Labor Movements in Thailand: Principle Challenges and the Three Pillars Management Resolution Sakdina Sontisakyothin, Ph.D. Department of Employment Ministry of Labour

The views expressed in this paper are the views of the authors and do not necessarily reflect the views or policies of the Asian Development Bank Institute (ADBI), the Asian Development Bank (ADB), or its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.

1. Principle Challenges Within three decades, Thailand has significantly transformed its traditional old style agricultural economy to an industrial based economy. The country’s economic growth has been led by export-orientation which, combined with import substitution, carried out to double digits growth rates in the late 1980s. The country’s trade boomed in the late 1980s guiding the country to enter into the selected fold of newly industrialized countries (NIC) by capitalizing on a new international division of labor that has seen the center of gravity of the world’s economy shift towards the Pacific Rim countries. Thailand has established herself as a formidable player in the field of labor intensive and increasingly capital intensive manufactured goods as well as supplier of agricultural products to the world market. As impressive as Thailand’s aggregate economy in the 1980s was, the country has known that its labor-intensive industrialization can be sustained just momentarily. Real intense international competition from countries which allowed accessible lower cost seemed to increase Thailand’s domestic wages. This directly disturbed Thailand’s pricing system and further expansion of its industrialization edge. One report remarked that by 1994, growth rates of Thai labor-intensive manufactured export products were down to about 10 per cent per annum in the second half of the 1980s. Thus, the report has noted that “the growth of labor intensive manufacturing industries will no longer be the dominant driving force for Thailand’s economic development.” The Thai economy has been expanding rapidly. The impressive economic performance of the country has substantially reduced poverty of the Thai people. The remarkable double digits economic growth rates have boosted the ability of the country to compete with others in the world market. The results of the booming manufactured exports led to rapid investment, created jobs and increased incomes. However, competition has been coming from the countries which create lower per capita income than Thailand, such as China, Indonesia and Vietnam. These countries are prominent in the labor intensive manufactured export market. To survive, Thailand has to pinpoint more to higher technology based products rather than labor intensive products. As a result of the economic boom, there are clear labor market responses to changes in the demand side. These responses could not keep pace with the changes in the production structure. Some economists noted that rapid economic growth during the late 1980s caused the tightening of the country’s labor market and labor shortages problem. Effective family planning programs implemented by the government since the 3rd Thailand National Economic and Social Development Plan led to a decline in the growth of the labor force. Therefore, the lack of employment and educational opportunities in rural areas and labor market segmentation in the urban areas pushed many able-bodied men and women in the 1970s and 1980s to work overseas as contract or illegal labor. Labor market tightening is evident from the relatively low levels of open unemployment and the rise in wage rates. Yet, the labor tightening was not only evident in Bangkok but also in the provinces during the harvest season. The demand for unskilled workers was very high while the demand for semi and

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high skilled workers was relatively low. One reason for the labor shortage problem was the changed attitudes of Thai workers who were no longer interested and had become more reluctant to accept menial and lower paid work while more jobs opened in the industrial and service sectors. Most local workers migrated to the cities nearby and to Bangkok for the better wages, working conditions, and more job opportunities while only a few remained in the agricultural sector in the local areas. As a result, in order to solve the labor shortage problem of the country the illegal migrant workers became necessary. The benefits from the cheap labor also helped reduce the cost for business to compete with others in the world market. 2. Labor Movement: The Three Pillars Thailand, as a host country, has basically mapped out a three pillars labour policy, namely domestic employment, overseas employment and alien workers control, into three labour movement management: domestic migration, international migration, and cross-border movement of migrant workers. 2.1 Domestic migration

Table 1 Leading Net Out-In Domestic Migration in Thailand 1995-2000 Leading Net In-Migration Leading Net Out-Migration Province Population Province Population Bangkok 117,396 Ubon Ratchathani 39,431 Pathum Thani 140,433 Udon Thani 34,351 Samut Prakarn 131,521 Buri Ram 33,603 Nonthaburi 120,201 Surin 31,920 Chonburi 98,820 Roi Et 28,702 Nakorn Pathom 48,305 Si Sa Ket 26,176 Source: Institute of Developing Economics, Internal Migration of Thailand, I.D.E. Statistical Data, and National Statistical Office, 2000 Population and Housing Census, 2003.

As the country’s economic boom during the 1980s and 1990s had transformed agricultural-led growth to manufacturing-led growth, the country required a huge contribution for the good performances of manufacturing and service sectors. The transition had yield a structural change in the country’s labour market and influenced Thai population migration patterns. The industrialization and modernization turmoil had naturally shifted a rural-rural movement to a rural-urban movement where big cities and inner towns, such as Bangkok and its vicinities, became a center-point. Poverty also seems to be a leading determinant causing rural-urban migration in Thailand. Current trend of internal migration shows that most of the migrants in Bangkok and the vicinity areas come from the Northeast of Thailand (the poorest region of the country). Thus, 120,000 – 170,000 migrant workers in Bangkok have been found mostly in manufacturing and service sectors i.e., small & medium sized factories, hotels, restaurants, department stores, taxi drivers, and street vendors. While nearly 400,000 migrant workers

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in the vicinity areas have found working in a larger industrial sector such as textiles, construction, transportation, and food products. The balance of in-migration and out-migration for each province also shows a higher degree of inter-regional migration. The central region, including Bangkok and vicinities, indicates the largest net gains while the Northeast region shows a tremendous lost. As a result of overflow in-migration to Bangkok and its vicinities, the rural migrants who cannot find employment in the formal sector customarily turn to withstanding themselves in the informal sector where the pay is slightly below the average wage and the social security has not yet covered. 2.2 International migration The situation of international movement in Thailand can be drawn in two areas: overseas Thai workers and foreign workers in Thailand. 2.2.1 Out-going Thai workers overseas The pattern of emigrant Thai workers initially started in the 1970s when the labor market in the Middle East began to recruit a large number of semiskills and high skilled workers in construction and manufacturing sectors. Thai workers were ranked on the top list among other countries to be picked due to their diligent skills, devotion and honesty. Then, a huge benefit of the overseas employment began to spread out when the groups of Thai workers return home with a large sum of money, especially workers from rural northeastern. And that is how the phenomenon of Thai workers outflows throughout the Asia-Pacific Region today. At present, the existing Thai workers overseas are estimated at 360,000 – 400,000 which mostly are in Taipei,China, Singapore and the Middle East. The current report from the Office of the Overseas Employment Administration, Department of Employment, Ministry of Labour, indicated the total of 147,769 semi-skilled and skilled Thai workers going aboard in 2003. The majority of the new entry out-going Thai workers overseas were found •

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122,852 persons to the Asian countries (75,849 persons to Taipei,China, 12,480 persons to Singapore, 8,631 persons to South Korea, 7,479 persons to Malaysia, 6,118 persons to Brunei, 5,037 persons to Japan, and 4,413 persons to Hong Kong, China) 17,290 persons to the Middle-East (6,327 persons to Israel), 1,117 persons to African Nations, and 6,510 persons to other countries.

Table 2 Leading Destinations of Out-Going Thai Workers Overseas 2003 Destinations Asian Countries Taipei,China Singapore South Korea Malaysia

2002 129,058 778,365 16,251 2,344 13,220

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2003 122,852 75,849 12,480 8,631 7,479

Brunei Japan Hong Kong, China Others Middle East Israel Others African Nations Other Countries Total

7,226 4,453 4,904 2,295 19,578 12,458 7,120 3,023 5,161 156,820

6,118 5,037 4,413 2,845 17,290 6,327 10,963 1,117 6,510 147,769

Source: Office of Overseas Employment Administration, Department of Employment Ministry of Labour.

The overseas employment service policy aims to promote overseas employment in order to solve the domestic unemployment problem and generate more income to Thai workers. In addition to income returns from overseas Thai workers, Thailand also expect them to gain more skills and experiences from the transfer of technology which will benefit Thai labor market and the quality of Thai workforce upon their return. 2.2.2 In-coming Foreign workers to Thailand In accordance with the alien workers control policy, the Ministry of Labour has been dealing with the alien workers in four main legal channels: Alien Act of 1978, Alien Employment Act of 1978, Immigration Act of 1995 and Investment Promotion Act of 1977. The Thai government clarified the alien workers in Thailand as persons who do not have Thai nationality working in Thailand and classified estimated 2,222,142 alien workers into four categories. (1) Legal Alien, currently estimated at 502,680 persons which composed of •

The 93,422 Alien workers who legally entered Thailand and permitted to work. These people are semi-skilled and skilled foreign workers who are granted permanent residence in Thailand under the Alien Act of 1978, temporary workers under Article 12 of the Immigration Act and the Investment Promotion Act. Most of them are business executives, technical specialists, professionals and technical experts from Japan, the UK, India, the US, China, Taipei,China, and etc.

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The estimated 409,258 over stay Alien. These Aliens of 190 nationalities were legally entered Thailand but not permitted to work. These people were mostly groups of tourists who came to visit Thailand and over stayed after their visas expired.

(2) Refugees from war currently reported at 119,258 persons. (3) Hill tribes and minorities, current figures indicated 514,424 of hilltribes and minority groups who are granted permanent residence in Thailand and permitted to work in 27 occupations. (4) Illegal migrant workers currently estimated at 1,722,462 persons: 288,780 registered and granted a work permit and estimated 800,000 are working illegally underground.

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Table 3 Classification of Alien Working in Thailand 2003 Classification Legal Aliens With work permit Over stay Refugees from War Hill Tribes and Minorities Illegal Migrants (Myanmar, Lao PDRs, Cambodia) With work permit Without work permit (estimated) Total

2003 502,680 93,422 409,258 119,258 514,424 1,088,780 288,780 800,000 2,225,142

Source: Office of Foreign Workers Administration, Department of Employment Ministry of Labour.

2.3 Cross-border movement of migrant workers The term undocumented workers or cross-border illegal migrants became well known when the Thai government decided to allow them to stay and work in the kingdom temporarily under Article 17 of the Immigration Act 1995 and Article 12 of the Alien Act of 1978. In respect to the Act, these undocumented immigrants from Myanmar, Lao PDR, and Cambodia who entered Thailand as unskilled laborers without permit and register remain with illegal status and waiting for deportation. In term of illegal migrant workers, today Thailand is dealing with a massive influx of illegal migrant workers from Myanmar, Cambodia and Lao PDRs. The total cross-border illegal migrant workers in 2003 are estimated at 1,088,780 persons which only 288,780 of them have registered and granted a temporary stay and work in Thailand. Unfortunately, Thai authority has no doubt where the other estimated 800,000 are still working behind the factory and living in the dark. However, what the Thai government concerns most is that most of them, both registered and underground illegal, are previously seen working in Bangkok and the vicinity areas. Though these illegal migrant workers can benefits Thailand business owners in economic sense, but the country also experienced more harm than benefit such negative impacts are minority problem, community conflicts, public health expenditures, and communicable diseases.

Table 4 Cross-border Illegal Migrant Workers in Thailand 2003 Nationalities With Work Permit Myanmar Lao PDRs Cambodia Without Work Permit (estimated)

2003 288,780 247,791 21,314 19,675 800,000

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Total

1,088,780

Source: Office of Foreign Workers Administration, Department of Employment Ministry of Labour.

Since 1996, Thailand has constituted and enacted numbers of policy, measures, and action plans attempting to solve the problems based on managing and systematizing the existing illegal migrant workers and discontinuing a new inflow of illegal migrants from Myanmar, Cambodia, and Lao PDRs. Unfortunately, it seems that the number of illegal migrants has tremendously continued to increase no matter what alternative we use or how hard we try, either relaxing or attacking 3. Management Resolution 3.1 The three pillars policy The Ministry of Labour now has reshaped its labor migration policy based on the three pillars management. Internal movement. The policy primarily aims to generate more job opportunity in the local areas as a method of reducing out-migration on rural-urban movement. Several governmental measures and activities have been employing throughout the country, such as • Creating job opportunity in the middle of the local community • Promoting and supporting the SMEs (Small & Medium Enterprises) and OTOP (One Tambon One Product project) in order to generate more job openings and owned account workers for the locality • Supporting and providing career guidance and vocational training in each local area to generate more extra job • Supporting public work and activities, such as creating a part-time job for students during summer semester and after school. Overseas employment. The Ministry of Labour is focusing more on the benefits that Overseas Thai workers should enjoy upon their return, both in cash and in kind benefits. • Overseas Thai workers should gain additional experiences, modern technology, and new skills from the transfer of technology upon their returns, • Overseas Thai workers should earn reasonable income and fringe benefits, and

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Overseas Thai workers should be able to raise their standard of living both physically and mentally.

To strengthen the three mentioned policies, the Ministry of Labour employs additional policies to promote and expand overseas labour market and explore any new overseas market for Thai workers by • Reducing brokerage fees and travel expenses paid to the job placement agencies

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Assisting collateral to loan from public institution sources for travel expenses and fees, and Promoting and expanding more market for Thai domestic helpers, Thai cook, and Thai traditional massage and spa.

Alien workers control (1) Legal foreign workers policy. The policy aims to facilitate on issuance of work permit for investors or skill foreign workers while the demand for high skilled and high experienced with expertise on modern technology still high. (2) Illegal migrant workers policy. As Thai government began to realize that it is almost impossible to completely seal off the territorial borders of the country and extremely difficult to patrol. Therefore, it is difficult to come up with a better and clearer policy due to the interest of Thai business operators upon cheap labour still high. The Administrative Commission on Irregular Migration Workers has recently come up with new strategies and objectives to control the illegal migrant workers by focusing on national security, social and economic environments. Objectives • Reducing the numbers of illegal migrant workers by encouraging employers to employ only migrant workers who can make the maximum benefits to the country • Continuing attack the flow and having more effective monitoring, controlling, and administrative management system • Providing enough information to the public to increase public awareness and create more positive attitude towards the government resolution. Strategies • Identifying the types of work in which the illegal migrant workers are really in need • Registering employers to share the responsibility for employing illegal migrant workers • Prescribing enterprises under BOI promotion without illegal migrant employment • Limiting residential areas of illegal migrant workers • Continuing the promotion and awareness of replacement of Thai workers. And as of July 1, 2004, the Thai government will grant a final opening for the entire illegal migrants who still working behind the factories to show up and register with the local administrative agencies. After registration, the illegal migrants will receive a legal status and work permit as a process of legalizing and systematizing the illegal migrant workers in Thailand. This measure would be a last self-search employment for those illegal migrants in Thailand according to a change in headliner of migrant employment which will be allowed only in G-G manner (Government to Government). The Ministry of Labour is expecting the estimated 800,000 underground illegal migrants to come to report and register. 3.2 Current approach Short-term approach

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Apart from what we have done in the past, Thai Government, by Prime Minister Thaksin Shinawatra, is now undertaking a new policy and measures on systematizing migrant workers in Thailand by introducing a Economic Cooperation Strategy between Cambodia, Lao PDR PDR, Myanmar, and Thailand (or called ECS). The ECS is a tools or method primarily aims to strengthening cooperation among Asian’ members and reducing a gap between Thailand and neighboring countries. The mechanisms of ECS are also expected to encourage and boost up a border economic development among ECS’ members in order to build up a new unskilled labor market and relocate migrant employment to the border areas. This will lessen a new inflow of illegal migrants from neighboring countries to Thailand while the process of systematizing and legalizing the entire illegal migrant workers is undergo. Long-term approach And as of May 2004, Thailand has already signed 3 MOUs on Employment Cooperation with Myanmar, Cambodia and Lao PDRs. A new government policy under a Economic Cooperation Strategy between Cambodia, Lao PDR PDR, Myanmar, and Thailand or ECS will assist the three neighboring countries to develop their physical and other infrastructures based on the interest of the members on equal basis. In the long-run, it is hoping that once a gap of socio-ecomic disparities with these neighboring countries are reduced, the pressure on influx of the migrant workers should reduce as well. Finally, any further measures or action plans should lead to resolve the migration problem in the long-run and build up a legal labour migration system in order to archive a sustainable management for migrant workers as well as eliminating an unfair treatment and human trafficking in Thailand.

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