VZCZCXRO8183
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #1319/01 1531016
ZNR UUUUU ZZH
R 021016Z JUN 09
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 7174
RHEHNSC/NSC WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
INFO RUEHCHI/AMCONSUL CHIANG MAI 6611
RUCNASE/ASEAN MEMBER COLLECTIVE

UNCLAS SECTION 01 OF 03 BANGKOK 001319 
 
STATE FOR EAP/MLS AND EB 
STATE PASS TO USTR 
TREASURY FOR OASIA 
SINGAPORE FOR FINATT BAKER 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ELAB EFIN ECON EINV ETRD TH
SUBJECT: Thai Government Fights Rising Unemployment 
 
BANGKOK 00001319  001.2 OF 003 
 
 
Sensitive But Unclassified.  For Official Use Only. 
 
¶1. (SBU) Summary:  Not surprisingly, the global economic recession 
has caused the number of unemployed Thais to increase.  The official 
unemployment rate in Thailand of about 2 percent is deceptively low 
because of very liberal definitions of what it means to be employed, 
and even then estimates are that unemployment will double or even 
triple this year.  To combat the trend, the Royal Thai Government 
(RTG) Ministry of Labor (MOL) has held job fairs, conducted training 
programs, and promoted alternative occupations as part of a 
six-pronged strategy.  Early indications are that these efforts may 
be having a positive, if limited, impact on unemployment rates.  It 
remains unclear though whether the RTG actions will be able to keep 
up with - or prove wrong - expected increases in unemployment this 
year.  End summary. 
 
¶2. (SBU) Comment:  Thai media and political pundits tend to focus on 
the government's coalition management, actions toward former Prime 
Minister Thaksin, and now prospective constitutional amendments. 
While these political developments are important, Thais, like 
citizens elsewhere, are also greatly concerned with their personal 
financial circumstances.  The RTG's efforts to bolster employment 
will affect grassroots attitudes toward Prime Minister Abhisit and 
his administration, with implications for the governing coalition's 
stability and longevity.  The six-pronged policy of "three 
reductions and three increases" is a serious attempt to address 
Thailand's employment concerns.  Unfortunately, given the grim 
economic outlook, rising unemployment driven by larger economic 
forces may affect support for the government no matter what 
employment policy initiatives are implemented.  End Comment. 
 
The Unemployment Rate in Thailand 
--------------------------------- 
 
¶3. (SBU) The global economic slowdown has greatly increased the 
number of unemployed Thai citizens.  At the end of 2008, the 
National Statistical Office (NSO) reported that the unemployment 
rate in Thailand was 1.4 percent (538,500 people).  In January 2009, 
the rate jumped to 2.4 percent (878,900 people).  The NSO reported 
that in February, however, the rate was down to 1.9 percent (714,600 
people).  While the NSO has not yet released official numbers for 
March or April, Ministry of Finance Fiscal Policy Office officials 
have been quoted in the media as stating that the March rate held at 
1.9 percent.  At a May 14 meeting with Econoffs, Deputy Director 
General Songsri Boonba of the Ministry of Labor (MOL) Department of 
Employment (DOE) explained that by the end of May, the MOL estimates 
750,000 Thais (approximately 2 percent of the workforce) will be 
unemployed.  The DOE believes the decrease in the rate since January 
is due to companies beginning to call back laid-off staff as well as 
the actions of the Royal Thai Government (RTG) to combat 
unemployment.  (Note:  Skilled labor in Thailand is in short supply, 
so companies hoping for a turnaround in fortunes in the future will 
often keep staff on for longer than current revenues would justify. 
End note.) 
 
¶4. (SBU) An economist for the International Labor Organization 
(ILO), Gyorgy Sziraczki, opined that the unemployment rates do not 
portray a clear picture.  At a May 27 seminar organized by the MOL 
and the Friedrich-Ebert-Siftung foundation, he explained the 
official unemployment rate is not skyrocketing because people are 
seeking whatever work they can.  Speaking generally about Asia, he 
explained how many individuals are not employed to their capacity; 
many are working at a lower skill level, are unable to work 
full-time or are on unpaid leave, yet remain classified as 
employed. 
 
¶5. (U) The unemployment rate in Thailand is determined by the number 
of unemployed divided by the total labor force of approximately 37.5 
million.  The labor force includes Thai citizens between 15 years of 
age and retirement, who are available for work.  Those not available 
for work, and thus not included in the labor force number, are 
homemakers, students, individuals who are physically or mentally 
incapable of work, individuals working without pay, and individuals 
who are voluntarily idle.  The NSO statistics are compiled via 
interviews in each region of the country.  In the NSO survey, a 
person was considered employed if during the week before they were 
surveyed, he or she did at least one of the following: worked for at 
least an hour for some kind of payment; worked for at least an hour 
without payment on a farm or in a business enterprise owned/operated 
by a family member; worked less than an hour or not at all but 
received payment; or worked less than an hour or not at all and did 
not receive payment, but had a job to which they would return.  One 
is considered unemployed only if they are a member of the labor 
 
BANGKOK 00001319  002.2 OF 003 
 
 
force and during the week before they were surveyed were not 
classified as employed.  Though the definition of an employed person 
does not require full-time work, the statistics from February show 
that 83.8 percent of those employed work more than 35 hours per 
week; 73.5 percent work more than 40 hours per week.  The NSO survey 
takes into account both formal and informal work; in February, 31 
percent of those employed operated an enterprise on their own or as 
a partnership with others but without engaging other employees and 
17.3 percent were unpaid family workers.  As with any survey based 
on sample estimates, the statistics are subject to sampling and 
non-sampling errors. 
 
¶6. (SBU) Although by developed country standards Thailand's 
unemployment rate may be deceptively low, the trends are significant 
and foreboding.  Despite the unemployment rate in Thailand appearing 
to hold steady at 1.9 to 2 percent from February to the projected 
May rate, expectations are that the situation will get worse in 
¶2009.  The Thai government's National Economic and Social 
Development Board's (NESDB) May 25 reported that during the first 
quarter, the Thai economy was down 7.1 percent from a year ago. 
Production was in decline across the board with only two exceptions; 
the agricultural and fishery sectors.  With these figures in mind, 
more layoffs are likely.  Estimates for 2009 vary, but put the 
unemployment rate in excess of 3 percent of the labor force; at 
least double the 2008 rate.  The Fiscal Policy Office projects the 
rate to rise to 3.8 percent (within the range of 3.3 to 4.3 
percent).  The NESDB estimates that 1.3 million (3.5 percent) will 
become jobless this year.  A worst-case scenario projection from the 
University of the Thai Chamber of Commerce puts the number of 
jobless at above 2 million (5.3 percent).  This would indicate that 
unemployment in Thailand will triple this year. 
 
RTG Policy to Combat Unemployment 
--------------------------------- 
 
¶7. (SBU) At a May 14 meeting with Econoffs, Deputy Director General 
Songsri Boonba of DOE described the Ministry of Labor's six-pronged 
policy to combat unemployment dubbed "three reductions and three 
increases."  The first "reduction" is in the number of layoffs, 
which the RTG aims to accomplish by encouraging companies to reduce 
working days and overtime instead of cutting personnel. 
Specifically, the RTG is encouraging companies to follow Section 75 
of the Labor Protection Act, which requires employers to pay 
employees 75 percent of wages when business activities are 
temporarily suspended, either in whole or in part.  Songsri 
explained that some companies have teamed up with the DOE to conduct 
on-site training for workers to attend during their time off due to 
reduced hours/days.  Interestingly, she also stated that some 
workers have resigned after having their work hours decreased in 
hope of finding an opportunity with better pay. 
 
¶8. (SBU) To avoid further layoffs, the RTG is also reducing 
employers' and employees' monthly contributions to the national 
social welfare system.  Employers and employees have each generally 
contributed 5 percent of the employee's salary to the social 
security system and the government 2.75 percent.  According to 
Songsri, from July 1, employers and employees will each be required 
to contribute 3 percent.  The reduction in contributions is expected 
to reduce the cost burden on businesses and allow them to keep more 
people on the payroll. 
 
¶9. (SBU) The second reduction is in the number of workers that move 
from rural to urban areas, which the MOL hopes to accomplish by 
creating temporary jobs in rural areas.  Songsri did not elaborate 
on this policy area, but the temporary jobs created would likely 
involve short-term construction projects paid for or backed by the 
RTG.  The third is to reduce the cost of living of workers by 
controlling the price of goods.  (NOTE: Songsri stated her office is 
working with the Department of Commerce in this area, which likely 
involves controls on the price of sugar and the provision of generic 
products.  End Note.) 
 
¶10. (U) In terms of the three "increases" in this six-pronged 
employment policy, the first is to increase employment, which the 
RTG hopes to facilitate through the hosting of job fairs nationwide. 
 A widely publicized two-day job fair was held in March in Bangkok's 
posh Siam Paragon mall.  In addition to traditional positions, the 
job fair showcased examples of self-employed work, such as making 
photo frames and artificial flowers from banknotes.  Other job fairs 
have been held across the country.  The Department of Employment 
reported that approximately 30 percent of those who have 
participated in a job fair have subsequently found employment.  To 
help with job placement, the RTG has established employment service 
 
BANGKOK 00001319  003.2 OF 003 
 
 
centers throughout Thailand to aid laid-off employees.  Companies 
with vacancies send representatives to recruit employees at the 
service centers.  Center staff reach out to industry associations 
and federations to match perspective workers with openings. 
 
¶11. (U) The second "increase" is to the skill of workers, chiefly 
through training programs to provide unemployed workers skills in 
areas where there is a growing demand.  To accomplish this, the DOE 
has set up the aforementioned onsite training programs for workers 
to attend during their time off due to reduced hours/days. 
Additional training programs include the high profile Tonkla Archeep 
("vocational seedling") program, a 6.9 billion baht (203 million 
USD) vocational training program. 
 
¶12. (U) Under the Tonkla Archeep program, which is administered by 
Deputy Prime Minister Korbsak Sabhavasu's office, individuals are 
eligible to take a free vocational training course (under a month in 
length) in one of seven subject areas: agriculture, construction, 
trade, transportation, computers, services, and 
industry/manufacturing.  During the course, participants receive a 
living and transportation allowance.  After course completion, 
graduates who choose to return to their home province (from central 
areas where the courses take place) receive a small stipend for up 
to three months. 
 
¶13. (U) Since the program began, approximately 170,000 individuals 
have applied for the training, according to Deputy Director-General 
Songsri.  Given the high demand, applicants must first meet certain 
qualifications and are then selected for training on a random basis. 
 Approximately 20,000 individuals received training through the 
program in April; 50,000 were expected to take courses in May.  The 
RTG's target is to train 500,000 individuals in total - 240,000 
before the end of the fiscal year and 260,000 the next. 
 
¶14. (U) As with any new program, there have been some reported 
problems, although the RTG claims some have already been addressed. 
As an example, Narong Pechprasert, an economist from Chulalongkorn 
University, criticized the government (through the media) for not 
turning to the business sector for assistance in organizing training 
programs.  He also noted that the government may be risking limited 
time and money to develop skills that do not meet the requirements 
or standards of the market. 
 
¶15. (U) The third "increase" is to employment options for workers 
through the promotion of alternative occupations.  This policy 
approach is focused on individuals over 40 who may find it more 
difficult to find new employment after being laid off. 
 
JOHN