VZCZCXRO6460
RR RUEHCHI
DE RUEHBK #4896/01 2220659
ZNR UUUUU ZZH
R 100659Z AUG 06
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 0858
INFO RUEHCHI/AMCONSUL CHIANG MAI 2281

UNCLAS SECTION 01 OF 03 BANGKOK 004896 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958, AS AMENDED: N/A 
TAGS: ELAB ECON ETRD TH
SUBJECT: EDUCATION AND SUPPLYING THE SKILLS FOR THE LABOR FORCE 
 
 
HOW EDUCATION AFFECTS BUSINESS 
 
¶1.  Summary.  Businesses, especially international companies, in 
Thailand suffer from a lack of important skills among their 
workforce as a result of an antiquated and ineffective education 
system.  Lack of English proficiency and critical thinking skills, 
as well as a lack of career preparation in universities, are leaving 
gaps in and inhibiting development of the Thai workforce. However, 
changes in human resources management are attempting to address the 
management issue by developing a Western administration style.  The 
labor force is also seeing an increase in the ratio of 
college-educated workers, which a Thai think-tank claims is a 
positive signal for the economic growth. This is one of two cables 
examining the Thai education system and how it affects business 
conditions. End Summary. 
 
THAI PEOPLE CAN'T SPEAK AMERICAN 
 
¶2.  A significant obstacle for Thailand's continued economic growth 
is the notable lack of English proficiency in the Thai workforce. 
Thailand's economy depends on trade (more than 60 percent of GDP) 
and Foreign Direct Investment and the lack of English skills is by 
far the biggest personnel problem for foreign companies operating 
here.  The country manager for Capstone Group, a multinational human 
resources management company, says that it is very difficult to find 
someone with both the necessary skills for the job and sufficient 
English aptitude.  It is relatively easy, however, to find 
applicants that have the right skill set to meet an employer's 
needs, but not the language skills. 
 
¶3.  According to an American Chamber of Commerce in Thailand 
(AmCham) source, foreign companies are currently forced to promote 
English proficient employees to higher positions over non-English 
speaking employees that have better qualifications.  He believes 
that the English problem is the result of an absence of English in 
the environment and culture, not only an unsuccessful school system. 
 English is hardly spoken outside of class and is not 
well-integrated in society. 
 
MANAGEMENT PROGRESS 
 
¶4.  The education system's style of teaching-monotonous learning, 
lack of creative thinking (see septel), and also a lack of 
internship programs are reflected in slow management development. 
It takes longer for Thais to develop management skills because they 
are not used to thinking "outside the box," and there is a long 
adjustment period to "real-life" work.  According to the country 
manager at Capstone, many Thai employees are reluctant to take a 
management position and concomitant responsibilities.  They are 
"complacent with their position and do not want to think more than 
they have to." 
 
¶5.  The Thai management style also reflects the education system and 
can hinder the growth of many Thai companies.  According to the 
Capstone Group country manager, Thai managers dictate instructions 
to their employees and leave little room for critical thinking and 
employee development, which reflects the teaching-style of local 
educators.  The employee rarely has a chance to find solutions 
independently and this only prolongs the time it takes for employees 
to develop management skills. 
 
WORK EXPERIENCE 
 
¶6.  Employees entering the workforce straight out of college 
typically have very little work experience and are usually 
unprepared for "real-world" work.  College programs in Thailand lack 
internship and career preparation programs, which is part of the 
reason that the Department of Labor enacted a statute that makes it 
mandatory for companies to provide in-house training.  Thai 
companies also have no internship recruitment programs.  It takes 
significantly longer for new graduates to adjust to the work 
environment than they do in Western countries, according to our 
sources. 
 
SOME SPECIFIC EXAMPLES: THE SEAGATE ISSUE 
 
¶7.  Recent press articles report a lack of skilled labor that has 
investors worrying about Thailand's economy.  However, speculation 
about Seagate shifting $1 billion worth of new investment from 
Thailand to Malaysia because of either a lack of high-skilled labor 
or the current political instability is untrue, according to a 
Malaysian Seagate representative.  Seagate Thailand has remained 
very secretive about the issue because of media sensitivity and 
speculation.  The representative said that decisions made at Seagate 
are strictly internal, and did not elaborate on their future course 
of action.  She did mention that "[Seagate is] not even moving out 
of Thailand," noting that Seagate has been in Thailand for over 25 
years and would not have been here if there were no supply of 
skilled laborers. Comment: Despite Seagate's denials that a shortage 
of skilled labor was the cause of their sudden change of investment 
plans, they still refuse to tell anyone, including ourselves, what 
motivated the change despite all the press speculation. End 
Comment. 
 
BANGKOK 00004896  002 OF 003 
 
 
 
IT INDUSTRY - IBM THAILAND 
 
¶8.  IBM Thailand told us that finding enough programmers and code 
writers to fulfill their needs is not a problem.  The needs that are 
not found in Thailand are high-level IT specialists, specifically IT 
architects, IT consulting, systems and network engineers, and 
mainframe specialists.  IBM will either train employees themselves 
to fulfill these needs, or import the labor from abroad, mostly 
India and Singapore.  However, only about 10 percent of high-skilled 
labor is imported and IBM has several in-house training programs to 
develop current employees into positions that are needed. 
 
¶9.  Our source at Capstone Group told us that the lack of IT 
consulting skills has to do with the lack of critical thinking.  IT 
consultants usually do not have the critical thinking ability to 
analyze presales and sales causality, although sales in the IT 
sector are generally okay. 
 
¶10.  Several hundred fresh college graduates apply to IBM each year, 
and only about 5 - 10 percent have the skills necessary to qualify 
for a position at IBM.  But these numbers are usually enough to meet 
the labor demands, according to our IBM source.  When they enter 
IBM, their skills are good enough to contribute right away, though 
IBM still puts them through a training program that is specialized 
for entry-level positions. 
 
¶11.  IBM confirmed that English skills were sub-par compared to its 
neighboring countries, but only on a speaking level.  This is not a 
large problem, says an IBM spokesperson, because most communication 
in English is done through emails or other written forms.  English 
speaking skills are only a problem when they have to do 
presentations. 
 
OTHER LABOR FORCE DEMANDS 
 
¶12.  Sales and marketing are in constant need by companies.  Finance 
and business development are also needs in the current economy, says 
an AmCham source.  While the lack of skilled workers in these areas 
is somewhat of a constraint, this source believes that it reflects 
more the growth of the economy and the lag time in producing new 
graduates than any inherent structural problem. 
 
¶13.  The oil and gas industry is quickly growing in Thailand due to 
large foreign investment.  But the Thais are not able to supply 
enough skilled workers to keep up with the industry demand, 
according to our source from Capstone Group.  There is demand for 
construction engineers, structural engineers, chemical engineers, 
and industrial engineers.  The industry is expanding faster than the 
universities can turn out graduates. 
 
¶14.  The demand for managers in the construction industry is also 
not being met.  There are many good project managers in Thailand but 
there is a limit to their capability for creativity.  Thailand's 
construction labor force does not have the creativity for advanced 
architecture and interior design.  According to the Capstone Group 
country manager, most interior design companies are made up 
primarily of foreigners.  Contract management and quality surveyors 
are difficult to find. 
 
¶15.  The manufacturing industry lacks the skilled managers that are 
needed to push manufacturing into advanced levels.  Since there is a 
significant manufacturing sector in Thailand, this may limit future 
expansion in the long run.  The next level of manufacturing consists 
of lean manufacturing and six sigma manufacturing, which involves 
highly refined products and continuous quality improvement.  Usually 
only Americans and European manufacturing firms have the necessary 
skills and few Thai manufacturers do.  The shortage of industrial 
engineers explains why Thai manufacturing is currently stuck, says 
Capstone Group. 
 
CURRENT TRENDS 
 
¶16.  Corporate human resources traditionally were only in charge of 
administrative tasks, but a refocus took place about 3 years ago. 
Human resources are starting to focus on the individual employee and 
to help them develop.  Management style is changing and becoming 
more Western, focusing on individual development and freedom to 
solve problems, rather than dictating directions.  Thai companies 
are aware of the downfalls of the traditional style and many 
companies are replacing managers that don't adopt Western-style 
management. 
 
¶17.  Increased availability of college graduates has altered the 
makeup of the employed labor force.  The National Economic and 
Social Development Board (NESDB) call this a "higher standard of 
education in the workforce," because the number of employed college 
graduates are consistently increasing, signaling a positive trend in 
the overall educational level of the labor force.  (Septel looks at 
some of the remaining problems of education). 
 
¶18.  An associate Professor of Economics at NIDA University 
elaborates on this trend.  The increase in the supply of students 
 
BANGKOK 00004896  003 OF 003 
 
 
causes an increase in the demand for institutions that offer 
degrees.  Subsequently, several institutions and universities have 
opened to offer degrees but many of these institutions are 
considered of low quality.  The supply of college graduates with 
low-quality educations from "no-name" schools has increased greatly. 
 Many of the graduates have a hard time finding employment because 
of the increased number of college graduates and competition, and 
the lesser value employers' place on degrees from less prestigious 
institutions.  The supply of students that attend these schools, 
however, are constant because of the difficulty of admission into 
top-notch schools and the increasing number of students graduating 
secondary school. 
 
 
¶19.  Comment:  The deficiencies in the labor force are heavily 
related to the education system.  As the education system 
continuously fails to produce consistent English and critical 
thinking skills needed to be successful and politicians do not act 
on education reform promises, we can expect to see these issues 
continue.  Without a fundamental change in the education system it 
will be very difficult to solve these problems.  There has been a 
consistent decline in students' science and math scores from 
standardized tests (see Septel), and it is a possibility that the 
education system may not be able to provide the engineers demanded 
in the near future, especially for high-level IT and advanced 
engineering positions.  For Thailand to achieve the next level of 
value-added in the global economy, the government must focus on 
increasing the skills of the Thai labor force. 
 
Arvizu