MAKING EDUCATION AND SKILL TRAINING PROGRAMS MORE INCLUSIVE: THE CASE OF THAILAND

Somchai Jitsuchon Nuntaporn Methakunavut Thailand Development Research Institute

1

Poverty and Inequality

Rapid improvement of overall poverty Poverty incidence fell from 45% (1986) to 8% (2009) The remaining poor tend to concentrate in rural area, Northeast and North regions Poverty Incidence

rural

Source: from Socio-Economic Surveys (SES) data, National Statistical Office

Poverty and Inequality

Poverty Profile:
Household with low education General labor, farm operator household
Poverty Incidence

Source: from Socio-Economic Surveys (SES) data, National Statistical Office 3

Poverty and Inequality

Increasing concerns over inequality ! Inequality remains high and largely persistent, with only a small sign of improvement recently. Partially causes social and political conflicts

Source: from Socio-Economic Surveys (SES) data, National Statistical Office

 The poorer households seemed to be doing better Narrowing gaps between the poorer and the middle-income household expenditure shares Changes of Wider gaps between the rich and these middle classes

Dissecting Change in Inequality

Income Decile
Source: from Socio-Economic Surveys (SES) data, National Statistical Office

Emerging Issue of missing middle If this situation persists, those escaping from poverty from below might run into the same middle
5

Low Performance of Middle Income

The economic return of midlevel education is lagging behind other levels The stagnation of real wage in industrial sector

Source: Lathapipat (2011)

Source: Siam Commercial Bank Economic Intelligence Center

Urgent Issue
Income prospect of mid-income subpopulation is at risk Need to make education and skill training more inclusive
Making higher education more accessible with quality Making mid-level education more relevant to market Providing effective skill training

Expected Achievement Speed up the narrowing of Thailand

7

Access to education by the poor school Impressive primary-secondary

enrollment rate
Education for all agenda since 1990 The 15-year free education since 2009

However limited access and chance of the poor and High drop-out rate esp. in higher education
Cost of education actually not fully free participation rates for 16-19 year-ol ds by household expenditure quartil Heavy burden from transportation cost e upper secondary (3,500 baht (100 US$) /person/year) col ledge Quality inequality of basic education
Source: Lathapipat (2011)

Education Quality
Status
21% of schools not pass quality requirement, most located in rural area PISA score of students on language, math , science and reading skills are below average level, and declining. Skills / knowledge of labor far behind firms expectations

Quality matters
School quality contributes to performance differential between students in urban and rural (Lounkaew, 2011) Once differences in cognitive skill are controlled, years of schooling provides only little influence on economic growth Teacher quality is the most important
(Hanusheck, 2011)
9

 Under Skill Development Promotion Act (2002), firm with lager than 100 employees are obliged to provide training to at least half of their workers, or else must contribute to Skill Development Fund
Rapid increase of workers received training (from 300,000 in 2005 to 4 million in 2008) 30% of the firm still failed to obey the law

Skill Training Quality

Training expenses are tax deductible, twice the actual spending

Got little attentions from firms

Several government, private-own, community based training centers Still large demand-supply mismatch because
Lacks of good training courses: do not match demands Lacks of good trainers No guarantees system indicating training to

10

Summary
1.Although poverty rate declined steadily, but some still facing unfavorable economic opportunities: access to higher level and quality education. 2.Even getting education up to high school level, its long-run economic return grows slower than those with either lower or higher education. 3.The income gap between these middle classes with the rich are thus wider while the gap with the poorer one narrower. 4.If this situation persists, those escaping from poverty from below might run into the same middle income trap. 11

Summary
6. Education quality, especially at mid-level education, is thus an urgent issues if we want to make sure that education becomes more inclusive. 7. For those already left schools with secondary education or lower, good quality skill training is vital to help improve their earning prospects. 8. Like education, the quality of training is still doubtful, as evidenced by persistent problem of job mismatch. 9. Private sectors have been playing more active role in skill training, but there are only 12 limited numbers of successful firms.

Policy Implications
Inclusive Growth
Prevent wider (A) gaps between the richest and other income classes
Tracking missing middle
More inclusive globalizat ion

Accelerate the (B) narrowing of gaps between the poor and middle-income class

More inclusive education and skill training

13

 Ensuring across-the-broad quality improvement in early and basic education through improving teacher quality, school management and evaluation system. Expanding access and quality of Pre-school, initial stage of cognitive skill development. Improving the free education policy to be actually free. Redesign universal tertiary tuition fee subsidy to be more targeting on underprivileged groups. Changing attitude about vocational schools. Private sector may help by signalling needs through employment and wage incentives. 14

More Inclusive Education Policies

More Inclusive Skill Development Policies

Paying more attention on training of higher skills to mid-level educated workers, as well as low educated workers. Tapping on local wisdom in skill development, through local government and community networks. Developing some mechanism of income guarantee programs, along with management and entrepreneurial skills training for vulnerable self-employed workers, such as farmers and small entrepreneurs. Introducing wage adjustment scheme that match increased skills, such as skill testing 15 certificate, vocational qualification standards.