents the skilled biased technical change
effects, the change in the total share due to
changes in the proportions of high-skilled
workers within sector. It reflects the
reallocation of employment between industries
within one sector. It should be noted that the
greater one sectors employment share, the
greater effects on the within sector effect. So
called WITHIN EFFECTS
The data used are mainly drawn from the raw data
of Thai Labor Force Survey, Industrial Survey,
National Statistics Office (NSO), Bank of
Thailand (BOT), National Economic and Social
Development Board (NESDB).
16
3. Findings
In-depth Details The Whole Economy
Decomposition of Changes in the Economywide Share
of High-Skilled Employment
Percentage
17
3. Findings
In-depth Details The Sectoral Comparison
Percentage
Decomposition of Changes in the Economywide Share
of High-Skilled Employment
1983-7
2001-5
18
3. Findings
In-depth Details Agricultural Sector
The employment share 68 ? 43
Decomposition of Changes in the Economywide Share
of High-Skilled Employment
Percentage
19
3. Findings
In-depth Details Commerce Sector
The employment share 9.7 ? 17
Decomposition of Changes in the Economywide Share
of High-Skilled Employment
Percentage
20
3. Findings
In-depth Details Service Sector
The employment share 10.2 ? 17
Decomposition of Changes in the Economywide Share
of High-Skilled Employment
Percentage
21
3. Findings
In-depth Details Manufacturing Sector
The employment share 6.9 ? 15
Decomposition of Changes in the Economywide Share
of High-Skilled Employment
Percentage
22
3. Findings
In-depth Details Construction Sector
The employment share 2.1 ? 5
Decomposition of Changes in the Economywide Share
of High-Skilled Employment
Percentage
23
3. Findings
In-depth Details Transport Sector
The employment share 2.2 ? 3
Decomposition of Changes in the Economywide Share
of High-Skilled Employment
Percentage
24
3. Findings
In-depth Details Utility Sector
The employment share 0.4 ? 0.3
Decomposition of Changes in the Economywide Share
of High-Skilled Employment
Percentage
25
3. Findings
In-depth Details Mining Sector
The employment share 0.2 ? 0.1
Decomposition of Changes in the Economywide Share
of High-Skilled Employment
Percentage
26
4. Concluding Remarks
Concluding Remarks
  • Physical, mathematical and engineering science
    professions / legislators and senior officials
    and stationary plant and related operators
    enjoyed a significant increase in employment.
    While teaching associate professionals were the
    most suffering occupation as its lowest negative
    growth during 2001 -2005
  • The decomposed results of the whole economy
    identify that between sector effect dominates the
    within sector effect. However, during the era of
    globalization the within effect has increased its
    significance.
  • In the other words, it implies that the Thai
    economy is (also) likely in the realm of the
    SBTC.

The high-skilled workers will benefit from the
higher demand for them.
27
4. Concluding Remarks
Concluding Remarks
  • The service sector reflects the largest share of
    high skilled workers to the economy. The commerce
    sector accounts for the second largest
    contribution and then the manufacturing sector.
  • The service sector explicitly changes the
    pattern. The SBTC has occupied the aggregate
    change in the later period.
  • The manufacturing sector is the largest dominant
    sector of upskilling changes at more than 9
    times.
  • The transportation sector performs the upskilling
    change.
  • The agricultural sector, accounting for more than
    40 percent of employment, is also dominated by
    the SBTC. However, it is suffering from a
    decrease in employment.

28
4. Concluding Remarks
Concluding Remarks
  • The Limitation of the Study
  • International comparison at the same definition
    of skilled workers
  • Extension of the scope of time
  • Linkage between SBTC and skilled complementarity
  • Future Plan

- Linkages of Globalization, Changes in Demand
for Skilled Workers, and Investment in Human
Capital
29
Thank you
Source David Held (2004) A Globalizing world?
Culture, economics, polictics. Second edition.
The Bath Press p 100 Figure 3.6
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