According to the National Economic and Social Development Council (NESDC), there were 414,000 unemployed people in the third quarter of this year, up from 401,000 year-on-year. Factory closures in the second half of the year may exacerbate the situation, following 667 closures and the loss of 17,674 jobs in the first half.
The government’s planned minimum wage hike and a plunge in domestic car sales are pressuring employment figures, while the policy to promote mass transit use by imposing tolls on roads with heavy traffic could eventually limit auto manufacturers.
Bleak future
Lower employment in the manufacturing sector, notably the automotive industry, is a problem for workers and employers as businesses struggle to survive tough competition and a sluggish market, said Kriengkrai Thiennukul, chairman of the Federation of Thai Industries (FTI).
He said workforces in many industries will continue to shrink as local manufacturers cannot compete with Chinese rivals who are gaining an upper hand by exporting cheap products to Thailand.
The influx of cheap imports in the Thai market was a factor dealing a heavy blow to local manufacturers, leading to a drop in the Manufacturing Production Index (MPI), according to the Office of Industrial Economics, which did not specify the country of origin for these imports.
In October, the MPI continued to decline, falling by 0.91% year-on-year to 93.4 points, with the country’s capacity utilisation reaching only 57.7%. With intensifying competition and high household debt in Thailand weakening consumer purchasing power, many companies need to adjust their employment strategies, said Kriengkrai.
The FTI expects employment in factories will continue to dip, with more layoffs of employees or even plant closures. The government reported 667 factories, mostly run by small and medium-sized enterprises (SMEs), shuttered in the first half of this year. Though 1,009 new factories have registered this year, it will take time for many of these factories to employ workers, he said.
“Many companies decided to cut overtime expenses, reduced work shifts and even trimmed working days. This affects capacity utilisation and employment, especially in the car and auto parts industries,” Kriengkrai added.
For the first 10 months this year, Thailand’s total car manufacturing decreased by 19.2% year-on-year to 1.24 million vehicles, following sluggish sales in the domestic market as banks tightened lending criteria because of elevated household debt, said the FTI’s Automotive Industry Club.
In October, domestic car sales decreased by 36% year-on-year to 37,691 units, the lowest level since Thailand ended pandemic-era lockdown measures in May 2021. Last week Japanese automaker Nissan Motor said it will cut or transfer 1,000 jobs in Thailand under a plan to scale down production in Southeast Asia, according to media reports.
“We are sorry for this workforce reduction news. The company needs to improve its work structure for more efficiency. We hope everyone will understand as we keep on developing new products to boost sales,” said Toshihiro Fujiki, president of Nissan Motor (Thailand).
In June, Suzuki Motor Corporation announced it would close its car manufacturing base in Rayong by the end of 2025, shifting to importing electric cars to Thailand as part of a plan to review Suzuki’s global production structure.
The move reduces the company’s workforce by roughly 1,000 people, said Wallop Treererkngam, executive vice-president of Suzuki Motor (Thailand). When car manufacturing slows, auto parts makers, which are mostly SMEs, cannot avoid the negative impact, according to the FTI.
“I believe there will be more layoffs in the automotive industry in the future. This year, domestic car sales are expected to tally only 560,000 units, the lowest since 2008,” said Wallop.
Technology changes
Danucha Pichayanan, secretary-general of the NESDC, said technological changes and the lack of digital skills have affected employment in the country. The government’s planned minimum wage hike and a plunge in domestic car sales are pressuring employment figures.
He said the government needs to speed up promotion of worker adaptation from traditional industries to modern ones, especially in automotive, trailer, and semi-trailer manufacturing, which employ about 460,000 people.
“These workers have been affected by the shift to electric vehicle (EV) production, as internal combustion engine vehicle output dropped by 28.3% in the first nine months this year, leading to layoffs,” said Danucha.
The chief of the state planning unit said a survey by human resources companies in August found 83 auto parts and vehicle assembly firms had reduced their workforce by 3,500 people since January. More than half of these companies also stopped overtime work and lowered wages, with some implementing early retirement programmes.
He said preparing workers for new industry skills is essential, including in areas such as data centres, semiconductors, electronic circuit board production, smart electronic device manufacturing, and renewable energy production.
The Board of Investment predicts 170,000 jobs in these industries, however IMD’s digital competitiveness ranking last year revealed the Thai workforce still has weaknesses in digital industry skills, said Danucha.
According to NESDC’s report on social conditions in the third quarter, the number of employed people totalled 40 million, down 0.1% year-on-year, attributed to a decline in agricultural employment by 3.4%. Employment in non-agricultural jobs increased by 1.4% in the third quarter.
Sectors with reduced employment included wholesale and retail sales, which dipped by 0.8%, and the manufacturing sector, particularly computer and electronics production, automotive, trailers and semi-trailers, falling by 1%.
He said the decline in manufacturing employment began in late 2023, primarily based on technological changes, especially the transition from hard disk drives to solid-state drives.
High demand for service
Unlike downturns in other sectors, the 6.1% expansion in employment for hotels and restaurants in the third quarter was attributed to tourism arrivals in key Thai destinations.
Suksit Suvunditkul, president of the southern chapter of the Thai Hotels Association, said employment in the Phuket hotel industry from November this year to March next year has fully resumed as the current occupancy rate and forward bookings for next month already reached 80%.
“All hotels in Phuket are back to full operations, attracting workers from other provinces. Among hotel employment here, 90% of workers come from other provinces. We have to rely on them because Phuket lacks a sufficient working-age population,” said Suksit.
Given the robust tourism, he said most five-star properties can offer higher salaries than pre-pandemic levels, as they used the quiet years to restructure their human resources management, enabling workers to earn higher income with modest teams.
Suksit said the turnover rate is manageable at 5-10% per month, which hotels don’t regard as an obstacle because they can successfully recruit new workers, unlike the past three years when workers returned to their hometowns as a result of sluggish tourism growth.
“Other businesses also benefit from this trend, such as rental apartments and long-term accommodation in Phuket with rates of less than 10,000 baht per month, as a large number of workers move from other provinces as well as expats from other countries,” he said.
As Phuket’s hospitality businesses typically welcome guests of all nationalities in larger number than other tourism provinces, they mostly employ skilled workers, particularly those with strong language skills, said Suksit.
“The government should help provide skill training for workers who want to enter the tourism industry or upgrade their positions, responding to demand for trends such as green and sustainable services. These programmes should be conducted during the low season, as hotel workers are extremely busy during the high season and cannot attend courses,” added Suksit.
“I believe the Thai retail sector will not have layoffs in the near future as the industry still has high demand for workers. The Mall Group has not introduced a layoff programme,” said Supawut Chaiprasitkul, chief business officer for supermarkets and food at The Mall Group.
Supawut said the Thai retail market is expected to be tough next year as the country is dealing with a high level of household debt, which weakens consumer purchasing power, while there is global political uncertainty.
Yet Thai retail operators have consistently adapted to a changing business environment through upskilling and reskilling of their workforce, include both hard and soft skills, he said.
“We have to catch up with rapidly changing customer needs and enhance our workforce capability,” said Supawut.
Chataya Supanpong, chief engagement officer of Food Passion Co, the operator of Bar-B-Q Plaza, said the company has no plans for layoffs and is looking for workers as the company wants to expand.
“Human resources plays a pivotal role for our business,” she said, adding the company has skills training courses to enhance the competencies of its employee.
IT still expanding
While some global IT businesses, such as personal computers and computer networking, have reached a mature stage this year, others expanded and continued to recruit more staff, including cybersecurity, cloud computing and (AI) artificial intelligence-based servers, according to an employee at an IT product distributor who requested anonymity.
Most local offices of global tech companies in Thailand just oversee sales and marketing activities, and do not have lot of staff, said the source.
Some tech firms might cut management staff if products do not perform well to reduce business costs, or adjust operations by assigning one person to oversee multiple product categories, said the source.
In 2025, the local IT business outlook could improve as manufacturers are expected to recruit more staff, in line with growth prospects for AI-based PCs, noted the source. However, if the IT market does not grow as expected, businesses could cut staff in the second half of the year.
Pakthapa Chatkomes, country manager at cybersecurity firm Fortinet Thailand, said “The company increased its headcount to 48 in response to its growing business. The local cybersecurity industry posted double-digit growth this year as cyber-attacks on organisations increased,” she said.
In a challenging economy, Pakthapa said customers are more cautious about investment as they seek the best deals. Mid-sized companies are keen to subscribe to the “as-a-service” model, such as a security operation centre as-a-service, she said.
Timely wage hike
Sanan Angubolkul, chairman of the Thai Chamber of Commerce, said the chamber views the global economic slowdown and volatility as posing a significant challenge to business operators.
He said businesses are adjusting their operations to align with the evolving market demand, resulting in restructuring of many companies and layoffs, particularly in the technology, automotive, banking and media sectors.
Regarding the government’s plan to proceed with raising the daily minimum wage to 400 baht, the chamber believes the timing needs to be carefully considered.
“Many businesses are burdened with high costs and must compete with imported goods that have lower production costs and prices. These factors mean some businesses may not be able to cope with higher wage costs amid a partial economic recovery, which could result in more layoffs,” said Sanan.
However, most skilled Thai workers earn more than 400 baht per day, the recommended level of the minimum wage hike. The chamber believes the tripartite wage committee should have the discretion to determine a proper minimum wage that is suitable for the economic environment in each province.
Furthermore, the chamber suggests adopting its “Pay by Skills” scheme to motivate Thai workers to enhance their skills and competencies. This approach would not only increase employment, but also contribute to sustainable income in the future, said Mr Sanan. – The Bangkok Post
(https://www.bangkokpost.com/business/general/2912500/trends-drive-job-openings)
