Economic crisis hurts Thai workers

PATHUMTHANI, Thailand, December 10, 2008 - Saijai Khamphandung listened carefully to the official processing her unemployment claim at the local Employment Office. A sub-contract worker at Fujitsu (Thailand) factory in Pathumthani, an industrial town located some 46 kilometers north of Bangkok, Saijai was laid off in November along with 900 other workers. She had been earning up to 12,000 baht ($343) a month including overtime pay.  Now, Saijai will collect just a little over 3,000 baht ($86) in unemployment aid. Government assistance will last only six months, she was told. And she has to come back every month to show evidence that she is seeking new employment, the official explained.

After the Employment Office stop, Saijai went to a nearby factory to look for a new job. "I can tell that we're in difficult times by the response I get at every place I go," she said. "It used to be, can you start tomorrow? Now they all say, we'll call you when something comes up."

Saijai Khamphandung, recently laid off, taking a break in a shopping mall outside Bangkok

Workers like Saijai are more vulnerable than others. Her employment was sub-contracted. Technically, this made her an employee of the recruitment agency, not Fujitsu (Thailand), whose hard-disk-drive plant in Pathumthani is the global manufacturing base for Japan's Fujitsu. She was also considered easier to let go, having been with the company for under four months.

According to Saijai, those who have been on sub-contracted employment for less than 120 days were entitled to severance pay equal to one month of their basic wages. (Factory workers in Bangkok and the metropolitan area earn about 6,000 baht ($171) a month, without overtime).
 
"The factory announced the no-overtime policy around September. I started to feel the pinch then because overtime was half of my monthly income," Saijai recalled. "After that, I kept hearing rumors about the layoff. I kind of knew that I was at risk because of my employment status. I just didn't think it'd be so soon."

Slower Export Growth Expected Across Region in 2009

Amid the domestic political certainty of the last two years, Thailand has been relying on exports to drive economic growth since private investment and consumption continued to decline. In 2008, export growth (nominal term) is expected to be 19.5 percent from 17.3 percent a year ago.

This robust performance, however, won't repeat next year, the World Bank said. In its latest Thailand Economic Monitor, the Bank forecasts that export growth will be just 8 percent in 2009.

Thailand is not alone. Exports from East Asia to the U.S., the E.U. and Japan are expected to suffer in 2009.  World trade will decline for the first time since 1982 as growth in high-income countries is expected to contract 0.1 percent. This year, East Asia's exports to China also dropped more sharply than to the U.S. or Europe. This reflected reduced demand for components or intermediate inputs for further processing before export from China to other markets, the World Bank said in its new report, East Asia & Pacific Update.

The prolonged domestic political crisis has also played a major role in Thailand's economic slump over the last two years. Since 2006, private investment and consumption has been declining amid growing concern over political uncertainty, which has affected the government's ability to drive policies and programs to stimulate growth.

The World Bank predicts that private investment will grow at only 2.2 percent in 2009. This is a significant drop from the projected 4.4 percent in 2008, though still higher than the 2007 figure of less than one percent. Some studies indicate that private investment has a larger direct effect on economic growth than does investment by the government. Private investment accounts for 17 percent of Thailand's GDP, while public investment accounts for just under 6 percent.

The convergence of slower export growth, decreasing domestic consumption and private investment, and political uncertainty prompts expectations that the Thai economy will come under intensifying pressure next year. The World Bank estimates that Thailand's economic growth will be 2 percent in 2009 - the lowest rate since 1998 in the aftermath of the Asian Financial crisis.

The average growth of developing countries in East Asia and Pacific, meanwhile, is expected to be 6.7 percent in 2009, down from the projected rate of 8.5 percent this year.

"These are not just numbers - there are real people behind each of these economic figures," said Kirida Bhaopichitr, a World Bank economist in Thailand. "Factories are forced to cut their workforce because of reduced demands. This is threatening millions of factory workers, most of whom are low-skilled. The situation is different from the 1997 crisis, when most of the people who were laid off were middle-class people working in the financial sector."

The World Bank estimated that every 1 percent drop in developing countries' growth rate could trap 20 million people in poverty.

More Workers than Jobs

A native of Sa Kaeo province, some 245 kilometers east of Bangkok, Saijai came to Bangkok when she was 19 to study at Ramkhamhaeng, an open university. When she was still employed, she sent 2,000-3,000 baht ($57-$86) home every month to help her mother pay debts incurred after her father died years ago. Back in Sa Kaeo, Saijai's mother earns a small income from cleaning houses and looking after the elderly.

At the Pathumthani Employment Office, Saijai and friends from Fujitsu file unemployment claims

That's why Saijai is still aiming for factory job, even though she is constantly told that more workers will be laid off next year. 

"My computer skills are poor. My English is even worse," she confessed. "But when you apply for a factory job, all the employer wants is basic education. They don't require highly-skilled workers. They will train you to operate the machine."
 
But this doesn't mean she wouldn't consider anything outside of factories. Just last week, Saijai dropped off her application at a dental clinic in Rangsit, a busy residential area 20 kilometers north of Don Mueang domestic airport. The clinic is looking for a dental assistant, she said.

"I may prefer factory job, but I can't be too picky," she said. "When the economy recovers, I can always return to the factory. Now I just need to do something. It hurts being unemployed."  

She may be wise. According to the National Statistical Office, employment in manufacturing contracted 0.4 percent in October this year, the latest month for which official data on employment is available. The sector employs 15 percent of the Thai workforce.

Data from the Pathumthani Employment Office also showed that there only 443 job vacancies in the province in November, declining four-fold from the same period last year. Less than half of these jobs are in manufacturing. At the same time, there were close to 7,300 workers looking for jobs, a 15.5 percent increase from the same period last year.