Is Your Organization Ready to Hire in South-East Asia?

Following the Wrong Approach

Frequently, our European corporate customers appoint us to scout qualified local workforce for their business operations across South-East Asia – both in Thailand and in the neighboring countries.

The first gap we need to fill is the common misconception that Asian hiring process follows European standards. It doesn’t.

Thus, for European HR managers and entrepreneurs, selecting local staff has proved to be a hard task.

We do believe that the real challenge comes after the selection – managing multicultural teams requires human and professional skills, which aren’t always present in Western firms.

For European HR managers and entrepreneurs, selecting local staff has proved to be a hard task.

Based on our experience, the incomprehension and miscommunication between expatriate managers and local workers have lead successful ventures in Europe to perform poorly in South-East Asia. The path to failure in Thailand is an inaccurate selection process and, even worse, a Western alike human resources management.

Understanding Thai Labour Market

Let’s get back to basics and examine some figures.

In Thailand, the unemployment rate hit the figure of 1.1% in February 2017 (according to the data provided by the Bank of Thailand).

Thailand historically has had one of the lowest unemployment rates in the world.

The average Thai unemployment rate has been around 1.5 percent from 2001 to 2017, reaching its worst level (5.73 percent) in January 2001 and a record low of 0.39% in November 2012.

In European Union, the unemployment rate has been averaging 9.07 percent from 2000 until 2017, reaching an all-time high of 11 percent in February 2013 and a record low of 6.80 percent in February 2008.

It decreased to 8 percent in February 2017 (the data have been collected by Eurostat).

Opposite to European standards, Thai candidates are used to finding a new position with astonishing facility – in Thailand are the employers which struggle to find the best human resources out there.

If we compare Thai rates with European figures, a huge difference leaps out.

European unemployment rate is eight times higher than Thai unemployment rate.

Consider that we haven’t mentioned any data yet about youth unemployment rate.

The European youth unemployment rate (as of February 2017) decreased to 17.3 percent. In sluggish Southern-European economies, the reality is less appealing for young workers – for instance, Italy steadily lags behind Europe with a skyrocket high rate of 35.2 percent.

To be honest, from this point of view, Thailand has faced a deterioration. Thai youth unemployment rate increased from 3.5 percent (as of January 2017) to 5.2 percent (as of February 2017). Yet, over the latest five years the worst level reached by Thai labour market has been 5.8 percent, which should be considered as a positive outcome, if compared with a record low of 24 percent in European Union.

The Help European Companies Need

This brief macroeconomic introduction enables us to help our clients better understand Thai hiring process.

Firstly, Thailand, such as many other Asian countries, is essentially fully employed. Thailand historically, for different reasons, has had one of the lowest unemployment rates in the world.

While European population accounts a large share of elderly people, Asia still has a young bold population, plus a skilled and affordable workforce.

For those who have experience in Asia and in emerging markets, this doesn’t sound like a big surprise.

Automation and high technology have been seldom adopted by many Asian manufacturing firms, especially small-medium sized companies (SMEs).

While European population accounts a large share of elderly people, Asia still has a young bold population (although some Asian countries are getting older as well – Japan above all).

Skilled and affordable workforce is another major factor, which has made “going East” so appealing for multinational industrial companies over the recent decades.

Further, Asia has seen the implementation of many policies to support its labour market. Indeed, Asian policymakers traditionally focus on keeping the unemployment rate low.

On the other hand, lawmakers scarcely concern about the improvement of other traditional welfare-state services (just to mention a few, like health care, retirement funding, public education, etc.).

Hence, how should the European employer address these markets? How to find the right people who fit his business?

Our first advice is as elementary as straightforward – don’t think and act as you were in Europe!

Start adopting a different approach.

Hiring new staff – from factory workers to experienced managers – should be carried out quickly. The process has to be as fast and lean as possible, in order to keep potential candidate’s interest alive.

Thai candidates are used to finding a new position with astonishing facility and speed. They are not accustomed to a long and tedious selection process.

Consequently, for them shifting from a job to another – and from an employer to another – is business as usual.

If you have a chat with any Thai employee, you will find out that working twelve months with the same company appears to be quite a long period of time. If an average European employee still sees rooms for an internal career improvement after a year, for the Thai working mindset it’s time to land on a new position – hopefully with a higher salary.

The hiring process in Thailand of course needs