View from Thailand: AEC Opens Labor Markets

By Suchada Sukhsvasti na Ayudhya May 23, 2016

In Thailand, we are already seeing the effects following the December 31, 2015, kickoff of the ASEAN Economic Community (AEC) in which the 10 countries that make up the Association of Southeast Asian Nations (ASEAN) are coming together with the huge purchasing power of up to 660 million people.

The vision for the AEC is a single market with a free flow of goods, capital and skilled labor, which should make the region more attractive for foreign investment. However, this is a region characterized by the charm of differences between each member state in terms of social, economic and political development level and institutional capability. There is a lot of playing field to level.

The Thai government is working hard to communicate the implications of the AEC to all Thais through a variety of channels, including television, radio, electronic media and newspaper. The majority of the government’s communication effort is targeted especially at small and medium-sized enterprises (SMEs), which may be the major beneficiaries and the group most affected by this integration into single market and production base.

Thailand’s Ministry of Commerce is encouraging SMEs to look outside the Thai market to the other nine member countries—Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore and Vietnam—to seek new markets in growing economies. The AEC offers low export tariffs among members and fosters labor mobility throughout the region. A huge spike in migration of skilled labor between AEC countries is expected.

SMEs are being urged to expand into neighboring countries to mitigate the effects of Thailand’s domestic slowdown and too much foreign investment leaving the country. The Bank of Thailand has said that greater funding could return to Thailand’s financial markets given its economic recovery but that external factors will determine the trend. For instance, if the U.S. Federal Reserve continues its rate normalization, capital outflows are likely to continue in Thailand.

Even with free labor flow, skills shortages will likely persist in Thailand. The vast majority of inter-ASEAN migration is among low-skilled workers, and that will not change overnight. Thailand’s capacity of vocational education in engineering, electronics and computer science is not sufficient to serve Thailand’s market needs. These jobs require skilled or semi-skilled labor, and higher education institutions cannot keep up with demand. Recruiters have to dominate campus recruitment or jump into the talent war. 

In this climate, the Personnel Management Association of Thailand (PMAT) will celebrate its 50th anniversary in June, marking this milestone with a two-day educational conference that will include guest speaker Peter Senge, the American systems scientist and senior lecturer at the MIT Sloan School of Management. 

The ASEAN community and, especially, the AEC will bring challenges to HR professionals throughout our region. It is important that in the spirit of the single community, we share knowledge, best practices and innovation across our borders in ways that will make all of us stronger, both together and alone.    

Suchada Sukhsvasti na Ayudhya is a PMAT Advisory Board member and country representative for the Asia-Pacific Federation of Human Resource Management. Republished by permission from the World Federation of People Management Associations.


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