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“74312”,”8/10/2006 6:59″,”06BANGKOK4896″,


“Embassy Bangkok”,”UNCLASSIFIED”,””,”VZCZCXRO6460


DE RUEHBK #4896/01 2220659


R 100659Z AUG 06










E.O. 12958, AS AMENDED: N/A






1. Summary. Businesses, especially international companies, in

Thailand suffer from a lack of important skills among their

workforce as a result of an antiquated and ineffective education

system. Lack of English proficiency and critical thinking skills,

as well as a lack of career preparation in universities, are leaving

gaps in and inhibiting development of the Thai workforce. However,

changes in human resources management are attempting to address the

management issue by developing a Western administration style. The

labor force is also seeing an increase in the ratio of

college-educated workers, which a Thai think-tank claims is a

positive signal for the economic growth. This is one of two cables

examining the Thai education system and how it affects business

conditions. End Summary.




2. A significant obstacle for Thailand\’s continued economic growth

is the notable lack of English proficiency in the Thai workforce.

Thailand\’s economy depends on trade (more than 60 percent of GDP)

and Foreign Direct Investment and the lack of English skills is by

far the biggest personnel problem for foreign companies operating

here. The country manager for Capstone Group, a multinational human

resources management company, says that it is very difficult to find

someone with both the necessary skills for the job and sufficient

English aptitude. It is relatively easy, however, to find

applicants that have the right skill set to meet an employer\’s

needs, but not the language skills.


3. According to an American Chamber of Commerce in Thailand

(AmCham) source, foreign companies are currently forced to promote

English proficient employees to higher positions over non-English

speaking employees that have better qualifications. He believes

that the English problem is the result of an absence of English in

the environment and culture, not only an unsuccessful school system.

English is hardly spoken outside of class and is not

well-integrated in society.




4. The education system\’s style of teaching-monotonous learning,

lack of creative thinking (see septel), and also a lack of

internship programs are reflected in slow management development.

It takes longer for Thais to develop management skills because they

are not used to thinking \”outside the box,\” and there is a long

adjustment period to \”real-life\” work. According to the country

manager at Capstone, many Thai employees are reluctant to take a

management position and concomitant responsibilities. They are

\”complacent with their position and do not want to think more than

they have to.\”


5. The Thai management style also reflects the education system and

can hinder the growth of many Thai companies. According to the

Capstone Group country manager, Thai managers dictate instructions

to their employees and leave little room for critical thinking and

employee development, which reflects the teaching-style of local

educators. The employee rarely has a chance to find solutions

independently and this only prolongs the time it takes for employees

to develop management skills.




6. Employees entering the workforce straight out of college

typically have very little work experience and are usually

unprepared for \”real-world\” work. College programs in Thailand lack

internship and career preparation programs, which is part of the

reason that the Department of Labor enacted a statute that makes it

mandatory for companies to provide in-house training. Thai

companies also have no internship recruitment programs. It takes

significantly longer for new graduates to adjust to the work

environment than they do in Western countries, according to our





7. Recent press articles report a lack of skilled labor that has

investors worrying about Thailand\’s economy. However, speculation

about Seagate shifting $1 billion worth of new investment from

Thailand to Malaysia because of either a lack of high-skilled labor

or the current political instability is untrue, according to a

Malaysian Seagate representative. Seagate Thailand has remained

very secretive about the issue because of media sensitivity and

speculation. The representative said that decisions made at Seagate

are strictly internal, and did not elaborate on their future course

of action. She did mention that \”[Seagate is] not even moving out

of Thailand,\” noting that Seagate has been in Thailand for over 25

years and would not have been here if there were no supply of

skilled laborers. Comment: Despite Seagate\’s denials that a shortage

of skilled labor was the cause of their sudden change of investment

plans, they still refuse to tell anyone, including ourselves, what

motivated the change despite all the press speculation. End



BANGKOK 00004896 002 OF 003




8. IBM Thailand told us that finding enough programmers and code

writers to fulfill their needs is not a problem. The needs that are

not found in Thailand are high-level IT specialists, specifically IT

architects, IT consulting, systems and network engineers, and

mainframe specialists. IBM will either train employees themselves

to fulfill these needs, or import the labor from abroad, mostly

India and Singapore. However, only about 10 percent of high-skilled

labor is imported and IBM has several in-house training programs to

develop current employees into positions that are needed.


9. Our source at Capstone Group told us that the lack of IT

consulting skills has to do with the lack of critical thinking. IT

consultants usually do not have the critical thinking ability to

analyze presales and sales causality, although sales in the IT

sector are generally okay.


10. Several hundred fresh college graduates apply to IBM each year,

and only about 5 – 10 percent have the skills necessary to qualify

for a position at IBM. But these numbers are usually enough to meet

the labor demands, according to our IBM source. When they enter

IBM, their skills are good enough to contribute right away, though

IBM still puts them through a training program that is specialized

for entry-level positions.


11. IBM confirmed that English skills were sub-par compared to its

neighboring countries, but only on a speaking level. This is not a

large problem, says an IBM spokesperson, because most communication

in English is done through emails or other written forms. English

speaking skills are only a problem when they have to do





12. Sales and marketing are in constant need by companies. Finance

and business development are also needs in the current economy, says

an AmCham source. While the lack of skilled workers in these areas

is somewhat of a constraint, this source believes that it reflects

more the growth of the economy and the lag time in producing new

graduates than any inherent structural problem.


13. The oil and gas industry is quickly growing in Thailand due to

large foreign investment. But the Thais are not able to supply

enough skilled workers to keep up with the industry demand,

according to our source from Capstone Group. There is demand for

construction engineers, structural engineers, chemical engineers,

and industrial engineers. The industry is expanding faster than the

universities can turn out graduates.


14. The demand for managers in the construction industry is also

not being met. There are many good project managers in Thailand but

there is a limit to their capability for creativity. Thailand\’s

construction labor force does not have the creativity for advanced

architecture and interior design. According to the Capstone Group

country manager, most interior design companies are made up

primarily of foreigners. Contract management and quality surveyors

are difficult to find.


15. The manufacturing industry lacks the skilled managers that are

needed to push manufacturing into advanced levels. Since there is a

significant manufacturing sector in Thailand, this may limit future

expansion in the long run. The next level of manufacturing consists

of lean manufacturing and six sigma manufacturing, which involves

highly refined products and continuous quality improvement. Usually

only Americans and European manufacturing firms have the necessary

skills and few Thai manufacturers do. The shortage of industrial

engineers explains why Thai manufacturing is currently stuck, says

Capstone Group.




16. Corporate human resources traditionally were only in charge of

administrative tasks, but a refocus took place about 3 years ago.

Human resources are starting to focus on the individual employee and

to help them develop. Management style is changing and becoming

more Western, focusing on individual development and freedom to

solve problems, rather than dictating directions. Thai companies

are aware of the downfalls of the traditional style and many

companies are replacing managers that don\’t adopt Western-style



17. Increased availability of college graduates has altered the

makeup of the employed labor force. The National Economic and

Social Development Board (NESDB) call this a \”higher standard of

education in the workforce,\” because the number of employed college

graduates are consistently increasing, signaling a positive trend in

the overall educational level of the labor force. (Septel looks at

some of the remaining problems of education).


18. An associate Professor of Economics at NIDA University

elaborates on this trend. The increase in the supply of students


BANGKOK 00004896 003 OF 003


causes an increase in the demand for institutions that offer

degrees. Subsequently, several institutions and universities have

opened to offer degrees but many of these institutions are

considered of low quality. The supply of college graduates with

low-quality educations from \”no-name\” schools has increased greatly.

Many of the graduates have a hard time finding employment because

of the increased number of college graduates and competition, and

the lesser value employers\’ place on degrees from less prestigious

institutions. The supply of students that attend these schools,

however, are constant because of the difficulty of admission into

top-notch schools and the increasing number of students graduating

secondary school.


19. Comment: The deficiencies in the labor force are heavily

related to the education system. As the education system

continuously fails to produce consistent English and critical

thinking skills needed to be successful and politicians do not act

on education reform promises, we can expect to see these issues

continue. Without a fundamental change in the education system it

will be very difficult to solve these problems. There has been a

consistent decline in students\’ science and math scores from

standardized tests (see Septel), and it is a possibility that the

education system may not be able to provide the engineers demanded

in the near future, especially for high-level IT and advanced

engineering positions. For Thailand to achieve the next level of

value-added in the global economy, the government must focus on

increasing the skills of the Thai labor force.




Written by thaicables

July 13, 2011 at 5:17 am

Posted in Education, Unclassified

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