Southsast Asian Studies, Vol. 23, No.2, September 1985

ArticlesThe Changing Labor Force and Employment
Problem in Thailand
Sukanya NITUNGKORN*

I Introduction
Like most developing countries thathave experienced high rates of population
growth in the past decades, Thailand is
now facing the problem of a rapid increasein population in the young age group.
A large proportion of these youths tends
to be active in the labor market as soonas, or even before, completing their compulsory primary education. At the sametime, there has also been a rapid increasein the number of higher-educated youths
seeking jobs for the first time. The rateof this group entering the labor market
has been accelerating due to the recent
explosion of higher education brought about
by increases in social demand.
The present employment problem is not
only the result of the high population
growth, but is also due to past governmental economic and social development
policies. Major changes in the structureof production and employment have takenplace in the period between 1960 and 1980.

* Faculty of Economics, Thammasat University,
Bangkok 10200, Thailand

The first national economic development
plan of Thailand started in 1961, and thecountry is at present in the middle ofthe fifth national economic and social
development plan. Throughout these two
decades, various policies and measures
undertaken by the government in implementing the plans have had either direct
or indirect effects on the patterns of production and employment in the Thai labor
force. This paper will examine the changes
in population and labor force structureduring the period in question. In addition,
the problems of unemployment and underemployment will also be examined. In thispaper, I hope to provide a more realistic
picture of the employment problem facing
the Thai economy at present.

II The Data
Two major sources of data will be utilized: population censuses and labor force
surveys from the National Statistical Office.
An analysis of the changing labor force
and employment will be based on these
population censuses. Data from the labor
force surveys will be used for the analysis
113

of the unemployment and underemployment
problems. No attempt will be made tocompare the two sets of data since they havedifferent bases. The labor force surveys
provide more detailed information on labor

declined to 2. 8 percent during the following intercensual period, 1960-1970 [Wanglee 1976: 11]. This high growth rate
has resulted in an increase of the population of the younger age group. The distribution of population in Table 1 reveals
that one-fourth of the Thai population in1980 were under 10 years of age, and onehalf were under 19 years of age. Such ahigh proportion of school-age population
should imply a high dependency burden;that is, a large portion of the country's
limited resources has to be diverted toprovide facilities needed for children, andhence a smaller proportion will be avail-utilization which is not available in the
population censuses. It should be noted
here that at the time of this study, theresults of the 1980 population census forthe whole kingdom were not yet available.
The data of the 1980 population census
presented in this study are from preliminary and advanced reports which are basedon a one percent sample.

able for investment in economic development.
In 1970 the Thai government officiallydeclared a policy of reducing the population growth rate through voluntary familyplanning. During the Third Five-Year
Plan (1972-1976), the average population

III Growth of the Population andLabor Force
The period between 1947 and 1960
marked the period of the highest average
growth rate of population in Thailand.
The average annual growth rate duringthat period was 3.4 percent. The rate

growth rate was to be reduced to 2. 5

Table 1 Distribution of Population by Age GroupAge Group

Number ('000)
19803 )

1960

1970

1980

26,257.9 34,397.4 44,278.4
8,231. 5 10,944.1 11,053.9
3,088.2 4,562.2 5,828.6
2,499.0 3,717.5 5,303.2
2,416.1 2,683.4 4,340.7
2,071.1 2,241. 5 3,547.7
3,125.9 4,035.0 5,081. 4
2,109.1 2,737.2 4,027.4
1,462.7 1,752.0 2,653.2
1,208.2 1,681. 0 2,442.1
46.1
43.5

100.0
31. 3
11. 8
9.5
9.2
7.9
11. 9
8.0
5.6
4.6
0.2

100.0
31. 8
13.3
10.8
7.8
6.5
11. 7
8.0
5.1
4.9
0.1

100.0
25.0
13.2
12.0
9.8
8.0
11. 5
9.1
6.0
5.5

19601>
Total
Under 10
10-14
15-19
20-24
25-29
30-39
40-49
50-59
60+
Unknown

Percentage

1970Z )

Cumulative Annual
Growth Rate
1960-1970 1970-1980
2.74
0.26
3.98
4.05
1. 05
0.79
2.59
2.64
1. 82
3.36
-0.58

Sources: 1) Central Statistical Office, 1960 Population Census.
2) National Statistical Office, 1970 Population Census.
3) National Statistical Office, 1980 Population Census, Preliminary Report.
17-'

2.56
0.10
2.48
3.62
4.93
4.70
2.33
3.94
4.24
3.81

s. NITUNGKORN : The Changing Labor Force and Employment Problem in Thailand
percent per annum. and it was to be

implementation. this was revised to a six-

further reduced to 2. 1 percent during
the Fourth Five-Year Plan (1977-1981).
It was claimed that population growthyear primary education. starting from1978. Children normally start school atage six and should complete their pri-

had been successfully controlled during
those two plans. However, there is stilI

mary education by age 13. However. thedropout rate has been relatively high.

evidence indicating a wide variation in
population growth rates among regions

Even in 1982, it was reported that only

and areas. By the end of the Fifth FiveYear Plan (1982-1986), the average population growth rate is to be reduced to 1. 5
percent.

Whether this target is feasible

about 61 percent of those who entered
the first grade actually completedthesixth; this means that almost 40 percent
dropped out along the way.2)

depends a great deal on the success of

As a consequence. a larger proportionof the Thai labor force is found to be in

the family planning program in reducing

the very young age group. Table 2 reveals

the average birth rates in the northeasternand the southern regions. For the northernthat approximately one-fourth to onefifth of the economically active populationand the central regions, which have experienced the demographic transition period,

was in the 11-19 age group in the last
three censuses. 3 ) The patterns of age dis-a further reduction in birth rate is thought

tribution of labor force in the three cen-

to be highly unlikely [Honglaradom et ale

suses are relatively similar. However, the1980J.

percentage of the economically active pop-

Although the population growth rate has

ulation in the 11-19 age group as re-started to decline. its effect will only beported in the 1980 population census wasseen in the next 15 years. However, theresult of the high population growth priorsubstantially reduced.

This could be dueto the efforts of the government during

to 1960 is now being seen in a rapid increase of population in the working ages.
As reported in the 1960 and 1970 population censuses, approximately 87 percentof the Thai population stilI resided in rural(or non municipal) areas where only primary schools were accessible. Before the1960s, compulsory education in Thailand
was composed of four years of lower primary plus three years of upper primary,according to the 1962 Primary Education
Act. l )However. due to the high cost of1) In order for attendance of upper primaryschool to be enforced, a child must live
within two kilometres of the upper primaryschool.
2) Information from the National Education
Commission, cited in Chutikul [no d.].
3) Since the 1960 population census, the economically active population has been defined
to cover all persons 11 years of age andover who were employed as of the census
date or who had worked on any day during
the seven days preceding the census date aswell as experienced workers who were looking for work. The 1970 and the 1980 population censuses included those who were
waiting for the farm season as economically
active population. This group is defined in
the labor force survey as out of labor force.
175

Table 2 Distribution of Economically Active Population by Age Group

Percentage
1960

1970

1980

100.0
7.8
14.6
15.4
13.5
20.7
14.1
9.3
4.5
_0.2

100.0
10.0
17.1
13.4
11.5
21.0
14.3
8.4
4.2
0.0

100.0
5.7
15.9
15.7
13.8
20.0
15.5
9.3
4.2

Cumulative Annual
Growth Rate
1960-1970 1970-1980
1. 99
4.57
3.60
0.65
0.37
2.14
2.14
1.00
1.40
-16.36

2.27
-3.35
1.52
3.94
4.09
1.73
3.11
3.30
2.22

Source: Same as Table 1.

the past decade to make effective universal
compulsory education as well as to expand
lower secondary education at the lambon 4)
level.

IV Changing Educational Attainmentof the Population and Labor ForceOf the factors affecting the quality ofhuman resources. education has always
been considered by the Thai government

as the most important. The government's
expenditure on education over the past
two decades ranked second only to theexpenditure on economic development.
During the First Plan. it amounted to 2.4
percent of the gross domestic product androse to 3.5 percent during the FourthPlan. In terms of total government budget.
it accounted for 16.9 percent in the First
Plan and jumped to 20.8 percent in the
Fourth Plan.

Table 3 Population Age Six and Over by Educational Attainment

Level of
Education
Total
No Education
Completed School
Lower PrimaryUpper Primary
SecondaryHigherOthers & Unknown

1980

1960

1970

1980

Cumulative Annual
Growth Rate
1960-1970 1970-1980

21,148 27,596 37,819
7,974 7,145 6,345
13,174 20,450 31,151
11,549 17,185 23,461
685 1,190 3,358
635 1,337 3,452
95
186
881
210
552
322

100.0
37.7
62.3
54.6
3.2
3.0
0.4
1.0

100.0
25.9
74.1
62.3
4.3
4.8
0.7
2.0

100.0
16.8
82.4
62.0
8.9
9.1
2.3
0.9

2.70
-1.09
4.50
4.05
5.68
7.73
6.95
10.15

1960

1970

Source: Same as Table 1.
4) A tambon is a cluster of several· villages.
176

Percentage

Number COOO)

3.02
-1.18
4.30
3.16
10.93
9.95
16.83
-5.25

s. NITUNGKORN : The Changing Labor Force and Employment Problem in Thailand
The outcome of the past investment ineducation can be seen from the distribution of education among the Thai population in Table 3. The reduction in thenumber of persons without education overthe past two decades has been noticeable.
The growth of population with upperprimary education and above accelerated.
The most striking change over the last
decade was in the growth rate of population with higher education.
However, the overall structure of educational distribution, as revealed by thethree censuses, remained relatively unchanged. The vast majority of the population, ranging from 92 percent in 1960 to 79
percent in 1980, still has at most an upperprimary education. Those with secondaryand higher education constituted approximately 11 percent, even in 1980.
The situation is, however, consideredworse for the distribution of education in
the labor force. According to the 1980
Labor Force Survey (Round 2), of thetotal force in the whole kingdom, approximately 91 percent have at most a primary education. Sixty-seven percent of
the urban and 95 percent of the rural
workforce completed only primary education. This implies that better educatedworkers have been concentrated in urban
areas, particularly in the Bangkok metropolis, leaving the less educated ones inrural areas.
The existing educational imbalance has
been, more or less, the consequence ofthe pattern of governmental budget allocation in the past. Resources have been
distributed in favor of higher education,in particular for setting up and expanding universities, which are accessible to
only a small percentage of the population.
For the primary level, emphasis has beenon quantitative expansion in order to keep
pace with the growth of the school-age
population. The inadequacy of budget
allocated to the primary level is evident
from the report of the National Education
Commission that at least 13. 3 percent of
the primary schools, particularly those ofsmaller size, still cannot provide classes
up to grade six [Thailand, Office of the
National Education Commission 1983: 72].
Another main factor that accounts forthe large proportion of children leaving
school after or even before completingthe compulsory education has certainly
been family poverty. The direct costs ofclothing, transportation, and lunches areno small amount for poor families [Thailand, National Statistical Office, Report of
the Survey of Children and Youth, 1977:
Table 9]. Moreover, when the child isold enough to help earn the family living,
the indirect cost in terms of earnings
foregone makes poor parents reluctant tosend him/ her for higher education. A
study of education in northeastern Thailand [Holmes 1974] reports that the vast
majority of villagers consider that education as it is presently conducted bears nodirect relationship to farming. What mostparents want schooling above grade fourlevel to do is to bring certificates andjobs which carry prestige and a regularsalary. The rewards of prestige, honor,
and respect from secular schooling are
not realized to any great degree until one
177has at least the certificate of lower secondary level, which is the minimum level
required for a job in a government office.
Therefore, if they are not economicallywell enough off to send their children up
to that level, they will be more likely tohave them attend to at most the compulsory level. For those who can afford tocontinue schooling, the higher the levelof education, the larger will be the government subsidy in terms of actual cost of
education. 5 ) Moreover, the expected returns
from additional levels of education, based
at least on the Civil Service salary scale,
are found to be higher than the expected
returns from acquiring working experience
for the same number of years. This may
provide another explanation for the rapid
increase in demand for higher educationin Thailand.

V The Changing Structure of
Production and Employment

A. Diversification m Agricultural Production
Thailand has, for a long time, been known
as a major rice-growing country. During
the last two decades, there has been
substantial diversification in agricultural
production. The rapid expansion of othercrops occurred first in areas where rice
could not be cultivated profitably due tolack of water. Later, even in areas where
rice could be cultivated, there was a shift5) The higher the education level, the lower
will be the ratio of tuition fee to average cost
per head in each education level [Nitungkorn
1983: 167-194].
178from rice to other crops. Many factors
could be said to have contributed to thischange. Among them is the higher grossvalue added per rai of crops other thanrice. The rice premium has been criticized
as one of the factors responsible for thepersistently low income of rice-growing
farmers. The rice premium, therefore, has
indirectly encouraged diversification tocrops with larger value added whereverland, water supply, and climate havepermitted. The second factor has been
the improvement in transport, both rail
and road, that increased the possibility ofswitching to production for the domestic
market as well as for export. Thai farmers
have been found to be quite responsive tochanging world demands of agricultural
products. 6)
Most of the increase in agricultural
output before 1960 was attributable to anincrease in the area under cultivation rather
than higher yields. After 1960, yield increased substantially due to factors such as
irrigation, use of fertilizers and pesticides,
farm mechanization, etc.
Despite the increase in agricultural production, its importance in terms of shareof national output has been declining
sharply. In 1947, output of the agricultural sector constituted 60. 3 percent of
the total gross domestic product (GDP).
The share was reduced to 26. 2 percent
in 1980 (see Table 4). Employment share,on the other hand, has been declining at
a much slower pace. In 1947, the share
6) For a review of the"literature on the supply
response of Thai farmers, see Thanapomphun[1983: 148-188].

s. NITUNGKORN : The Changing Labor Force and Employment Problem in Thailand
Table 4: Percentage Distribution of Production and Employment by Industry

1947

Industry
Total
Agriculture
MiningManufacturing
Construction
Public Utilities
Transportation
Commerce &BankingService
Ownership ofDwelling &Public Admin.

1960

1980

1970

GDP

Employment

GDP

Employment

GDP

Employment

GDP

Employment

100.0
60.3
0.2
10.4
0.2
1.1

100.0
84.8
0.1
2.2
0.1
0.03
0.7

100.0
39.8
1.1
12.5
4.2
0.4
7.5

100.0
82.3
0.2
3.4
0.5
0.1
1.2

100.0
28.3
2.0
16.0
6.1
1.2
6.3

100.0
79.3
0.5
4.1
1.1
0.2
1.6

100.0
26.2
2.1
18.7
5.8
0.9
7.1

100.0
72.5
0.2
5.6
1.6
0.3
1.8

15.4

7.9

17.0

5.7

23.2

5.3

24.3

7.4

12.5

4.3

9.7

4.8

10.2

7.1

9.6

7.9

7.5

1.8

6.7

0.9

5.4

2.7

Source: Data on GDP are from the National Economic and Social Development Board, Thailand.
Data on employment are from the National Statistical Office, The Population Census,

1947-1980.

of economically active workers in the
agricultural sector was 84.8 percent of
total employment. It decreased to 82.3,
79.3, and 72. 5 percent in 1960, 1970, and1980 respectively. The absolute number ofpeople engaged in the agricultural sector,
on the contrary, has been increasing overtime. The numbers were 11.3, 13. 2, and16. 6 million people in the three consecutive censuses.
With 73 percent of the active population producing only 26 percent of thenational output, the average income ofworkers in the agricultural sector willundoubtedly be lower than in the rest of
the economy. Migration from rural areas
has been increasing over time. The improvement of transportation between Bangkok and other parts of the country has encouraged migration from further distances.
Of the total migrants into the Bangkok

metropolis in 1960, 15 percent were fromthe northeast, the poorest region. In 1981,
the number jumped to 43 percent and even
outnumbered migrants from the central
region which is adjacent to Bangkok.
Poverty has certainly been a dominantfactor in pushing people out of agricultural areas. 71
B. Promotion of the Manufacturing Industry

Before 1960, the development of industryin Thailand was hindered mainly by thelack of cheap power. Other principal
bottlenecks to industrial development were
the high speculative prices of industrialsites, a shortage of skilled labor and7) For empirical evidence of the effect of economic variables on the decision to migrate,
see the review of literature in Gamjana-Gooncham [1978].
179

management, poor communication. andhigh transportation costs [Ungphakorn
1965: 11].
The substantial reduction in imports
during World War II provided an impetus to domestic production of consumer
goods. The War and its aftermathbrought into sharp focus the need for industrialization and import substitution. Thisencouraged the Thai government to establish a number of industrial enterprises
ranging from sugar to paper, gunny bags,
plywood, and glass containers. The policyof direct governmental participation was
relaxed from the middle of the 1950s andemphasis was shifted to building the infrastructure and promoting private sector
participation. The first Act for industrial
promotion was passed in 1954. Under thisAct, promoted industries were granted
full duty exemption on import of capital
goods and low duty for· imported raw materials. Many other tax holiday schemes
were implemented. The· import tariffs wereraised many times for protective purposes.
The effective rates of protection in manufacturing industries were found to bebiased .in favor of production for thedomestic market and against export[Akrasanee 1975].
The pattern of industrial growth since1960 has reflected domestic demand rather
than factor endowment and comparativeadvantages. The policy of import substitutionunder heavy protection aggravatedthe balance of payments since it encouraged imports of raw materials and. capital
goods and at the same time discouraged
manufacturing exports. The share of light180

industries, for which most of the raw
materials are available in the country, fell
from 75 percent of total manufacturing
output in 1960 to 60. 9 percent in 1969.
On the· other .hand, the share of heavy
manufacturing rose from 25 percent to
39. 1 percent [Marzouk 1972: 201].
Despite heavy promotion of manufacturing industries, their contribution to thechange in the employment structure wasnegligible. The share of employment of
manufacturing industries increased slightly
from 3.4 percent of total employment in1960 to 4. 1 percent in 1970. an increaseof 212,000 people over one decade. However, the direct contribution of the promoted industries could· not be expected tobe high since the majority of the workforce in the manufacturing sector werestill unpaid family workers. According to
the 1964 Industrial Census, 87. 6 percent
of all establishments in this sector were
without paid employees. They engaged
over 54 percent of the total manufacturing labor force but accounted for only 4.6
percent of the total value added of thereporting establishments [ibid.: 212].
The heavy manufacturing industries had
been relying on an internal market where
the purchasing power of the majority was
low. In the early 1970s industries began. toface the problems of a slower growth rate
and an increase in idle capacity. With
the high level of effective protection, themanufactured products were not competitive in the world market. The system of
incentives, and particularly the exemption of imports of machinery and capital
goods from import duties, encouraged

S. NlTUNGKORN : The Changing Labor Force and Employment Problem in Thailand

capital-intensive techniques and also led
to inefficient utilization of scarce capital
resources.
Export-oriented industries were actively
promoted after 1971. Promotion measures
included: full exemption from import tariffs
on machinery and raw materials, and fromcertain business taxes; refund of all taxes
incurred in the production process; arediscount facility at subsidized interest
rates from the Bank of Thailand; andtechnical assistance from the Export Service
Center of the Ministry of Commerce. Toppriority was given to industries which
employed sizeable amounts of labor or
local raw materials, and to those promoting
energy conservation.
The share of employment of the manufacturing industries rose to 5. 6 percentof the total employment in 1980. The
growth rate of the economically active
population in this sector over the past
decade averaged 6. 58 percent per annum.
In terms of the number of people, the1980 census revealed that almost twice
as many economically active persons were
found in this sector as at the time of the1970 census (see Table 5). Manufacturing
establishments tended to be concentrated
in the greater Bangkok area (including
the surrounding provinces). In 1981, outof a total of 80,201 factories over the whole
kingdom, 22 percent were located in thegreater Bangkok area. GNP originatingfrom manufacturing industries in thegreater Bangkok area accounted for 54
percent of the total GNP from manufacturing industries in 1980 [Wannitikul 1983:
Tables 2 and 3].
C. The Tertiary Sector

The tertiary sector comprises transportation, commerce and banking, and service industries. The share of GDP of this
sector over the past two decades averaged
45 percent per annum, and its share of
total employment, 14 percent per annum.
Like the manufacturing sector, the tertiary sector is also characterized
Table 5 Economically Active Population by Industry
by a dual nature. It comprises
Cumulative
Annuala modem subsector which conNumber ('000)

Industry

1960

1970

1980

Total
13,772 16,652 22,867
Agriculture
11,334 13,202 16,567
Mining30
87
52
Manufacturing471
683 1,291
Construction
182
69
373
Public Utilities
16
25
64
Transportation
268
409
166
Commerce &780
876 1, 693
BankingService655 1,184 1,811
Others252
146609
Source: Same as Table 1.

Growth Rate
1960-1970 1970-1980
1.92
1.54
11.18
3.78
10.19
5.02
4.93

3.22
2.30
-5.05
6.58
7.47
9.70
4.30

1.17

6.81

6.10
-5.31

4.34
15.36

tains large establishments, anda traditional subsector (the socalled "informal sector") which
includes a large number ofsmall-scale or family unit typebusinesses. According to the1977 Report on Census of Business Trade and Services, Whole
Kingdom, 85 percent of 12,196
enumerated establishments had
less than 10 employees; 53 percent had less than five employ181

ees. The number of persons engaged inthose establishments with less than 10 employees accounted for 47 percent of all
persons engaged in establishments under
the survey [Thailand, National Statistical
Office, Report of Census of Business Tradeand Services, 1977, Whole Kingdom: 4-5].
This alone indicates that the commerceand service industries are overwhelmedwith small-scale business, not to mention
the number of hawkers, peddlers, domestic
servants, etc.
Since activities in the tertiary sector aremarket oriented, they are more likely
to be located in the urban areas where
customers are concentrated. Naturally, theBangkok metropolis would be the best
location since it is inhabited by 5. 3 million
people, about 52 times the population ofHaad Yai. the second largest city. As of
1981, the per capita gross regional product(at constant 1972 prices) of Bangkok was~ 45, 824 compared with ~ 31, 823 of theeastern region, which ranked second[Thailand, Office of the National Economic
and Social Development Board 1984]. A
study of establishments in the commerceand service industries reveals that there
has been a noticeable increase in concentration of these industries in the greater
Bangkok area. In 1971, 53 percent of theseestablishments were located in the greater
Bangkok area, but in 1978 the proportion
rose to 72 percent [Choykiattikul 1983:
Table 5].
The traditional sector in the urban area
has been considered as a "shelter" forunskilled migrants from rural areas aswell as for urban disadvantaged groups.
182

Employment generated in this sector is of
the low-income type. Nevertheless there
is still some evidence indicating that some
self-employed in this sector have an average
income higher than the average incomeof unskilled workers in small establishments [Teilhet-Waldorf 1978; Tongudai1982]. Migration flow from rural areas
into Bangkok nowadays is relatively more
systematic. A case study of migration fromthe northeast region reveals that migrationfrom Tambon Thahai, Kuang District, in
Ubol-Rachathani, has been very well organized. There is cheap transportation provided regularly and low-cost lodging in
Bangkok is arranged by former migrants.
Almost all male migrants work as taxi or
motor-tricycle drivers, and female migrants
work in restaurants or as domestic servants.
After having earned their target sum, theynormally return home. Earnings obtained
from working in Bangkok are found to be
spent mostly on consumption items rather
than invested in improving farm production[Mongkolkij-Ngam 1982: 161-165].

VI Changes in Employment Status andOccupation Patterns

Transition of the economy into a moreindustrialized stage generally entails changing the organization of production units.
As organizations become larger in size,
the proportion of unpaid family workers
in the work force is expected to decline,
whereas that of the employees should increase.
As discussed earlier, the family unit ofproduction is still predominant in all sec-

S. NITUNGKORN : The Changing Labor Force and Employment Problem in Thailand

Table 6 Economically Active Population by Employment Status

Number ('000)

Work Status

1960

Cumulative Annual
Growth Rate

Percentage

1980

1960

1970

1980

Total
13,772 16,652 22,867
Employer
44
61
281
Own-account Worker 4,085 4,935 6,787
Government Employee490
778 1,191
Private Employee
1, 144 1,820 3,727
Unpaid Family Worker 7,983 8,935 10,573
Unknown
28
123
309

100.0
0.3
30.0
3.6
8.3
58.0
0.2

100.0
0.4
29.6
4.7
10.9
53.7
0.7

100.0
1.2
29.7
5.2
16.3
46.2
1.4

1970

1960-1970 1970-1980
1. 92
3.38
1. 91
4.74
4.75
1.13
15.91

3.22
16.54
3.24
4.35
7.43
1. 70
9.60

Source: Same as Table 1.

tors, particularly in agriculture. A drastic

tural sector. If we disaggregate by sex, achange in the structure of employment
status of the Thai work force is not expected in the near future. It can be seenfrom Table 6 that even in 1980, almost halfof the work force was still in the unpaid
worker category. The proportion has been
declining slightly over time, but it has

much larger proportion of females is foundin this work category: 70 percent as com-been accompanied by an increase in theactual number of persons in this work
category. This has been due mainly to anincrease in the work force in the agricul-

pared with 24 percent of their male counterparts. The fact that a large proportionof females are unpaid family workers makes
the labor force participation rate of Thai
females one of the highest in the world.
Regarding the employee category, theproportion as well as the total population
active in this category has shown an increasing trend over time. In 1960, private

Table 7 Economically Active Population by Occupation

Number ('000)

Occupational Group

1960

1970

Cumulative Annual
Growth Rate

Percentage

1980

1960

1970

1980

Total
13,772 16,652 22,867
Professionals
174
284
718
Administrative
26
247
293
Workers
Clericals
154
392
190
Sales Workers
736
834 1,540
Agriculturalists
11,333 13,217 16,605
Miners26
41
43
Transport Workers
145
377
225
Craftsmen & Laborers
806 1,110 2,198
Service Workers
273
680
472
Unknown
99
24
31

100.0
1.3

100.0
1.7

100.0
3.1

1. 92
5.02

3.22
9.71

0.2

1.5

1.3

25.13

1. 75

1.1
5.3
82.3
0.2
1.1
5.9
2.0
0.7

1.1
5.0
79.4
0.3
1.4
6.7
2.8
0.2

1.7
2.11
6.7
1.26
72.6
1.37
0.2
4.94
1.7
4.53
2.51
9.6
3.0
5.61
0.1 -11.11

7.50
6.33
2.31
-0.31
5.30
7.07
3.72
-2.56

1960-1970 1970-1980

Source: Same as Table 1.
183

employees constituted 8. 3 percent of thetotal labor force, but in 1980 the proportion rose to 16. 3 percent. For Bangkok,
approximately half the labor force wascomprised of private employees in 1980.
A large number of male workers approximately 45 percent belong to the ownaccount worker category. This proportion
has been relatively stable over the past two
decades. Any important improvement in
the employment condition of this groupwill indirectly benefit those in the unpaid
family worker category.
A classification of labor force by occupation, as shown in Table 7, reveals an
overwhelming proportion of farmers in
the three censuses. It could be argued,
however, that the figures tend to be overstated, taking into consideration the factthat an increasing number of those whocalled themselves farmers may have earned
the larger portion of their income from
nonfarm activities. However, the overstatement might not be too large, taking into
account the actual population residing inrural areas.
Changes in the occupational structurereflect the condition of supply and demandin the labor market. On the supply side,
due to the low quality of the work force
in the rural areas in general, no rapidchange is likely to take place. The rural
work force has never been prepared inany way for changing conditions in production. On the demand side, the development of manufacturing industries inthe early stage has been concentrated onusing capital-intensive techniques in response to incentives provided by the gov1M

ernment. This has implied little chance forworkers to develop their skills throughon-the-job training. Besides, these industries have almost no linkage to local producers of raw materials. Hence the ruralsector has been almost entirely left out inthe process of industrial development. It
is not surprising that a large part of rural
areas has remained stagnant and in many
parts deteriorated. Migrants out of rural
areas have survived by working as unskilledworkers in the traditional sector in urban
areas as discussed earlier.
There has been some change, albeit
small numerically, in the proportion of those"white collar workers"; namely the professionals, administratives, and clericals. 8 )The increase in numbers as well as proportion of p~ofessionals in the past decade
is observable. This should reflect the growing number of higher-educated workers
as a result of the expansion of higher
education in the past decade. However,other than farming, any changes in otheroccupations are more likely to take placeoutside the rural areas.

VII The Problem of Unemployment
In an agriculture predominated country,
the open unemployment rate is generally
low. Nevertheless, its trend and its extent
provide some indication of the overall
economic condition as well as the func8) The unusually low number of persons in theadministrative occupational group as reported
in the 1960 population census may be due
to an error by the enumerators in classification into professional and administrative
categories.

S. NITUNGKORN : The Changing Labor Force and Employment Problem in Thailand

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tioning of the labor market. The
general characteristics of the unemployed should reveal the nature of
the employment problem facing
policy makers.
The unemployment rate. in Thailand over the past decade has showna relatively steady increasing trend(see Table 8). The data presented
in Table 8 are of the peak seasonof the year. 9 ) A disaggregation byregion and area (municipal vs.
nonmunicipal) reveals that the open
unemployment rate in Bangkok has
always been the highest and thatthe unemployment rates of the municipal areas of all regions are manytimes higher than the corresponding nonmunicipal areas. The unemployment rates in Bangkok andmunicipal areas of other regions
have been relatively low by international standards. The low unemployment rates in urban areas andthe small variation in geographicalwage differentials lead some studies
to conclude that the labor market
has been functioning relatively efficiently [Poapongsakorn 1983; WorldBank 1977J. In view of the more
systematic pattern of rural-urban

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9) The labor force survey is carried out
by the National Statistical Office, tworounds annually. The first round isheld from January to March coinciding with the nonagricultural season,and the second round from July to
September coinciding with the agricultural season. The first round isoften called slack season, and thesecond round, the peak season.
185

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migration and the prevalence of a relatively uniform wage level of unskilledworkers in Bangkok, this conclusion
may seem acceptable. The fact thatthe unemployment rate in Thailand isgenerally low does not imply that theeconomy is free from employment problems. It could also be interpreted thatpeople are so poor that they are forced
to accept jobs offered at whatever wage
level. We shall return to this point later.
Of greater interest are the characteristics of the unemployed. A disaggregation by level of education reveals
that the unemployment rate of those
who completed at most upper primaryeducation has shown a rising trend
during the past decade (see Table 9).
This group constituted approximately
80 percent of the total labor force. In
1971, they comprised 36 percent of thetotal unemployed, but in 1980 the number rose to 65. 7 percent. The graduates of secondary school who used tocomprise the largest group of the unemployed showed a reverse trend. The
proportion of secondary school graduates
among the unemployed declined byalmost 20 percent over the same period.
A similar trend has also been foundfor vocational and teacher training
graduates who also used to make up a
big share of the total unemployed. One
possible explanation would be that, due
to the increasing supply of the latter
two groups and the poor prospects of
the labor market, employers are able tosubstitute workers with secondary or
vocational education for positions that

S. NITUNGKORN : The Changing Labor Force and Employment Problem in Thailandused to require only primary school qualification. The unemployed with higher education, the technical and university graduates, comprised less than five percentof the total. However, the severity of the
problem is expected to continue to risedue to the increasing number of graduates,
particularly those in the fields of the social
sciences, law, and education. Out of 41,169
graduates of higher education from government and private institutions in 1980,68 percent majored in these three fields. In 1981,
there were 653,625 undergraduates enrolled
in government institutions, of which 87. 5
percent were students in the two open
universities. Of the total students in the
open universities, 77 percent majored inthese three fields. The establishment of
the first open university, Ramkamhaeng
University, in the early 1970s was due
partly to the inability of the government
to solve the high unemployment rate ofsecondary school graduates at that timeand partly to the pressure of demand forhigher education. The problem was exacerbated by the opening of the second
open university, Sukhothai Thammathirat,
in 1978. Although the number of graduates with higher education still constitutes
a relatively small proportion of the totallabor force, this group has exerted strong
political pressure. The recent creation ofan additional 1,500 positions by thegovernment in order to provide temporary
employment for technical and university
graduates is evidence of this.
Of the total population actively looking
for work, as reported in the 1980 census
of population, 73 percent were seeking

jobs for the first time. Out of these, 79
percent were in the 11-24 year-old age
group. The labor force survey, which wasundertaken 3-6 months behind the population census, also confirmed that theabove-mentioned age group accounted for60.4 percent of the total unemployment
for that year.
At this point, we may conclude thatthe problem of open unemployment inThailand is more correctly the problemof youth unemployment. Lower-educatedyouths have been effected to a muchgreater extent than higher-educated ones.
However, more information on the duration of time spent in looking for jobs foreach educational group would be necessary in order to judge the severity of the
problem. 10l

VIII The Problem of Underemployment
Economists have been discontented withthe use of the open unemployment rate
for measuring the employment problem
in developing economies where the majority of the work force consists of selfemployed and unpaid family workers. The
problem of employment In developing
countries, as pointed out in many studies,is rather a problem of inadequate income
and insufficient work opportunities. The
prevalence of this phenomenon is generally known as the underemployment
10) The information on duration of unemployment shown in the report of the labor force
survey is the percentage distribution ofduration of unemployment by sex andmunicipal!nonmunicipal areas.
187problem. Various approaches have beensuggested for improving the measurementof labor utilization in order to be able toinclude the existence of underemployment.
Since 1977. the National Statistical Officehas incorporated the labor utilization framework developed by Philip M. Hauser
as part of their regular labor force survey.
Within this framework. persons 11 yearsof age and over in the labor force areclassified in the survey as either adequately or inadequately utilized. Thosebelonging to the latter are categorized as
one of the following: underemployed, underutilized by hours of work, underutiIized by income. or underutilized by mismatch of occupation and education. Thosecategorized as underutilized by hours ofwork are unpaid family workers working 1-19 hours in the survey week but
wanting to work more and all employedpersons working less than 35 hours a week
and also wanting more work. In order todetermine underutilization by income, acut-off level of income based on the subsistence level of living for each geographical area has been determined. These
cut-off levels of income have been adjusted
over time in accordance with changes in
the cost of living in those areas. l1l However, for those living in nonmunicipal
areas outside the Bangkok metropolitanarea, the cut-off level has been fixed at
250 baht per month.

Underutilization by

income is thus defined as employed per11) The cut-off level of income for the broad
geographical areas can be found under thesection of Concept and Definition in thereport of the survey.
188

sons who make less than the cut-off levelin the location of his work during thesurvey week. Mismatch, as 'defined by apanel of judges, occurs when a respondent's occupation does not permit the fulluse of his education. Education is being
used as a proxy for skill or capacity.
Persons who are considered underutilized
in more than one way will be c:lassified
by the following priority scheme. Unemployment will be listed first. If a person
is underutilized by hours of work andincome and/or mismatch, he will be categorized as underutilized by hours. If heisunderutilized by both income and mismatch, he will be categorized as underutilized by income. The last priority is themismatch category. After all inadequately
utilized persons are classified, the residuals are categorized as adequately utilized
persons.
Squire divides underemployment into two
distinct types. The first, visible underemployment, includes those who are employed
but would like to work longer hours.
The second, invisible underemployment, isdefined in a number of ways, but generally includes those whose earnings lie
below a given cut-off level [Squire 1981:
69].
Employing Squire's concept, the extent
of visible underemployment can be measured by the percentage of the labor
force in the category of underutilized byhours of work. From Table 10. it can beseen that the highest percentage of thelabor force in this category was in 1977:
5. 8 percent in Round 1 (the slack season) ; and 3. 8 percent in Round 2 (theS. NITUNGKORN : The Changing Labor Force and Employment Problem in Thailand

Table 10 Underemployments by Area (In Thousands)
Type ofUnderemployment

Round 1 (Jan.-March)

Round 2 (July-Sept.)

(%

(% )

Whole
.. liNon-mum. Whole' . all N on-mum.
Kingdom of LF)1 M umClpa
Kingdom of LF 1M umClp

1. By Hours
of Work776. 4 (5. 79)
1977
37.2
652.7 (4.60)
36.2
1978
542.7 (3.84)
1979
63.4
No Survey
1980 +596.8 (3.37)
1981
68.2
2. By Income
1977 3,976.7(29.16)
395.9
549.4
1978 3,830.1(27.02)
439.9
1979 3,381. 0(23.90)
No Survey
1980 +828.0
1981 2,799.4(15.81)
3. By Mismatch 1977
6.3 (0.05)
4.0
7.4 (0.05)
3.6
1978
17.3 (0.12)
1979
12.4
No Survey
1980 +24.2 (0.14) I
18.8
1981

739.2
616.5
479.3

-

528.5
3,580.8
3,280.7
2,941.1-

1,971.4
2.3
3.8
4.9
I

-

5.4

784.6 (3.83)
676. 4 (3. 08)
505.6 (2.36)
510.6 (2.25)
448. 0 (1. 82)
6, 489. 7(31. 69)
6,324.0(28.88)
5,657.2(26.41)
3,806.6(16.75)
4, 151. 5 (16. 89)
9.5 (0.05)
11.5 (0.05)
14.8 (0.07)
29.1 (0.13)
35.2 (0.14)

39.6
52.5
55.4
63.0
50.9
388.2
518.0
431.6
435.8
920.2
7.6
9.2
10.4
20.3
23.1

745.0
623.9
450.2
447.6
397.1
6,101.5
5,806.0
5,225.6
3,370.8
3,231.3
1.9
2.3
4.4
8.8
12.1

Source: NatIOnal StatistIcal OffIce, The Labor Force Survey, 1977-1981.

peak season). The steadily declining trendof persons belonging to this category
could be explained by an increase inopportunities to work outside their own
farms. These opportunities include migrating into Bangkok, working in the government's rural job creation project in thedry season,12) working in other farm areas,
etc. Recently, some agricultural areas(particularly the central region) have developed into more advanced areas by
growing dry-season rice, pineapples, sugar
cane, and cassava. These areas have been
increasingly important in providing offfarm employment opportunities, not only

to nearby farmers but also to migrants fromthe northeast [Pawapoothanon 1982: 155160].
The sizable number of persons in the
category of underutilized by income, invisible underemployment in Squire's concept,
is in fact the core of the employment
problem in the Thai economy. In 1977, 29
percent of the labor force in Round 1 and32 percent of the labor force in Round
2 fell into this category. Although thenumber of persons whose income was
below the cut-off level has been declining
over time, particularly those living in the
nonmunicipal areas, it is not certain whether

12) The Rural Job Creation Program was initiated by the government in 1980 in order toassist drought-stricken farmers. Since then,budget has been allocated each year for the
purpose of creating jobs in the dry season,
primarily to reduce the migration flow into
the Bangkok metropolis.

their real income has actually increased. As
mentioned earlier, the cut-off level of income for the nonmunicipal areas has been
fixed at a relatively low level for many
years. According to the 1980 labor force
survey, Round 2, of those underutilized by189

income, 98 percent had at most an upperprimary level of education, 88 percent lived
in nonmunicipal areas, and 44 percent
were between 11-24 years of age. Employed persons in manufacturing and commerce industries constituted the largest
proportion (54 percent) of total persons
underutilized by income in the municipal
areas, 95 percent were found in agriculture
with the largest group in the own-accountworker and unpaid family worker categories.
Mismatch is unmistakably a kind ofinvisible unemployment in the sense thata person does not have an opportunity toperform to the best of his capacity. His
productivity and hence his income is lower
than it should be. Although the numberof persons in this category is less than one
percent of the total labor force, in termsof numbers it has been increasing rapidly.
This evidence supports our previous remark on the replacement of higher-educated workers for lower-educated ones
practiced by employers. The gloomy prospect of the labor market has forced
graduates to lower their job expectations.

IX Concluding Remarks
Rapid population growth in the past
has resulted in an influx of youths into
the labor market. The pressure of the
problem of employment can be expected
to increase since a large proportion of
the Thai work force will continue to bein this age group for at least anotherdecade.
The more serious employment problem
190

facing the Thai economy at present is
the problem of the working poor. Theseare people residing mainly in rural areas.
After two decades of economic development, about 70 percent of the Thai labor
force still depend on agriculture as theirmain source of income. A transition froma traditional agricultural economy into a
more industrialized one could hardly bepossible given the fact that approximately
90 percent of the work force still has at
most a primary level of education.
Economic development has been concentrated around the primary city, theBangkok metropolis. The gap between the
average income of those living in Bangkok
and the rest of the country, particularly
those living in rural areas, has been
widening. The deterioration of the farming occupation has pushed people out ofrural areas and swollen the traditional
sector in urban areas, particularly in
Bangkok. The largest proportion of theworking poor in urban areas is employedin small establishments whose employment
conditions have never complied with any
labor laws.
It has been increasingly evident at theplanning level that economic and social
development cannot be continued at anaccelerated rate: the situation might even
get worse if the rural. sector is left far
behind as it was in the past. An attempt
is now being made by the government toimprove farming and living conditions invillages identified as poverty areas. The
resulting activities may at least create somechanges in those long stagnant areas.
However, these efforts could go in vain if

S. NITUNGKORN : The Changing Labor Force and Employment Problem in Thailand

villagers are not capable of carrying out
the next stage of development by themselves. A much greater effort will be required to develop the present as well as
the future work force of these villages.
It is essential that the development of
those poverty areas, as well as the development of rural areas in general be included in the national perspective. Amongother things, a concomitant plan to slow
the growth of Bangkok and divert public
as well as private investment into rural
areas should be considered a high priority.
Without such an effort, the improved
human resources in rural areas will findit easier to migrate into urban areas, andhence perpetuate the problem.
Acknowledgement
This paper is a revision of part of the author's
research report entitled "Changing Labor Forceof Thailand." Financial support from the Council
for Asian Manpower Studies for the researchis gratefully acknowledged.
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