Asean, the AEC, and Changes in the Labour Market – Part II

March 27th, 2013
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With the impending Asean Economic Community (AEC) set to open in 2015, PeopleServe is taking a closer look at how it will affect changes in the labour market.

Dr. Prasarn Trairatvorakul, Governor of the Bank of Thailand

Dr. Prasarn Trairatvorakul, Governor of the Bank of Thailand

Our approach is in keeping with the view expressed by Dr. Prasarn Trairatvorakul, Governor of the Bank of Thailand, who stated that, “One of the greatest risks that may arise is not from the AEC itself, but from ensuring that businesses and stakeholders understand what exactly is at stake. The greatest threat is remaining complacent and not preparing for these changes. What we can do is, to the best of our ability, paint a picture of what can we realistically expect, in order to prepare to reap the benefits and face the challenges that lie ahead.

What to realistically expect…

A cursory knowledge of the AEC is sufficient to understand that no one can say for certain what will actually change come 2015. We are in uncharted waters. But as Dr. Prasarn and others have pointed out, the new regional cooperation will likely have the greatest labour impact on two Thai industries – medicine and tourism. Taken together, they are an interesting study in a genuine flow of labour.

Will we lose the best Thai doctors?
Proper HRM strategies may be a significant factor in predicting this….

Incentivising medical professionals properly and engaging in on-going Human Resource Initiatives could hold the key to preventing massive labour out-migration.

Thailand does risk brain-drain, as was seen within the EU, where highly skilled professionals from Southeastern and Central Europe moved into Western Europe. Similarly, there are persuasive economic speculations that top Thai physicians and medical professionals will migrate to places like Singapore, where the pay is highest in the Asean region.

People like Dr. Prasarn see the movement of labour as necessary, inevitable and critical to a single market and production base, saying it “cannot be complete without the free movement of factors of production, which includes the free movement of labour. The free flow of skilled labour is complementary to other freedoms, such as freedom of capital flows (particularly FDI) and services, and together they have important implications for productivity growth and investment.”

What about an influx of labour?
How can we guarantee compliance with Thailand’s Alien Employment Act?

As the ASEAN ECONOMIC COMMUNITY BLUEPRINT lays out, legislation regarding this will remain country specific; “Managed mobility or facilitated entry for the movement of natural persons engaged in trade in goods, services, and investments, in accordance with prevailing regulations of the receiving country.”

The tourism industry is one that will likely see an influx of labour.  Likely, non-Thais will prove cost-effective, skilled workers with suitable-levels of English, making them appealing hires. What does this mean for HR operations? Perhaps the first place to look is to the Alien Employment Act – how exactly will legislation be written and how will it be enforced?

Dr. Prasarn Trairatvorakul, offers some advice, “In Thailand, for instance, the Alien Employment Act continues to prohibit foreigners from being employed in certain professions, such as civil engineering or legal services, while other professions are regulated by professional associations. Going forward, moves need to be taken to further enhance the free flow of labour by 2015, such as through increased use of mutual recognition of professional qualifications.”

PeopleServe continues to look at these issues and more in upcoming editions…