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Understand and navigate Thailand’s skill shortage

Thailand had for years a structural issue with its  education system which struggles to keep up on the technology front and fails to deliver workers ready for both ASEAN competition and digitalisation.

On top of that issue, the country’s low birth rate and rapidly ageing population limits the number of young workers available. The shortage will continue to worsen in the coming decades as birth rate will keep decreasing, impacting school enrolments figures.


Thailand skills shortage isn’t all about upper qualified jobs

Thailand 4.0 initiative gives a strong place to the Eastern Economic Corridor (ECC) economic development. The ECC office’s estimates at 475,000 positions will be created 2023. 60% of which should be filled by low-skilled but qualified vocational workers, and 40% by higher-skilled workers with at least a bachelor’s or postgraduate degree.

Here the shortage becomes apparent. Local vocational colleges and universities in the vicinity of the Eastern Corridor are forecasted to be able to supply only 30% of the demand for skilled workers.]

Thailand’s sectors affected by skills shortage

As the government upgrades the country’s industrial and business sectors from 2.0 to 4.0, the job market is already experiencing shortages of candidates in key business roles such as sales, information technology (IT), engineering, manufacturing, business administration and accounting.

Those shortages already impact the ability of the economy to embrace the latest digital innovations and anticipate on medium-term to prepare for job market disruption anticipated with technology such as A.I. According to a 2019 study by Microsoft and IDC, only 20% of Thai organisations have carried out comprehensive plans to develop their workforce for the era of artificial intelligence (AI).

Demand for skilled IT workers has surged in line with wider adoption of ecommerce, social commerce, digital payment, artificial intelligence (AI), financial and banking technologies, Internet of Things (IoT), cloud computing, data analytics, blockchain and cybersecurity.

In engineering positions, aeronautics or rail transportation are already facing shortages, reflecting the involvement of the government to push mobility sectors. More generally, shortages in engineering are felt across the board when it comes to requiring a combination of technical and soft skills such as sales, data analysis, or presentation skills.

In the service industry, skilled customer service workers and more broadly call-centre staff are also becoming harder to find, caused by the rapid growth of ecommerce, online financial services, and insurance businesses.

Skills scarcity: how bad is it already?

According to a ManpowerGroup survey in  2018, 45% of employers in Thailand could not find employees with skills matching their requirements.

The survey also found 67% of large organisations (250+ staff) across all industries were facing a shortage of capable people. The shortage is the highest since ManpowerGroup began this annual survey in 2006.

The consequences and costs of that shortage are multiple. Thai companies:

  • Suffer from a volatile labor market and struggle to retain top skills in the company.
  • Spend substantial fees to recruitment agencies in order to find the right skills.
  • International companies rely still on expatriates or “local contract” foreigners to source the skills needed to grow their business. With skill transfer strategies usually poorly executed, this strategy impacts the long term development and retention of skills in the country.

Tactics to fight skill shortage today and tomorrow

In that negative landscape, the competition is becoming harsher between employers. Only company that measure and develop tactics to attract, develop and retain young talents will manage to navigate those dangerous waters. Here are some tactics that we recommend companies to explore:

  • Get support. Associate Human Resource department to business decisions to allow them to apprehend future skills development needs.
  • Understand. Design a relevant Performance Management System to identify the key competencies required for your business in 5 years.
  • Source. Partner with universities matching your skills development needs and implement scholarships and young graduate programs.
  • Rotate. Encourage work mobility, both vertically and horizontally, to develop and renew skills of your employees at an increased pace.
  • Grow. Create a strong career path system coupled with an ambitious L&D budget. Offer career counselling to your employees.
  • Embrace change. Develop of culture of creativity and place “digital enthusiasts” at all levels of the organization to infuse a digital culture.
  • Measure.  Accept to test things as long as you are able to set metrics and learn from the failures. In particular, quantity the effectiveness of your training and skills development programmes. Don’t navigate in the dark.

 

About Huneety

Huneety supports companies in Thailand to develop strategies and roll out learning and development plans effectively. Our services include support in planning and budgeting, sourcing and benchmarking of suppliers, and assistance to measure and track your actions success. We believe a L&D partner is what companies need to make it through the skill shortage in Thailand. Contact us for more information.

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