Thailand Caught Between Economic Levels : Labor: Competition from lower-wage nations has meant layoffs, but work force is not educated enough to compete in high-tech areas.

Textile worker Supatra Bun-Akaraj has never heard the term sunset industry , but she now knows what it feels like to be part of one.

Arriving in the capital from the countryside 20 years ago, she easily found a job at Thai Durable Textile, one of thousands of factories setting up on the outskirts of Bangkok during Thailand’s first wave of industrialization.

The layoffs began a few years ago, to make way for labor-saving machines. This year, the company knocked another 397 of Supatra’s colleagues off the payroll. Supatra now wonders how much longer she will have a job.

“I would not recommend for anyone to work in this factory--probably not in this business--but at my age I have no other choice,” says the 38-year-old.

With only a primary school education, Supatra says, she has little chance of finding a new job.

It’s a problem many more Thais will soon face. In the past decade, Thailand’s economic growth has been fueled by export-oriented industries dependent on an abundance of low-skilled, low-wage workers. But those industries have lost much of their competitive advantage because Thai wage increases have outpaced labor costs in other developing Asian nations--including China, Indonesia, Vietnam and India--that are now competing in international trade.

Thus, within a relatively short period of industrialization, Thailand is under pressure to make a transition to more sophisticated, higher-skilled industries.

Currently, Thailand’s main manufactured exports are textiles and garments, jewelry, canned and frozen seafood, footwear and electronics parts. In total, exports account for more than 37% of Thailand’s gross national product. But exports are expected to grow only 9.5% this year--the lowest rate in a decade--leading some analysts to predict that Thailand’s economy will grow at a slower pace over the next two years.

Thailand’s export drive really took off less than a decade ago with a massive inflow of foreign investment from Japan, Taiwan and elsewhere in Asia.

But this surge of funds cranked up wages so that Thailand is no longer a low-cost labor locale relative to many other Asian countries. In 1981, the daily minimum wage was $2.50, and was still only $3 in 1989. But today it is $5 in Bangkok, which has most of the nation’s industry.

A serious problem for Thailand in taking the economy to a higher level is that the education and skill of the work force has not kept pace. More than 80% of Thai workers in a labor force of 34 million has a primary school education or less. Only about 4% of school-age youth make it through universities.

Thailand has a shortage of skilled workers across the board--from doctors to auditors and engineers to middle managers. Thai universities are turning out roughly 5,000 engineers each year, but the country needs about four times that many. Such a shortage limits how quickly and efficiently Thailand can absorb new technologies.

Analysts say it could be years before Thailand’s education system produces enough skilled workers needed for the next stage of industrialization.

“There are a number of question marks about how well Thailand will manage this transition in the next five to 10 years,” says Graham Catterwell, the Thailand representative of Crosby Research Ltd.

“Our educational composition in the work force now is worse than what it was in Korea 30 years ago, in that we have a higher proportion of workers with just a primary school education,” says Chalongphob Sussangkarn, an expert in human resources.

The government has begun allocating increased amounts of money to the Education Ministry, both in absolute terms and as a percentage of the total government budget. The country’s vocational training program is also being expanded to reach 600,000 workers annually, roughly matching the number of people who enter the job market each year.

For more sophisticated training, however, the private sector is increasingly having to provide for its own needs by opening technical institutes, sometimes with public universities.

Many Thai industries, such as textiles and garments, have the potential to regain competitiveness and grow if they can modernize and shed low-skilled workers, experts say.

But massive layoffs could lead to a new period of labor unrest. The most recent Thai Durable layoffs, which included six union leaders, provoked a worker takeover of the factory during a week of massive street protests that subsided only after the government decided to mediate.

Complicating Thailand’s efforts to transform the economy are such issues as government corruption, inadequate infrastructure and inefficient government regulations. Such issues were recently addressed by a Japanese businessman who admonished an elite Thai audience to implement changes, including increasing the number of compulsory school years to nine years from six.

The willingness of the usually reticent Japanese to speak out on Thai domestic issues reflects Japan’s huge investment in Thailand.

The most immediate problem for the country, however, is the worldwide economic slowdown.

“If there is lots of demand for everything, it is easier to move up-market,” says the representative of a foreign research firm’s office in Bangkok.

“But right now there is a glut of everything, and the people who have already been making the high-tech things--Korea, Taiwan, Japan, the U.S.--they are still making them . . . so it is very hard for a country like Thailand to break into producing high-tech things when there are already too many high-tech things and the prices are dropping.”

Even under the best of circumstances, “it would take Thailand 15 more years to achieve the technological capability that Korea has.”