Education out of step with labour market

Only one in eight positions for vocational graduates are being filled in the labour market while as many as half of new university graduates are experiencing difficulties in securing jobs, the ManpowerGroup, a global human resources consultancy, reports.

Wanchai Piboonbaramee, the human resources and finance director for ManpowerGroup's Thai office, said Thailand's education system was out of line with the needs of local employers.

He estimated that out of as many as 50,000 open positions for vocational graduates, only 6,000 applications were received by local employers.

At the same time, positions for university graduates were much more limited compared with the number of new graduates entering the market each year, with as many as 50% of new graduates unable to find work after completing their degrees.

Meanwhile, the government's policy to raise minimum wages could prompt labour-intensive industries to shift their operations overseas to help slash costs.

Minimum wages in Bangkok and six other provinces are set to increase to 300 baht a day from next month, with wages going up by 40% or more for the remaining provinces by year's end.

Simon Matthews, country manager for ManpowerGroup (Thailand), said a shift in manufacturing bases to lower-cost countries would not be surprising following the rise in minimum wages.

He pointed out that such a move has already been seen in the textiles and garments sectors, which more than a decade ago boomed in Thailand but have since increasingly moved to China and Vietnam due to lower costs.

"But today, we see China now struggling with higher costs for labour-intensive industries, as labour costs have risen by as much as 20%," Mr Matthews said. He expressed confidence however that sectors which required higher-skilled labour, such as automobiles and electronics, would continue to see Thailand as a favourable manufacturing location, considering the advantages of the country in producing quality goods over other regional competitors.

He said companies that are affected by rising minimum wage costs can either choose to see their profit margins fall, pass on part or all of the cost increase to consumers or seek efficiency gains in other areas of the production chain to help offset the rise in wages.