Impact of Global Economic Crisis on the Employment and Migrant ...

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The flows <strong>of</strong> factors <strong>of</strong> production are the key elements <strong>of</strong> the recent globalization. These flowsalter the availability or the scarcity <strong>of</strong> the factors <strong>of</strong> production. There are two highlightedfactors <strong>of</strong> production: labour and capital.These days, domestic workers can be easily replaced by foreign workers. Either high skilled orlow skilled workers move from their country <strong>of</strong> origin to another country with faster and cheapertransportation. Normally, high skilled workers are welcomed to the destination country. On thecontrary, low-skilled migrants are less welcome, as they are possibly the reason for lowerwages <strong>of</strong> the low skilled locals. The ASEAN(2008) commits free flow <strong>of</strong> highly-skilled labour asone <strong>of</strong> in five free-flow elements without any explicit commitment about the low skilled workers 2The other important factor <strong>of</strong> production is capital. An increase in capital inflows possiblyenhances the demand for either high or low skilled workers, depending on the labour or capitalintensive industry. The capital inflows are also believed to be the main source <strong>of</strong> technologicaltransferring. Multinational enterprises (MNEs) are crucial actors <strong>of</strong> globalization, as theysimultaneously embody the international transfer <strong>of</strong> the factor <strong>of</strong> production and intermediategoods. They are also emphasized on research and development (R&D) which benefits not onlythe destination countries but also the home countries (OECD, 2010). The R&D is contributed bythe capital investment, especially in the country capital-shortage country. The UN (2005)highlights the success stories <strong>of</strong> domestic companies in the electronic industry in Thailandwhich transferred knowledge and integrated themselves into the global economy.D. Change in domestic labour conditions and the labour marketThe domestic condition <strong>of</strong> the labour market has also dynamically changed. There are twomajor debates: education and female participation.Educated people normally represent the potential labour supply for high- skilled workers. Anincrease in educational accessibility changes the relative supply between high- and low- skilledworkers. Freeman (1994) suggests that larger wage gaps between high-skilled and low-skilledworkers in the United States and the United Kingdom can be explained by a reduced supply <strong>of</strong>more-educated workers in the 1980s and 1990s.Table 3.1 shows that women’s participation rates in developed countries have increased 3 .Chantavanich, et al (2007) inferred that cheap migrant workers help increase the educationalopportunity <strong>of</strong> middle-class females because cheap workers do domestic work instead <strong>of</strong> theirduties. It draws the female graduates to the labour market, not to house work.Strikingly, male and female labour participation in developing countries is different from indeveloped countries. The figure shows that in developing countries, both male and femaleparticipation has declined, while the number <strong>of</strong> educated people has increased. It should benoted that the female participation rate in Southeast Asia has remained high due to the regionaland historical practices. Another hypothesis which possibly explains this phenomenon is that2 The other four elements are (i) free flow <strong>of</strong> goods; (ii) free flow <strong>of</strong> services; (iii) free flow <strong>of</strong> investment; (iv)free flow <strong>of</strong> capital. One in the action plans is Develop core Competencies (concordance <strong>of</strong> skills andqualifications) for job/occupational skills required in all services sectors by 2015.3 Given the cultural and gender-differentiated patterns <strong>of</strong> participation <strong>of</strong> each country.
job seekers with high education prefer to work in the formal sector. Highly educated graduateschoose to be unemployed and wait for the possibility to access into the formal sector rather thanbe employed in undesirable or low wage jobs (Susangkarn, 1987).Table 3.1 Labour Participation: Classified by GenderMale 1980 1985 1990 1995 2000 2005 2008Growth1980-2008Australia 78.5 75.9 75.7 74 72.3 72.2 72.5 -8%Japan 79.8 78.2 77.4 77.7 76.3 73.4 73.2 -8%Develo Singapore 81.6 80.6 79.3 78.9 78.7 77.3 75.9 -7%ped UK 76 74.2 74.1 70.6 70.0 69.3 69.7 -8%US 77.3 76.1 75.8 74.6 74.4 72.6 72.3 -6%China 87.5 85.9 85 84.9 83.6 80.9 79.7 -9%DeveloLaoP.D.R. 84.7 83.3 83 82.4 81.3 79.7 78.7 -7%ping Thailand 86.9 87.5 87 83.3 81.3 81.1 81 -7%Female 1980 1985 1990 1995 2000 2005 2008Growth1980-2008Australia 44.8 46.2 52.1 53.6 54.6 57 58.4 30%Japan 47.6 48.6 50.1 50 49.2 48.4 48.6 2%Develo Singapore 44.7 44.9 50.7 49.7 52.3 53.5 54.2 21%ped UK 44.7 48.3 52 51.8 53.5 54.7 55.2 23%US 51.1 54.1 56.9 58.4 59.5 58.6 58.9 15%DevelopingChina 71 71.6 73 72.3 70.9 68.5 67.5 -5%LaoP.D.R. 81 80.3 80.3 80.1 79.5 78.5 77.8 -4%Thailand 75.5 75.6 75.1 66.3 66.1 66.2 65.9 -13%Note: Labour force participation rate is the proportion <strong>of</strong> the population ages 15 and older that iseconomically active: all people who supply labour for the production <strong>of</strong> goods and services during aspecified period.Indicator: Labour participation rate, male (female) (% <strong>of</strong> male(female) population ages more than 15years old)Source: International Labour Organization, Key Indicators <strong>of</strong> the Labour Market database.Catalog Source: World Development IndicatorsE. Institutional effects and the labour marketUnder globalization, international cooperation and internationalization <strong>of</strong> business increase itsignificance. The larger size <strong>of</strong> Mutinational firms is also weakening the unions’ power (Scruggsand Lange, 2002). However, the minimum wage is set aiming to reduce wage inequality byraising wages in the lower end <strong>of</strong> the wage distribution. The minimum wage is possibly set tomaintain low wages to encourage national competitiveness. The minimum wage is claimed toenhance a greater employment rate for low-skilled groups (Neumark and Wascher, 2006).Thailand also falls into this category. The economic crisis does not effect on the minimum wagesetting, but the wage mechanism is intervened.
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