National Economic and Social Development Board (NESDB) by Development Evaluation and Information Division and Thailand Development Research Institute (TDRI) had conducted a study to develop the unemployment model by using the indicators of Thai labour market environment to be a tool in a warning system for concerning agencies at both polity and implementation levels. The main components that would be analyzed were environmental factors in the labour market that could be used as warning to the unemployment problem; unemployment rate analysis; and index that measure the severity of unemployment problem. The relationship of factors inside the labour market and the unemployment rates would be examined. Criteria to measure the severity of the problems had been developed and impacts from the government measures had been analyzed. The unemployment model would be developed under three conceptual frameworks of: (1) labour market segmentation that were formal and informal sectors; (2) unemployed workers that were categorized into three groups which are the formal and informal unemployed, and the unemployed who had never worked and (3) data used for unemployment analysis were Labor Force Survey in the first and third quarter of 1993-2000.
The study had concluded as followed:
1. According to the structure of Thai labour market, the economic turmoil had exacerbated the unemployment problem without any warning signal. In 2000, the Thai workforce were 34 million with those working in the agricultural sector were 47.4 percent and in the non-agriculture sector were 49.8 percent. The remaining were the unemployed of 2.4 percent and the seasonal unemployed of 0.5 percent. the structure of labour market was slightly affected from economic crisis. However, unemployment rates were increased aftermath the crisis. In the early stage of the crisis, the unemployment problem was not that high and none of the signal had of been raised to warn the severity of the problem afterwards.
Thai labour market structure
Structure Pre-crisis Crisis Post-crisis
1992-96 1997 1998 1999 2000
Workforce 100.0 100.0 100.0 100.0 100.0
-Agricultural Sector 54.2 49.7 49.4 46.9 47.4
-Non-agricultural Sector 4.2 49.1 47.0 49.7 49.8
-Unemployed workers 1.3 0.9 3.4 3.0 2.4
-Seasonal workers 0.3 0.3 0.2 0.4 0.5
Source : The development of Thai labour market environmental indicator project, NESDB
2. Factors related to unemployment could send a warning signal approximately 6 months in advance. This study was constructed a model to analyze factors in the labour market that related to the unemployment rate and seek for the period that those factors could send a warning signal before the occurring of an unusual unemployment situation by mainly targeting the unemployed persons. The result of the analysis indicated that factors affected the unemployment rate were the capacity utilization in the manufacturing sector, average working hours per week, job vacancy, real value of agricultural products (at constant price in 1988) and the ratio of graduated workforce.
3. The normal unemployment rate would be ranged from 2.7-3.7 percent in the first quarter to 1.1-2.1 percent in the third quarter. The indication of the severity of unemployment was the average of quarterly unemployment rate following the latest economic cycle (1993-1998). the severity of unemployment problem was categorized into 7 levels from very low to very high. the study had indicated that the unemployment rates was very high in the first quarter (February) or dry season around 2.7-3.7 percent while they were very low in the third quarter (August) or rainy season around 1.1-2.0 percent. Therefore; if unemployment rates deviate from the above ranges, many measures should be provided in advance.
4. Unemployment rate in the first quarter of year 2001 was still critical and need immediate measures. From the projection of unemployment rate, the overall unemployment rates in both formal and informal sectors in the first quarter of 2001 would be as high as 4.97 percent or 1.59 million of the unemployed, which was considered to be critical and essential to hastily find a solution. The unemployment rate in formal and informal sectors were shown in the charts below.
However, the model and early warning indicatiors were developed under the limitation of the existing information. The assumption and the framework in this model was also developed in the crisis period. As the input data and framework had changed, the model and early warning indicators should be adjusted to be relevant to the actual situation in the labour market and be used as an effective warning tool. NESDB would coordinate with concerning agencies in applying the early warning indicators to their tasks. They would be indicators for the labour market environment in the future affectively used and accepted.
Development News Bulletin, National Economic and Social Development Board, Volume 16, No. 04 : Aril 2001 End.
-SS-