# _Better Educated Labor Force_

Before looking at how the rise in educational attainment translated into higher skills of the labor force, it is useful to have a brief look at the types of workers in the labor market. The Labor Force Survey (LFS) shows that between three-quarters to four-fifths of the population aged 15 to 59 years were employed in 2004 (Figure 23.A). Unemployment never rose above 5 percent and was just over 1 percent in August 2004. The rest are those not in the labor force due to household duties, old age, seasonality, studying, or other reasons. Labor force participation dropped by about five percent due to the early 1990s, principally due to more and longer school attendance and in spite of a decline of seasonal work.

With economic development, more people leave family work, primarily in agriculture, to take up wage employment. Indeed, the share of wage workers among the employed in February increased by about one half. The rise in wage employment also led to a decline in the August harvest season effects. Nevertheless, still more than half of all jobs were non-wage in 2004. Further, among wage workers, only about half received monthly wages in 2004. While almost 99 percent of the monthly wage workers are covered by the 1998 Labor Protection Act or are public sector workers, only 70 percent of other wage workers, and six percent of non-wage workers, belong to these categories. Remarkably, the share of monthly wage workers among wage workers is unchanged compared to the early 1990s, and about 10 percent lower than prior to the crisis in 1996. Due to the continued rise in wage employment, the share of workers on monthly payroll in total employment increased up to 1996 and stagnated since.

As to be expected, the increase in enrolment rates since the early 1990s led to a more qualified labor force. The education attainment of the labor force improved steadily since the early 1990s. The labor force with more than primary education doubled since 1991 to reach close to 40 percent in 2004. Today, the 25-year old entrees to the labor market are clearly more skilled than their counterparts in the early 1990s (Figure 23.B). The Asian crisis accelerated this trend, as young adults decided to continue schooling due to a lack of well-paying jobs. The skill profile of wage workers at any given year is substantially better than that of the labor force overall (Figure 23.D compared to Figure 23.C). It improved steadily over time in spite of the higher share of wage employment in total employment, although the share of wage workers with upper secondary education or more remained constant since 1998. Wage workers on a monthly payroll have better skills than those of wage workers overall (Figure 23.E). Almost one in two finished at least upper secondary education. Perhaps due to the crunch in jobs on monthly wages since the crisis, the improvement in the skill profile of monthly wage workers continued up to today in contrast to the wage workers overall. In spite of the improvement, Thailand’s stock of human capital is still lower than Malaysia’s and especially Korea’s (Figure 23.F). Both countries made impressive strides in improving attainment levels since the mid-80s. While Thailand’s current labor force looks skilled relative to Malaysia’s in the late 1980s, it still looks unskilled relative to Malaysia’s in the late 1990s.

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