New Challenges for Thailand

Labour and Growth after the Crisis

Bibliographic Data

ID3986804
AuthorsA Mounier (0000-0001-9713-7246, Institut de Recherche pour le Développement), Voravidh Charoenloet (Chiang Mai University)
Year2010
Volume40
Issue1
Pages123-143
Publication date2010-02-01
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueJournal of Contemporary Asia (JOURNAL)
Journal identifiersISSN: 0047-2336 • E-ISSN: 1752-7554
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.1080/00472330903270783
OpenAlexW1997383201
LanguageEN
Citations received7
References cited12

Exploring the relationship between labour and economic growth in Thailand over the past half century, the article shows that Thailand can no longer rely on an extensive growth regime based on abundant and cheap labour. We argue that Thailand is at a critical juncture and that Thailand cannot avoid shifting to an intensive growth regime based on increases of labour productivity in order to control labour costs and, unlike past regimes, seek ways to ensure that the benefits of growth are better shared. Key Words: Laboureconomic growthskillslabour productivitylabour incomeThailand Acknowledgement This paper is based partly on research results of a Centre for Education and Labour Studies (CELS) comprehensive research project on labour and economic growth in Thailand funded by the National Research Council of Thailand. The authors have to thank the CELS team for its contribution and special thanks go to Gavan Butler from the University of Sydney and the journal's anonymous referees for their valuable comments. However, this paper remains the authors' responsibility alone. Notes 1 For more details regarding Thailand's different phases of economic growth, see Mounier et al. (1995 Mounier, A., Kaewthep, Kanoksak and Charoenloet, Voravid. 1995. "Forms and Phases of Thai Industrialization in a Historical Perspective,". In La Différenciation des Régimes de Croissance, Edited by: Mounier, A. and Byé, P. Vol. 6, 80–126. Paris: Economies et Sociétés. [Google Scholar]). 2 We (Mounier, 2003 Mounier, A. 2003. "La Nouvelle Question Sociale: les Mirages du Plein Emploi,". Economies et Sociétés, 41–7/8: 1429–1461. [Google Scholar]) have labelled this ratio "the social number" in order to stress its importance in long-term economic and social performances. The concept is examined further into the text. 3 Although some indications from NSO and ILO show that: (1) working hours are very long in Thailand as compared with those in other countries; and (2) working hours tended to decrease after 1989. If these indications are correct there may have been an increase in the social number; see below on work duration. 4 It can be shown that GDP per capita increases when labour productivity increases and decreases when the social number increases: if y, n and l are the rates of variation of GDP, the total population and the volume of the workforce, respectively, then approximately GDP per capita Y/N evolves as y–n; labour productivity E evolves as e = y–l; the social number S evolves as s = n–l; such that, y–n = e–s. 5 However, the McKinsey report is written in a problematic of "catching up," that is of international comparison. The characterisation of the evolution of labour productivity patterns through time is blurred by such an approach. 6 The exact figure should be e = y–l–yl. For the sake of simplification, we exclude the term "yl" which is quite small and, therefore, we overestimate the increase of productivity. We proceed with the same simplification in all expressions of the relationships between macro-variables. Overestimation is in a range of 0.02 to 0.05 (2‐5%) of the rates of variation. 7 This is a satisfactory assessment under the assumption that the price index of consumer goods evolves roughly as the price index of GDP does, or at least that both indexes are not durably divergent. 8 Labour productivity gains "e" can be distributed between different channels: p = rate of variation of the level of prices (producer or consumer price index); w = rate of variation of nominal labour incomes (w + p, being the increase of real labour incomes); h = rate of variation of working hours; k = rate of variation of nominal incomes of capital or profits (k + p being the increase of real incomes of capital) so that e = p + w + h + k. 9 Here a mention of the evolution of the rate of profit is needed. The rate of profit can be traced by means of a proxy made of two components, namely the ratio between the share of profit in GDP and the rate of investment (to the extent the stock of capital variation is related to investment). From the data for these components in Figure 5 and Table 2, we can infer that the rate of profit fell before the crisis. It was re-established after the crisis for a short period of time by the destruction of non-profitable enterprises and the rapid decline of the rate of investment to about 22%. National accounts show that there is a very strong increase in the efficiency of investment after the crisis, which is surely mirrored in an increased rate of profit. As we will see, and contrary to usual analyses, the rate of profit was enhanced by these events and not by downward pressures on labour incomes. The determinants of the rate of profit fluctuations are indeed embedded in the growth regime and therefore may change through time

Development economics · Economic growth · Economics · Juncture · Labour economics · Market economy · Order (exchange · Productivity · Slow growth · Employment and Welfare Studies · Engineering · Global trade and economics · Southeast Asian Sociopolitical Studies

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