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Thailand: Education linked to labour skills and competitiveness

2010/11/30

Only better education will improve Thailand's industrial competitiveness and bring sustainable economic increase, says the president of the Thailand Development Research Institute.

"However, access to college education is very limited for lower gain families," said Nipon Paopongsakorn in an interview.

Nipon was referring to the study "Schooling Access Inequality and Educational Wage Trends in Thailand, 1986 -2009" by Dilaka Lathapipat, which will be presented at TDRI's annual forum on Monday and Tuesday.

The study found that between 1986-2009 wages of workers educated to high-school level increased additional slowly than wages of people with primary and college educations.

"It is peculiar because industries such as food processing still want to hire unskilled labour while high-tech industry demands college graduates," said Nipon.

So workers with primary school education or foreign labourers from Burma are in high request in labour-intensive industries, said Nipon.

The number of students entering universities has increased substantially but the quality of education is vastly different between institutions. Those graduating from top universities get much higher pay, he said.

Industries as well need to upgrade. There are few food producers such as CP Group that can invest in research and development leading to innovative products, Nipon pointed out.

An export-led increase strategy supported by cheap labour will no longer work for the country as it cannot compete with China and India where large pools of labour are available. The export-led increase model as well benefits the owners of capital and technology much additional than the labour force, he said.

Nipon called for a new economic model driven by high-quality education of the labour force.

The government as well needs to rethink financial assistance and tax privileges given to small and medium enterprises (SMEs). Nipon pointed out that lending did not go to the right recipients and most SMEs could not access tax privileges offered by the Board of Investment.

TDRI will as well propose the government reforms social welfare, universal healthcare and pension schemes. The existing system creates inequality, with people such as civil servants getting the best healthcare and pensions, he said. Management consolidation of existing welfare schemes is as well needed, he suggested.

"Moreover, to uphold fiscal discipline we cannot avoid increasing the price-added tax rate to cover the cost of social welfare," he said.

Local government and communities should as well provide welfare for the people since they know better than central government what their communities need, he added.

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