Wage moves spark fears of big jump in jobless.

It is expected that the government would face a high unemployment rate in the near future. Manufacturers will consider reducing or just maintaining levels of both workers and office staff to keep costs down. They will try to maximise the productivity of remaining staff to cope with higher production costs.

The unemployment rate is 0.8 per cent. There are about five million unskilled workers out of 23 million registered workers. In manufacturing, more than 3 per cent of production costs is claimed to be labour costs.

Aat Pisanwanich, director of the International Trade Studies Centre, said last week that although Thailand currently has low unemployment, the rate could gradually rise as many industries have moved to automating production, downsizing operations, recruiting foreign workers and transferring investment to other countries.

"Employers will shift to getting their workforce from neighbouring countries with the free flow of labour under Asean, but low human resource development in our country," he said.

Under the Asean Economic Community, Thailand has committed to opening its market to foreign skilled workers in 2015. The higher labour cost without skill development here could encourage workers with low and medium skills from Vietnam, Indonesia and the Philippines to flood into Thailand. After finding higher labour costs without higher productivity here, foreign investors would think about relocating or starting projects in other countries in Asean.

According to the Board of Investment, the cost of workers in Vietnam is Bt103-Bt126 a day, in Indonesia Bt225 and in the Philippines Bt290.

Many large companies plan to focus more on automated production. For instance, the country's leading conglomerate has recently imported many automatic packaging machines to replace workers.

A higher employment rate would also create a domino effect on enterprises here, as they would have to pay more to their existing workers. Many companies would also try to increase the productivity of current workers rather than employ new ones.

To prevent future problems, the government should formulate a plan to develop human resources and education as one of its priorities.

Businessmen both local and foreign are concerned that the government has only promoted raising wages and salaries early next year without putting in place a concrete plan to boost workers' skills and reform the education system to develop human resources.Top executives from foreign chambers noted that Thailand has failed to develop human resources to meet market requirements for several years.

"The education system needs to be restructured by increasing vocational students and technicians rather than focusing on ordinary (Matthayom Suksa) study," one said.

About 400,000 new university graduates enter the labour market each year, but only 25 per cent of them or 100,000 will land a job. In contrast, more than 90 per cent of about 150,000 new vocational or technical school graduates each year will be hired.

However, vocational schools have an image problem that must be fixed. Brawls between students from rival institutes have caused parents and students to worry about studying at vocational and technical schools.