Im­pli­ca­tions of Thai­land’s Ag­ing Pop­u­la­tion on the La­bor Mar­ket

Thai-American Business (T-AB) Magazine - - Contents - Writ­ten by: Tom Sorensen

As if we did not have enough prob­lems with how the world views Thai­land’s cur­rent po­lit­i­cal sit­u­a­tion, lately we have been see­ing the fol­low­ing head­lines in the news:

“NESDB Sounds Age and La­bor Alarm”

“Meet the New Old Man of Asia: Thai­land”

“De­fer Re­tire­ments if Pos­si­ble”

“Ex­ports Fell for Sec­ond Straight Year, First Back- to- back De­cline in 20 Years”

“Pro­por­tion of Work­ing- age Pop­u­la­tion Go­ing from 67% of To­tal Pop­u­la­tion to Only 55%”

Be­fore we look at steps com­pa­nies can take to im­prove or im­ple­ment em­ploy­ment brand­ing, which is piv­otal to your suc­cess in tal­ent ac­qui­si­tion, let’s set the stage and look at some de­mo­graphic facts from global and Thai per­spec­tives.

AG­ING FROM DE­CLIN­ING FER­TIL­ITY AND DE­CREAS­ING MOR­TAL­ITY

In their re­port, World Pop­u­la­tion Age­ing, United Na­tions’ Depart­ment of Eco­nomic and So­cial Af­fairs says that pop­u­la­tion ag­ing is tak­ing place in nearly all coun­tries of the world. Ag­ing re­sults from de­creas­ing mor­tal­ity and, more im­por­tantly, de­clin­ing fer­til­ity. This leads to a rel­a­tive re­duc­tion in the pro­por­tion of chil­dren and to an in­crease in the share of peo­ple of work­ing age. Glob­ally, the num­ber of el­derly per­sons ( aged 60 years or over) is ex­pected to more than dou­ble over the next 35 years.

Thai­land’s Of­fice of Na­tional Eco­nomic and So­cial De­vel­op­ment Board ( NESDB) has said that al­most one third of the peo- ple in Thai­land will be over 60 years old by 2050 ( 35 years from now). In Malaysia this num­ber is 20% and in the Philip­pines it is only 17%.

The fer­til­ity rate has been fall­ing in most re­gions of the world over the last sev­eral decades, and this de­cline has been the main fac­tor driv­ing pop­u­la­tion ag­ing. The world’s to­tal fer­til­ity rate has dropped by about half, from 5.0 chil­dren per woman 60 years ago to 2.5 chil­dren per woman more re­cently. The de­cline in global fer­til­ity rates will con­tinue dur­ing the com­ing decades.

An econ­o­mist at Bank of Amer­ica in Sin­ga­pore has said that de­mo­graph­ics are use­ful pre­dic­tors of real GDP growth, and that Ja­pan’s ex­pe­ri­ence sug­gests an ag­ing pop­u­la­tion will weigh on ex­pan­sion and property.

WORK­ING- AGE POP­U­LA­TION NOT MATCH­ING NEEDS OF MAR­KET

In their 2012- 2016 de­vel­op­ment plan NESDB re­ports that the cur­rent work­ing age pop­u­la­tion does not have the per­ti­nent ed­u­ca­tion and skills to match the needs of the la­bor mar­ket. Ad­di­tion­ally, the man­u­fac­tur­ing sec­tor has shifted its re­quire­ments from a high de­mand for lowskilled la­bor to re­quir­ing a work force that pos­sesses the so­phis­ti­cated man­age­ment and tech­ni­cal skills nec­es­sary for man­u­fac­tur­ing high qual­ity and high value prod­ucts.

NESDB con­cludes that un­der­em­ploy­ment is be­com­ing a ma­jor con­cern, as most of the pro­duc­tion sec­tor has not yet shifted to­wards em­ploy­ing high- skilled work­ers in­stead of a la­bor- in­ten­sive work­force. The hu­man re­source de­vel­op­ment sys­tem does not yet have the ca­pac­ity to bring the qual­ity of the mid­dle- and low- level work­force to higher lev­els. It is es­sen­tial that the work­force pos­sesses higher skills in or­der to com­pete with other AEC economies.

The pro­por­tion of the work­ing- age pop­u­la­tion started to de­cline a few years ago. It means that more peo­ple exit the la­bor mar­ket than en­ter it and con­se­quently there are less employees in the pool from which you hire. Thai­land’s work­ing pop­u­la­tion is ex­pected to peak in 2017. In­ter­est­ingly, China has hit their peak al­ready; 2012 was the first year in 50 years that China had less peo­ple in the la­bor mar­ket than the year be­fore.

In Thai­land, the pro­por­tion of the work­ing- age pop­u­la­tion was 67% a few years ago ( 42.9 mil­lion work­ing- age peo­ple) but is now start­ing to de­cline. NESDB predicts that we will only have 35.2 mil­lion in the la­bor force, which will rep­re­sent only 55.1% of Thai­land’s to­tal pop­u­la­tion in 25 years’ time.

DE­FER RE­TIRE­MENT, if POS­SI­BLE

If your or­ga­ni­za­tion still has a 55- year re­tire­ment age, it is time to se­ri­ously con­sider a change to 60 or even 65 as many coun­tries have in Europe. They say to­day’s 55- year- old baby boomer is yes­ter­day’s 35- year- old Gen X. Healthy liv­ing, from di­et­ing to ex­er­cis­ing, are rea­sons why we are now in much bet­ter shape even late in our lives.

Putting off re­tire­ment would be an ex­cel­lent op­tion to Thai­land’s con­tract­ing la­bor force and ag­ing so­ci­ety. NESDB re­cently sug­gested that the pri­vate sec­tor boosts the num­ber of el­derly peo­ple in the work­force. We should en­cour­age se­nior peo­ple in our or­ga­ni­za­tions to keep work­ing af­ter they reach re­tire­ment age. Com­pa­nies should cre­ate jobs that suit the se­niors’ life­styles and ca­reer paths.

IM­PLE­MENT EM­PLOYEE VALUE PROPO­SI­TION

If you think it is in­creas­ingly dif­fi­cult to find staff for your or­ga­ni­za­tion, I’m afraid you ain’t seen noth­ing yet! We are talk­ing about a de­mo­graphic time bomb, which refers to the short­age of la­bor and how it threat­ens the economies of coun­tries around the world.

A shrink­ing work­force will in­evitably af­fect your own com­pany’s fu­ture growth po­ten­tial. It may no longer be ac­cess to cap­i­tal hin­der­ing or help­ing your busi­ness – it will be how suc­cess­ful you are at re­tain­ing your employees as well as how you ac­quire more tal­ent for your or­ga­ni­za­tion.

Stop here for a mo­ment – it is time, ladies and gen­tle­men, to act smarter than the com­pany on the other side of the street. Ap­ple, Google, Star­bucks and 50 other global brands might not find it very dif­fi­cult to at­tract and con­vince can­di­dates to join their or­ga­ni­za­tions. They have such strong name recog­ni­tion that in their par­tic­u­lar cases it is more of a seller’s mar­ket than buyer’s mar­ket. But the rest of us do not have the lux­ury of such high pub­lic vis­i­bil­ity.

You must de­velop an Em­ployee Value Propo­si­tion ( EVP) that clearly de­scribes real needs and clar­i­fies job expectations. Here are just a few of the many ques­tions that will help you on the way. They must be an­swered be­fore you start any sourc­ing of new staff. And let me warn you, it will take you the same amount of time, en­ergy, and anal­y­sis that you put into your an­nual busi­ness plan and bud­get. There is no way you can de­velop an EVP be­tween cof­fee breaks.

• Why would some­one who is good at this type of work want this par­tic­u­lar job?

• Why should any­one come and work

for you?

• What does this job of­fer that is unique or makes it most at­trac­tive to a po­ten­tial can­di­date?

• Why is do­ing this job at your com­pany bet­ter than do­ing the same job for a com­peti­tor?

• Why do peo­ple come to work at your com­pany and why do they stay? Is it lead­ing edge tech­nol­ogy? Fast growth? In­dus­try rep­u­ta­tion? Work- life bal­ance? How does it dif­fer­en­ti­ate you from your pri­mary com­peti­tors?

• What is your com­pet­i­tive com­pen­sa­tion and ben­e­fits plan? 12 or 13 months guar­an­teed pay, sign- on bonus, per­for­mance in­cen­tives, com­pany car, med­i­cal cover, prov­i­dent fund, for em­ployee or for fam­ily too? Flex time, free park­ing at the of­fice build­ing?

Re­mem­ber, ap­pli­cants or can­di­dates are a per­ish­able com­mod­ity. It is the only ‘ prod­uct’ I know of that can speak. They can say no to be­ing ‘ sold’ to your or­ga­ni­za­tion. The bet­ter ones are quickly turned off by un­re­spon­sive­ness, which is of­ten in­ter­preted as a lack of ini­tia­tive or se­ri­ous­ness. Re­sumes may look like a pile of pa­per­work on your desk but they really are not. If you do not act with a sense of ur­gency and are not pre­pared with an in­tel­li­gent EVP when meet­ing fu­ture employees, the con­trac­tion in the la­bor force will hit you hard be­fore it hits your com­peti­tor.

Tom Sorensen is a Head­hunter and Part­ner at Grant Thorn­ton in Thai­land. He can be con­tacted at tom. sorensen@ th. gt. com.

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