1. Social crisis and labor market regulation in Thailand Presentation for the visiting professor’s workshop “Global Labour Market Regulation and Changing Welfare Conditions, Institute of Political Economy, Carleton University, February 13, 2009 Johannes Dragsbaek Schmidt

2. Bullets 1) Crisis – Dangers and Opportunities 2) “Creative destruction” or Robbery in full Daylight! 3) Strings and Conditionalities of the IFIs 1997 – hypocricy in 2009 4) De-regulating Labor Markets/Targetting the poor and avoiding social chaos 5) Introducing Flexibility in Labor Markets/Impacts 6) Growing inequalities - Distributional consequences 7) Informalization of Labor Markets 8) Increased Social and Political Instability 9) Concluding Remarks

3. Strings and Conditionalities of the IFIs 1997-2009 Opening up for foreign ownership of shares in local companies and finance Abolishing restrictions on FDI Tight fiscal and monetary policies without consideration for social consequences No control of financial flows Imposition of full guarantees to creditors Rapid structural reform measures – stringent financial standards and corporate restructuring Privatization of SOEs, education and health etc Get ”the fundamentals right” in Asia and the South but not in the North

4. De-regulating Labor Markets/Targetting the Poor and Avoiding Social Chaos Abolishing contract-based regular employment Easier to hire and fire (Flexibility) Enterprise unions No minimum-wage (or artificially low if necessary) Fear of social chaos– intro of ”social welfare” Tripartite negotiations – never implemented

5. Introducing Flexibility in Labor Markets Reforms of labor laws – governments developed ”harmonious” industrial relations/partnerships Reducing employment protection Allowed for collective dismissals No limits on work hours More power to management in terms of outsourcing and use of irregular workers Lowering wages to become competitive

6. Outcomes: Thailand has the longest work hours in the world – lowest number of annual holidays Weakening of trade union membership and density and bargaining power Increased unemployment Enormous increase in non-standard/informal workers A dual labor market massive social costs Workers paying for the crisis (AGAIN)

7. Informalization of Labor Markets Thailand pre-crisis 1997- 30% – today 2009 - 53% and growing Increase in wage gaps Increase in employment insecurity Slow down in government investments including employees pay of skill upgrading Increase in part-time and temporary employment Gender impact – worst for women lead to increase in prostitution, human trafficking and a general criminalization of the economy

8. Result of twin crises: Increased Social and Political Instability Has led to casualisation of labor and growing job insecurity Increasing dualism between formal labor market and informal – 3D – dirty, dangerous and difficult Thailand – recent military coup no. 18 since 1932 – 3 Primeministers in 6 months Increasing social and political instability – in search of a new social contract