Social crisis and labor market
regulation in Thailand
Presentation for the visiting professor’s workshop “Global Labour Market
Regulation and Changing Welfare Conditions, Institute of Political Economy,
Carleton University, February 13, 2009
• Johannes Dragsbaek Schmidt
Bullets
• 1) Crisis – Dangers and Opportunities
• 2) “Creative destruction” or Robbery in full Daylight!
• 3) Strings and Conditionalities of the IFIs 1997 –
hypocricy in 2009
• 4) De-regulating Labor Markets/Targetting the poor
• and avoiding social chaos
• 5) Introducing Flexibility in Labor Markets/Impacts
• 6) Growing inequalities - Distributional consequences
• 7) Informalization of Labor Markets
• 8) Increased Social and Political Instability
• 9) Concluding Remarks
Strings and Conditionalities of the
IFIs 1997-2009
• Opening up for foreign ownership of shares in local
companies and finance
• Abolishing restrictions on FDI
• Tight fiscal and monetary policies without consideration
for social consequences
• No control of financial flows
• Imposition of full guarantees to creditors
• Rapid structural reform measures – stringent financial
standards and corporate restructuring
• Privatization of SOEs, education and health etc
• Get ”the fundamentals right” in Asia and the South but
not in the North
De-regulating Labor Markets/Targetting
the Poor and Avoiding Social Chaos
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•
•
•
•
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Abolishing contract-based regular employment
Easier to hire and fire (Flexibility)
Enterprise unions
No minimum-wage (or artificially low if necessary)
Fear of social chaos– intro of ”social welfare”
Tripartite negotiations – never implemented
Introducing Flexibility in Labor
Markets
• Reforms of labor laws – governments
developed ”harmonious” industrial
relations/partnerships
• Reducing employment protection
• Allowed for collective dismissals
• No limits on work hours
• More power to management in terms of
outsourcing and use of irregular workers
• Lowering wages to become competitive
Outcomes:
• Thailand has the longest work hours in the world
– lowest number of annual holidays
• Weakening of trade union membership and
density and bargaining power
• Increased unemployment
• Enormous increase in non-standard/informal
workers
• A dual labor market
• massive social costs
• Workers paying for the crisis (AGAIN)
Informalization of Labor
Markets
• Thailand pre-crisis 1997- 30% – today 2009 53% and growing
• Increase in wage gaps
• Increase in employment insecurity
• Slow down in government investments including
employees pay of skill upgrading
• Increase in part-time and temporary employment
• Gender impact – worst for women lead to
increase in prostitution, human trafficking and a
general criminalization of the economy
Result of twin crises: Increased
Social and Political Instability
• Has led to casualisation of labor and
growing job insecurity
• Increasing dualism between formal labor
market and informal – 3D – dirty,
dangerous and difficult
• Thailand – recent military coup no. 18
since 1932 – 3 Primeministers in 6 months
• Increasing social and political instability –
in search of a new social contract