The Future of Work in Thailand
This article on the future of work in Thailand examines aspects of the post-pandemic era, ranging from the overall status of the local labor market up to the long-term influence on consumer consumption and business recovery. See how organizations respond towards the impact of automation and technology on job availability and employment growth in the new normal. There is also assessment on commitment to gender equality, diversity, and inclusion as well as decisions by policymakers and business leaders on aspects of cybersecurity management and data and privacy protection.
Status of Local Labor Market
Thailand’s local labor market comprises 38 million workers, which is 55% of its 70 million total population. The country’s workforce is the sixth largest in the East Asia and Pacific region and the fourth largest in the Association of Southeast Asian Nations (ASEAN). The agricultural sector’s employment has seen a 1% year-on-year rise, with 12.68 million people employed due to the start of the rice planting season. Meanwhile, the employment rate in transportation/storage increased 4.6%, while the labor participation rate in manufacturing and wholesale/retail rose 2.1% and 0.2%, respectively.
However, its unemployment rate jumped to 2.25% from 1.89% during Q2 2021 – a 16-year high due to tougher coronavirus restrictions. Among non-agricultural sectors, the unemployment rate is more severe due to measures to control the opening and closing of enterprises – 9.3% in restaurants, 7.3% in hotels, and 1.3% in construction. Youth employment suffered the most, falling by 18% for men and by 24% for women.
Low labor force participation is just one of the major challenges that Thailand faces in 2022. The number of unemployed individuals has already reached 1.2 million between 2012 and 2019. The workforce in agriculture is only 33% while 54% is in the informal employment sector due to low educational level, health challenges, care responsibilities, and old age. The proportion of the population aged 65 and up is expected to climb from 13% to 31% in 2060, resulting in a 14.4 million decline in labor force size and a 0.86% decrease in GDP per capita growth according to projections.
“Targeted responses focusing on key sectors and segments of the workforce are vital for recovery, as are continuing efforts to ensure everyone receives a vaccination, including migrant workers,” said Graeme Buckley, Thailand’s Country Director for the International Labor Organization (ILO).
Consumer Consumption and Business Recovery
According to new data from the McKinsey Global Institute, consumer consumption in Thailand might rise dramatically over the next decade, from $120 billion to $410 billion. Up to 90% of Thailand’s population could be classified as “consumption class” by 2030, meaning they spend more than $11 per day in purchasing power parity terms and can afford not only necessities like food and accommodation, but also discretionary expenditure. The emergence of these new consumer segments will have an impact on the consumer landscape in Thailand:
- Smaller households. The average Thai household size is 20% lower than two decades ago, reflecting social changes such as people delaying marriage and having (fewer) children. More people are living alone, spending more time on the internet, and owning more pets in the last five years.
- Aging. Thai population of senior citizens is expected to grow by 40% during the next decade but consumption will double especially for housebound older people during the pandemic.
- Women empowerment. With a female-to-male labor-participation ratio of 78%, women consumers will contribute to Thailand’s GDP $80 billion per year by 2030.
- Segment of one. Data analytics helps to zero in on what Thai consumers really want, fueling customization of goods and services across industries.
- Eco-responsibility. Asia is at the forefront of climate risk, responsible for two-thirds of global economic disruption due to climate change. Sustainability is beginning to affect the purchase decisions of Thais as it has announced a ban on single-use plastic bags in 2020.
As the coronavirus pandemic enters its third year, five fundamental factors will continue to shape consumer behavior patterns in Thailand.
- Focus on home-related content
Thai consumers’ mindsets are focused on living the ‘smart life’ which is why there is a stronger demand for smart home devices. Middle-to-upper-income families also desire to become more comfortable and reconnect with the home environment; thus, it is reflected on 80% of Thais prioritizing self-care while balancing happiness and duties.
According to a recent HKTDC Research survey, 86% of middle-class Thais are increasingly prepared to spend money to customize their homes to fit their personal style. This is being driven by rising income, urbanization, and customer preferences toward energy-efficient home equipment and environmentally friendly home décor.
- Stronger support for local products
According to Mintel Thailand research, 47% Thai consumers are making more efforts to buy local goods, products, and services or to prioritize Thai brands than those foreign owned. However, 35% of Thais find it difficult to differentiate between Thai brands and multinational brands.
As consumer interest in buying local products grows, brands have the chance to educate consumers about the benefits of shopping local, such as increased job possibilities and further boosting the country’s economy post-pandemic, the report revealed. Brands can highlight their ‘proud to be local’ credentials by making claims like ‘homegrown’ or ‘locally sourced ingredients’. COVID-19 has enhanced the localism mindset, allowing firms to speed up their actions and marketing about their contributions to local communities as a strategy to build strong connections through localism.
- A vibrant e-commerce market
Thailand’s online market created $5 billion in gross merchandise value in 2019, contributing to an average annual growth of 54% over the past four years. This is attributed to about 55% of households using smartphones or mobile devices for shopping. The online shopping platforms most used by Bangkok consumers are Lazada, Shopee, PowerBuy, and JD Central.
Moreover, 67% of Thai consumers are also intending to increase their online purchases in the future in e-commerce marketplaces. This is nearly double the global average at 35% and significantly higher than the Asia-Pacific average at 47%. Social media platforms are the preferred online sales channel. With over 1.2 million monthly active Facebook Shop users, Thailand already ranks fifth in Southeast Asia for the highest share of social shoppers.
- Fashion as a means of self-expression
Thais are increasingly seeking ways to express their individuality through what they buy and how they live. They view self‑expression as the new currency in the fashion industry and look for brands that match their personal experience and boost their self‑image.
One thing in common among Thailand’s most popular brands such as Nike, Michael Kors, and Under Armour is that they successfully comprehend their customers’ lifestyles and understand what drives them to construct a certain self-image. If a customer perceives a strong emotional connection between their own self-image and the personality of a particular brand, this can lead to a significant emotional attachment between the two. This makes the customer more loyal to the brand and raises the brand’s lifetime value.
- The metaverse hype
The Metaverse is a digital environment that uses augmented and virtual reality technologies where users can access services and experiences such as shopping, conferences, investment, trade negotiations, and entertainment. When it comes to e-commerce and 5G technology, Thailand is one of Southeast Asia’s front-runners. The metaverse wave is consistent with Thailand 4.0, which aims to turn the country into a value-based economy centered on technology, innovation, and creativity. Unsurprisingly, many Thai brands are implementing AR and VR marketing during the pandemic as a way to connect with Thai consumers.
Impact of Automation and Technology to Job Availability
Thailand 4.0 initiative is the government’s new economic strategy for transforming to a high-income country, with robots and digital technologies among the new fields earmarked to lead the way. Despite launching the project in 2016, it is still not comprehensive enough to meet the ASEAN state’s development objectives. As a result, Thailand is on course to lose up to three million jobs over the next 20 years. The country would face enormous employment losses if it fails to adapt emerging disruptive technologies (TDRI), according to the Thailand Development Research Institute (TDRI) President Somkiat Tangkitvanich.
In addition to potential job losses, Somkiat believes that the government’s goal of achieving annual economic growth of 5% would be impossible to achieve. If Thailand’s level of technological skill continues unchanged, he estimates that the country’s GDP will only increase by 2.1% each year in the future. While this would encourage more and more firms to integrate automated technologies into their production lines, the biggest casualties would be 16.9 million unskilled Thai employees which is 45% of the overall workforce. Artificial Intelligence (AI) systems will also replace 70% of jobs, leaving 8.3 million Thais in high-risk occupations in the next one to three years.
According to International Labor Organization (ILO), the Thai manufacturing sector by-and-large should stop relying on a model based on semi- and un-skilled labor with limited technological investment. The government should accelerate investment in human capital and technological upgrading like in Singapore and South Korea. As automation and the use of robots expand and more lights-out factories become the norm, demand for lower-skilled labor will wane. Thai workers should be equipped with the skills necessary to remain employable in the manufacturing industry of tomorrow and to prevent decline in overall labor productivity and the threat of premature de-industrialization.
Commitment to Gender Equality, Diversity, and Inclusion
Thailand currently ranks 75th out of 153 countries in the World Economic Forum’s 2020 Global Gender Gap Report as the Gender Equality Act continues to be largely ignored, having been disappointingly under-used since it was passed by the government more than six years ago.
“Women are less likely to be hired for senior managerial positions and even less likely to be promoted to them, unless they work for their own company or one that is owned by the family,” says Angkhana Neelapaijit, a former human rights commissioner and chair of the sub-committee on gender equality and women’s rights.
Stakeholders from the public and private sectors in Thailand must collaborate to develop cross-cutting solutions, such as designing job stimulus programs and company restart strategies that include gender equality, creating business incentives for companies to increase women in leadership roles, fostering a diverse and inclusive corporate culture, providing family-friendly employment options, and supporting women-owned businesses in supply chains, among other things.
As for inclusion of people with disabilities in the workplace, Thailand’s Persons with Disabilities Quality of Life Promotion Act BE 2550 (2007) requires public and private organizations to hire one disabled person for every 100 employees. But employment quotas might be a double-edged sword because it conveys the message that people with disabilities should be hired based on their limitations rather than their abilities.
According to ILO, companies frequently fail to recognize disabled employees’ abilities to develop their talents, skills, and career pathways in the same manner that non-disabled employees do. As a result, they are typically assigned to specific sets of responsibilities at the bottom of the pyramid.
Cybersecurity Management and Data and Privacy Protection
Cybersecurity threats and challenges have more than doubled since the COVID-19 outbreak as firms have shifted to online platforms and work from home arrangements have been implemented, said PwC Thailand. The emergence of Internet of Things and the popularity of mobile banking, e-commerce and digital government services have also led to an increase in the number of cyber-attacks. About 35% of businesses in Thailand said their most significant cyber breach cost $1 million or more in damage.
Organizations in the New Normal should consider cyber insurance plans and investments in cybersecurity to decrease vulnerability from online criminals, the report said. There should be plans to accelerate digitization of operations in order to increase productivity and customer service as a result of full-time remote working.
The Thailand parliament announced the passage of a contentious cybersecurity law in 2019 to improve cyber-resilience and to bestow sweeping powers to state cyber agencies with sweeping powers, according to OpenGov Asia. The new legislation authorizes the National Cybersecurity Committee (NCSC) to summon individuals for questioning and enter private property without a court warrant. Also, a new Cybersecurity Regulating Committee will have broad authority to examine computer data and networks, copy information, and seize computers and other equipment.
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