Labour Market and Economic Performance in Thailand and the Philippines: Supply-Demand Imbalance and the ASEAN Economic Community (AEC)

Abstract

In the 1960s, Thailand and the Philippines had similar population sizes. However, the different policies on economic development and population control affected the rate of economic growth. Thailand overtook the Philippines in terms of GDP per capita in the 1980s, as Thailand strongly promoted foreign direct investment in manufacturing sectors to absorb surplus labourers from the agricultural sector. It also initiated one of the world’s most successful national family planning programmes and gained a demographic dividend. In contrast, the Philippines lagged behind because it was not dedicated to the promotion of foreign direct investment and its family planning programme was ineffective. When the labour supply exceeds demand, unemployment and poverty problems increase. The Philippine government, faced with an overpopulation problem, has adopted a labour export policy for the last four decades. In contrast, Thailand has struggled with labour shortages, particularly unskilled labours, and an increasing proportion of the elderly. In 2015, the Association of South East Asian Nations (ASEAN) will form a single market, the ASEAN Economic Community (AEC). It is expected to encourage more regional trade and investment and greater intra-ASEAN labour mobility. Furthermore, the integration will help increase ASEAN competitiveness and adjust the imbalances in labour supply and demand among member countries. This article aims to provide a comparative analysis of the labour problems between Thailand and the Philippines using panel data compiled from labour force surveys and educational statistics for the period 1960–2013. The employment opportunities for Thai and Filipino workers that might come with AEC and labour strategies needed ahead of AEC will also be discussed.