Access to Education and Formal Employment in Thailand Dr. Jessica Vechbanyongratana Labour and Management Development Centre Faculty of Economics Chulalongkorn University

Social Protection in Thailand Universal Social Protection Schemes: Universal Social Protection Schemes: Health (Universal Coverage Scheme) Health (Universal Coverage Scheme) Elderly (Universal Tax-financed 500 Baht Scheme) Elderly (Universal Tax-financed 500 Baht Scheme)

Social Protection in Thailand Limited Comprehensive Coverage Schemes (Government and SSO) Limited Comprehensive Coverage Schemes (Government and SSO) Sickness Sickness Invalidity Invalidity Death Death Maternity Maternity Child Allowance Child Allowance Old age Old age Unemployment Unemployment Comprehensively Covered Population Comprehensively Covered Population Government Workers (7% of population) Government Workers (7% of population) Private Sector under SSO Program (15% of population) Private Sector under SSO Program (15% of population)

Social Protection in Thailand Approximately 22% of population covered by comprehensive social protection schemes Approximately 22% of population covered by comprehensive social protection schemes Informal economy encompasses 76% of Thai population Informal economy encompasses 76% of Thai population Majority of working age adults are without comprehensive protection, including job loss and on-the-job injury protection Majority of working age adults are without comprehensive protection, including job loss and on-the-job injury protection 2011 Bangkok floods highlighted this issue 2011 Bangkok floods highlighted this issue

Social Protection in Thailand Are there systematic differences between comprehensively covered and uncovered workers in terms of education? Are there systematic differences between comprehensively covered and uncovered workers in terms of education? What can youth do today to increase the probability of gaining formal sector employment? What can youth do today to increase the probability of gaining formal sector employment? What can the government do to promote better access to education and formal sector employment? What can the government do to promote better access to education and formal sector employment?

Presentation Overview Overview of education policy, trends, and access in Thailand Overview of education policy, trends, and access in Thailand Educational attainment and formal labor market outcomes Educational attainment and formal labor market outcomes Policies to encourage transition to non- compulsory education Policies to encourage transition to non- compulsory education Fallacy of composition and Thai labor market dynamics Fallacy of composition and Thai labor market dynamics Discussion Discussion

Overview of Education Policy, Trends, and Access in Thailand

Thai Education Policy Guarantees 15-years tuition-free education from pre-primary through M.6 Guarantees 15-years tuition-free education from pre-primary through M.6 Mandatory education P.1 – M.3 (since 2003) Mandatory education P.1 – M.3 (since 2003) School materials subsidy policy School materials subsidy policy 500 baht for school uniforms 500 baht for school uniforms 230 baht for school supplies 230 baht for school supplies Equity policy Equity policy

Source: Ministry of Education

Access to Education Lower secondary schooling Lower secondary schooling Government mandate and 15-years free education policy have led to almost universal access Government mandate and 15-years free education policy have led to almost universal access Upper secondary education Upper secondary education Household income Household income Despite “free” education, peripheral expenses can be cost prohibitive Despite “free” education, peripheral expenses can be cost prohibitive Investment in schooling vs. earning today Investment in schooling vs. earning today Tertiary education Tertiary education Transition expenses reduce access Transition expenses reduce access Local institutions mismatch with student interests/abilities/labor market conditions Local institutions mismatch with student interests/abilities/labor market conditions Lack of education/career counseling Lack of education/career counseling

Educational Attainment and Informal/Formal Labor Market Outcomes

Occupations by Education Level Labor Force Survey ( rd quarter) Labor Force Survey ( rd quarter) Informal Sector Informal Sector Agriculture/Fishing Agriculture/Fishing Elementary Occupations (street vendors, laborers, domestic workers) Elementary Occupations (street vendors, laborers, domestic workers) Bangkok Taxi/Motorcycle Taxi Bangkok Taxi/Motorcycle Taxi Formal Sector Formal Sector Government Government Salaried Employees Salaried Employees

Employment in Agriculture/Fishing by Education Level

Probit Analysis Other controls: Urban, Region, Sex

Employment in Elementary Occupations by Education Level

Probit Analysis Other controls: Urban, Region, Sex

Employment as Bangkok Taxi/Motorcycle Driver by Education Level

Probit Analysis Other control: Age

Employment in Government by Education Level

Probit Analysis Other controls: Urban, Region, Sex

Employment as Salaried Worker by Education Level

Probit Analysis Other controls: Urban, Region, Sex

Main Observations Workers who finish non-compulsory upper secondary or tertiary schooling have a higher likelihood of working in the formal sector Workers who finish non-compulsory upper secondary or tertiary schooling have a higher likelihood of working in the formal sector Older workers are more likely to have government jobs Older workers are more likely to have government jobs Younger workers are more likely to be salaried workers Younger workers are more likely to be salaried workers

Policies to Encourage Transition to Non-compulsory Education

Increasing Transition to Upper Secondary Education in Thailand Conditional Cash Transfers (CCT) Conditional Cash Transfers (CCT) CCTs are cash transfers to households with children conditional on school attendance CCTs are cash transfers to households with children conditional on school attendance CCTs very successful in increasing enrollment in non-compulsory schooling (See Slavin 2010) CCTs very successful in increasing enrollment in non-compulsory schooling (See Slavin 2010) Policy Suggestion Policy Suggestion Move from equity subsidy policy to CCTs for low- income communities Move from equity subsidy policy to CCTs for low- income communities

Increasing Transition to Tertiary Education in Thailand Bridge grants Bridge grants Students have access to government loans after tertiary education enrollment, but do not have the resources to transition Students have access to government loans after tertiary education enrollment, but do not have the resources to transition Grants in upper secondary school increase likelihood that low-income students transition to university education (Vechbanyongratana and Warunsiri 2011) Grants in upper secondary school increase likelihood that low-income students transition to university education (Vechbanyongratana and Warunsiri 2011) Bridge grants can facilitate better matching between student interests/student abilities/labor market conditions Bridge grants can facilitate better matching between student interests/student abilities/labor market conditions

Fallacy of Composition and Thai Labor Market Dynamics

Fallacy of Composition Individuals are more likely to be employed in the formal sector if they transition to non- compulsory education Individuals are more likely to be employed in the formal sector if they transition to non- compulsory education However, a policy increasing average levels of education will not necessarily lead to more formal sector employment However, a policy increasing average levels of education will not necessarily lead to more formal sector employment

Thai Labor Force Educational Attainment by Age Source: National Statistical Office LFS rd Quarter

Rising Supply of Educated Workers The increase in the relative supply of female university graduates to high school graduates has led to decrease in the relative income (Warunsiri and Vechbanyongratana 2012) The increase in the relative supply of female university graduates to high school graduates has led to decrease in the relative income (Warunsiri and Vechbanyongratana 2012) What will be the effect of the rising supply of university graduates on the likelihood of formal sector employment? What will be the effect of the rising supply of university graduates on the likelihood of formal sector employment?

Source:

On an individual level, encouraging transition to non-compulsory education increases the likelihood of formal employment and social protection On an individual level, encouraging transition to non-compulsory education increases the likelihood of formal employment and social protection At a macro-level, growing supplies of graduates will increasingly be in competition for scarce formal sector jobs unless the formal sector expands At a macro-level, growing supplies of graduates will increasingly be in competition for scarce formal sector jobs unless the formal sector expands

Discussion

Discussion Will formal sector employment become increasingly out of reach even for workers who complete non-compulsory schooling? Will formal sector employment become increasingly out of reach even for workers who complete non-compulsory schooling? Can better education/career counseling help channel students into education leading to formal sector employment? Can better education/career counseling help channel students into education leading to formal sector employment? What are barriers to increasing formal sector employment opportunities? What are barriers to increasing formal sector employment opportunities? Can financial literacy outreach to young people and working age adults lead to increased voluntary participation in comprehensive social protection schemes? Can financial literacy outreach to young people and working age adults lead to increased voluntary participation in comprehensive social protection schemes?