EDUCATION AND SUPPLYING THE SKILLS FOR THE LABOR FORCE

UNCLAS SECTION 01 OF 03 BANGKOK 004896 SIPDIS SIPDIS E.O. 12958, AS AMENDED: N/A TAGS: ELAB ECON ETRD TH SUBJECT: EDUCATION AND SUPPLYING THE SKILLS FOR THE LABOR FORCE HOW EDUCATION AFFECTS BUSINESS ¶1. Summary. Businesses, especially international companies, in Thailand suffer from a lack of important skills among their workforce as a result of an antiquated and ineffective education system. Lack of English proficiency and critical thinking skills, as well as a lack of career preparation in universities, are leaving gaps in and inhibiting development of the Thai workforce. However, changes in human resources management are attempting to address the management issue by developing a Western administration style. The labor force is also seeing an increase in the ratio of college-educated workers, which a Thai think-tank claims is a positive signal for the economic growth. This is one of two cables examining the Thai education system and how it affects business conditions. End Summary. THAI PEOPLE CAN'T SPEAK AMERICAN ¶2. A significant obstacle for Thailand's continued economic growth is the notable lack of English proficiency in the Thai workforce. Thailand's economy depends on trade (more than 60 percent of GDP) and Foreign Direct Investment and the lack of English skills is by far the biggest personnel problem for foreign companies operating here. The country manager for Capstone Group, a multinational human resources management company, says that it is very difficult to find someone with both the necessary skills for the job and sufficient English aptitude. It is relatively easy, however, to find applicants that have the right skill set to meet an employer's needs, but not the language skills. ¶3. According to an American Chamber of Commerce in Thailand (AmCham) source, foreign companies are currently forced to promote English proficient employees to higher positions over non-English speaking employees that have better qualifications. He believes that the English problem is the result of an absence of English in the environment and culture, not only an unsuccessful school system. English is hardly spoken outside of class and is not well-integrated in society. MANAGEMENT PROGRESS ¶4. The education system's style of teaching-monotonous learning, lack of creative thinking (see septel),and also a lack of internship programs are reflected in slow management development. It takes longer for Thais to develop management skills because they are not used to thinking "outside the box," and there is a long adjustment period to "real-life" work. According to the country manager at Capstone, many Thai employees are reluctant to take a management position and concomitant responsibilities. They are "complacent with their position and do not want to think more than they have to." ¶5. The Thai management style also reflects the education system and can hinder the growth of many Thai companies. According to the Capstone Group country manager, Thai managers dictate instructions to their employees and leave little room for critical thinking and employee development, which reflects the teaching-style of local educators. The employee rarely has a chance to find solutions independently and this only prolongs the time it takes for employees to develop management skills. WORK EXPERIENCE ¶6. Employees entering the workforce straight out of college typically have very little work experience and are usually unprepared for "real-world" work. College programs in Thailand lack internship and career preparation programs, which is part of the reason that the Department of Labor enacted a statute that makes it mandatory for companies to provide in-house training. Thai companies also have no internship recruitment programs. It takes significantly longer for new graduates to adjust to the work environment than they do in Western countries, according to our sources. SOME SPECIFIC EXAMPLES: THE SEAGATE ISSUE ¶7. Recent press articles report a lack of skilled labor that has investors worrying about Thailand's economy. However, speculation about Seagate shifting $1 billion worth of new investment from Thailand to Malaysia because of either a lack of high-skilled labor or the current political instability is untrue, according to a Malaysian Seagate representative. Seagate Thailand has remained very secretive about the issue because of media sensitivity and speculation. The representative said that decisions made at Seagate are strictly internal, and did not elaborate on their future course of action. She did mention that "[Seagate is] not even moving out of Thailand," noting that Seagate has been in Thailand for over 25 years and would not have been here if there were no supply of skilled laborers. Comment: Despite Seagate's denials that a shortage of skilled labor was the cause of their sudden change of investment plans, they still refuse to tell anyone, including ourselves, what motivated the change despite all the press speculation. End Comment. BANGKOK 00004896 002 OF 003 IT INDUSTRY - IBM THAILAND ¶8. IBM Thailand told us that finding enough programmers and code writers to fulfill their needs is not a problem. The needs that are not found in Thailand are high-level IT specialists, specifically IT architects, IT consulting, systems and network engineers, and mainframe specialists. IBM will either train employees themselves to fulfill these needs, or import the labor from abroad, mostly India and Singapore. However, only about 10 percent of high-skilled labor is imported and IBM has several in-house training programs to develop current employees into positions that are needed. ¶9. Our source at Capstone Group told us that the lack of IT consulting skills has to do with the lack of critical thinking. IT consultants usually do not have the critical thinking ability to analyze presales and sales causality, although sales in the IT sector are generally okay. ¶10. Several hundred fresh college graduates apply to IBM each year, and only about 5 - 10 percent have the skills necessary to qualify for a position at IBM. But these numbers are usually enough to meet the labor demands, according to our IBM source. When they enter IBM, their skills are good enough to contribute right away, though IBM still puts them through a training program that is specialized for entry-level positions. ¶11. IBM confirmed that English skills were sub-par compared to its neighboring countries, but only on a speaking level. This is not a large problem, says an IBM spokesperson, because most communication in English is done through emails or other written forms. English speaking skills are only a problem when they have to do presentations. OTHER LABOR FORCE DEMANDS ¶12. Sales and marketing are in constant need by companies. Finance and business development are also needs in the current economy, says an AmCham source. While the lack of skilled workers in these areas is somewhat of a constraint, this source believes that it reflects more the growth of the economy and the lag time in producing new graduates than any inherent structural problem. ¶13. The oil and gas industry is quickly growing in Thailand due to large foreign investment. But the Thais are not able to supply enough skilled workers to keep up with the industry demand, according to our source from Capstone Group. There is demand for construction engineers, structural engineers, chemical engineers, and industrial engineers. The industry is expanding faster than the universities can turn out graduates. ¶14. The demand for managers in the construction industry is also not being met. There are many good project managers in Thailand but there is a limit to their capability for creativity. Thailand's construction labor force does not have the creativity for advanced architecture and interior design. According to the Capstone Group country manager, most interior design companies are made up primarily of foreigners. Contract management and quality surveyors are difficult to find. ¶15. The manufacturing industry lacks the skilled managers that are needed to push manufacturing into advanced levels. Since there is a significant manufacturing sector in Thailand, this may limit future expansion in the long run. The next level of manufacturing consists of lean manufacturing and six sigma manufacturing, which involves highly refined products and continuous quality improvement. Usually only Americans and European manufacturing firms have the necessary skills and few Thai manufacturers do. The shortage of industrial engineers explains why Thai manufacturing is currently stuck, says Capstone Group. CURRENT TRENDS ¶16. Corporate human resources traditionally were only in charge of administrative tasks, but a refocus took place about 3 years ago. Human resources are starting to focus on the individual employee and to help them develop. Management style is changing and becoming more Western, focusing on individual development and freedom to solve problems, rather than dictating directions. Thai companies are aware of the downfalls of the traditional style and many companies are replacing managers that don't adopt Western-style management. ¶17. Increased availability of college graduates has altered the makeup of the employed labor force. The National Economic and Social Development Board (NESDB) call this a "higher standard of education in the workforce," because the number of employed college graduates are consistently increasing, signaling a positive trend in the overall educational level of the labor force. (Septel looks at some of the remaining problems of education). ¶18. An associate Professor of Economics at NIDA University elaborates on this trend. The increase in the supply of students BANGKOK 00004896 003 OF 003 causes an increase in the demand for institutions that offer degrees. Subsequently, several institutions and universities have opened to offer degrees but many of these institutions are considered of low quality. The supply of college graduates with low-quality educations from "no-name" schools has increased greatly. Many of the graduates have a hard time finding employment because of the increased number of college graduates and competition, and the lesser value employers' place on degrees from less prestigious institutions. The supply of students that attend these schools, however, are constant because of the difficulty of admission into top-notch schools and the increasing number of students graduating secondary school. ¶19. Comment: The deficiencies in the labor force are heavily related to the education system. As the education system continuously fails to produce consistent English and critical thinking skills needed to be successful and politicians do not act on education reform promises, we can expect to see these issues continue. Without a fundamental change in the education system it will be very difficult to solve these problems. There has been a consistent decline in students' science and math scores from standardized tests (see Septel),and it is a possibility that the education system may not be able to provide the engineers demanded in the near future, especially for high-level IT and advanced engineering positions. For Thailand to achieve the next level of value-added in the global economy, the government must focus on increasing the skills of the Thai labor force. Arvizu