Robots vs labour: the state of the car industry in Thailand – the politics of the robot wave

Everyone around the world is becoming aware of artificial intelligence (AI) or robots because their ability is constantly developing and they are likely to replace many jobs in the near future.  What is the situation in Thailand?  Are workers losing their jobs?  Does Thai labour law provide adequate protection?  Is the government keeping up?  This report will take a look at the state of the problem and the calls for solutions.

Illustration by Nattapon Kaikeaw

Types of robots

Let us first establish an understanding that automation is divided into 3 levels.[i]

1. Robotic Process Automation (RPA) are robots with simple automatic software that can do the regular or routine work of humans, such as basic accounting.  2. Intelligent Process Automation (IPA) is technology that helps repetitious human work or work that needs strength.  These robots can do easy technology, but humans ultimately must still decide.  3. Artificial Intelligence or AI is the final stage of automation.  Robots can learn, develop and decide on the best alternative from the specified variables.  One example is a chatbot or a digital person who can communicate with customers and manage complaints about services.

In 2017[ii], the use of robots and automation in Thailand had an overall import value of 266 billion baht and the trend was increasing, while exports were valued at 134 billion baht.

Human development strategy and Thailand 4.0

In the middle of 2017, Mom Luang Puntrik Smiti, Permanent Secretary of the Ministry of Labour, signed a Memorandum of Understanding to cooperate in the establishment of a Manufacturing Automation and Robotics Academy (MARA)[iii] between the Director-General of the Department of Skill Development and the Chairman of the Federation of Thai Industries to develop the capacity of the labour force so that it has up-to-date skill standards for technological change and to support the economic development policies of the government such as the Thailand 4.0 policy.  A cabinet resolution approved a new Amata University programme for a Master of Science (M.S.) in Engineering (Intelligent Manufacturing Systems) of the National Taiwan University in Thailand, emphasizing the use of robots to assist in automated production lines and autonomous vehicles.

If we take an overall view, the Fiscal Policy Office (FPO)[iv] reveals that AI will help increase the GDP of developed countries by 1.7 times by 2035 and will help increase global labour productivity by about 30-40%.  It will help increase profits in all branches of production.  In these studies, about 100 million low-skilled domestic and construction workers in ASEAN are at risk of losing their jobs in the next 20 years.

Research also shows that 44% of the workforce in the automobile and automobile parts industries are at high risk of unemployment.  

Are no workers losing jobs because of robots?

However, if we look at official data, the Ministry of Labour[v] says that there have not yet been layoffs from the introduction of robots, but it cannot be known if there will be mass layoffs in the future.  Thailand cannot be complacent about this trend, but if we look at the latest 2016 Welfare and Labour Protection Statistical Report on its website, and data collected on cases of workers submitting appeals and visits to companies, we find that in 2016, there were layoffs at 41 companies involving 2,778 workers, an increase of 68.9% from the previous year.  The layoffs were mostly caused by technological change and downsizing. ‘Technological change and downsizing’ may come in many forms, but the introduction of automation is believed to be among them.[vi]

Bank of Thailand research

The future for labour is still a matter of concern. The March 2018 research study ‘Industrial Robots and Their Impact on the Labour Market’[vii] from the Bank of Thailand (BOT) helps to confirm this by stating that even if automation does not have any immediate severe effect on labour in the industrial sector overall, it will have the effect of laying off people doing repetitious work, making work harder to find and reducing wages.

From these examples studies it is found that (1) workers affected by robots are those doing clear rule-based work; (2) new factories using fully automated systems will affect the hiring of new entrants to the labour market, for example, making it more difficult for holders of Vocational Certificates of Education in commercial subjects to find work compared with the past; (3) existing outsourced workers will become unemployed.  Some workers will have to learn new skills demanded by new machinery, and younger workers can adjust quickly while older workers will find it difficult to adapt.

How much protection can the labour laws give?

Legal protection related to layoffs due to the introduction of robots or technology or changes in technology is enacted in Articles 121, 122 and 118 of the 1998 Labour Protection Act which require the employer to pay more compensation than normal.  Has this legal process actually been used to protect labour?  This is an important question.

Chokedee Kaewsang, Deputy Secretary General of the Board of Investment, states that the automobile industry, especially car producers, and the electronics industry have invested in converting production lines completely to the use of robots and automated systems and producers of parts in the supply chain for the 2 industries have also begun to convert.

The voice of the Federation of Thailand Automobile Workers Unions

Thailand is a primary base of the global automobile industry and has introduced a large number of robots in production.  The Federation of Thailand Automobile Workers Unions has 54 unions as members with a total of around 30,000 workers.

Visut Ruangrit               Sirijunyaporn Jangthonglang

An interview with Visut Ruangrit, Deputy President of the Federation and Sirijunyaporn Jangthonglang, Deputy President of the Women’s Section of the Federation, revealed that at present, this industry has not yet had very many layoffs as a result of conversion to robotic or automated systems.  But as far as these systems are used out of necessity, there are two issues.  First, buyers increase production quantity or buyers choose to use technology or robots in production.  Second, it is work that is dangerous.

Visut said also that if many robots are introduced on a continuous production line such as car assembly, the workers have to keep up with the robots, so there is pressure to manage the work in front of them so that the process can continue to function.  But if the workers are placed at separate points, the robots cannot exert much pressure.

The case of Toyota and voluntary layoffs programme

The interesting case study is the Toyota Motor Thailand Company’s change of production technology by using a ‘voluntary layoff programme’ so that workers did not receive special compensation payments according to the Labour Protection Act.

Photo from voicelabour.org

In 2009, a programme called ‘Leaving Happily’ was offered to about 800-1,000 sub contracted workers.  About 40% all those in the production process of a total of 750,000 employees volunteered to leave.

The Deputy President of the Federation of Thailand Automobile Workers Unions stated that when there was news of releasing workers, the employers told the media that this programme came about because of few buying orders.  It was necessary to reduce the number of people to survive.  But when the Ministry of Labour[viii] gave an interview to the media, they instead said that the reason was the introduction of robots or technology and up to date machinery to replace labour.  Some employees who were laid off came to the Federation because they had not received their rights under the law and insisted that robots had sometimes been introduced into the production line.  Robots had not been introduced suddenly but in succession.

Visut pointed out that employers used programmes that avoided voluntary resignation because if the layoffs were because of the introduction of robots or technology to replace them, workers would then have the right to compensation under Sections 121 and 122 of the Labour Protection Act.

The position of the Federation on the Toyota case was to demand[ix] that employees should at least get their rights according to the law because these programmes make employees lose the right to social unemployment insurance since they get only 3 months unemployment benefit instead of 6 months because social insurance specifies that they themselves have resigned and not been laid off.

The President of the Federation of Thailand Automobile Workers Unions stated that this case had the effect of beginning to alert workers.  Groups of workers in the Federation began to make demands in negotiations if there were layoffs of employees for unusual reasons, including the introduction of robots and up to date technology.

The President of the Federation raised the case of the Thailand Auto Part and Metal Workers Union which called for and on 20 December 2017 got an agreement with the company on higher compensation than stipulated in the law.  The Union had workers from 13 companies and submitted the demand to all 13, but only 4-5 companies accepted the demand.

Illustration by Nattapon Kaikeaw

When robots do not join the union!

Another interesting case is Thai Suzuki Motor Co. Ltd. in Thanyaburi District, Pathum Thani Province where robots were introduced more than 20 years ago.  Thongchai Romyenpensuk, President of the Thai Suzuki Workers Union, who has worked for the company for almost 28 years, reported that the factory introduced robots in the welding department in 1997 and was able to reduce the number of people on the assembly line.  That may be the reason why the employer began more negotiations with the labour union at that time, because the main bargaining method used by workers were slowdowns.  But when the employer introduced more robots, the slowdown tactic was difficult to practise, as the robots kept going all the time.

From this, proposals were made to the state, the private sector and even organizations responsible for protecting the rights of labour like unions and the labour movement itself.

BOT proposes emphasis on supporting 3 labour groups

The BOT research study ‘Industrial Robots and Their Impact on the Labour Market’ proposes that the state pay special attention to 3 groups of workers doing repetitive work: (1) labour that cannot adjust and so is laid off; (2) labour that cannot adjust and even if not laid off must raise their skill level; (3) school leavers for whom it will be harder to find work in many fields from now on.

What is required is: (1) More directly relevant skills training and learning for workers;  (2) Compiling data on labour by increased surveys from the entrepreneurs’ side stressing the participation of all sides in amassing and applying information directly with target groups;  (3) Provision of social protection by alleviating the impact only on laid-off workers as a mechanism of last resort to give short-term help, such as the Government Jobs Guarantee by making the state the employer of last resort with the responsibility of hiring the unemployed especially in creating work in professions where labour is short such as caring for the elderly or the arts, by paying a wage high enough to allow people to live.

Proposal from civil society

A collaborative policy project to strengthen civil society organizations supported by the Thai Health Promotion Foundation (THPF) organized a forum at the beginning of 2018 to develop public policy proposals from the civil society sector.  It drafted public policy proposals to create well-being in an aging society.  One of the many proposals related to cases where companies introduced labour-saving technology, specifying that:

- The state must amend the 1998 Labour Protection Act by specifying a special layoff compensation fund and make the compensation payments fair.

- For increased productivity, the state and employers must cooperate to promote the opening of non-formal education centres in industrial zones.

- Companies must be required to set up a fund for the protection of labour rights with employers contributing to the fund as insurance so that when businesses are given up, employees have a definite right to compensation without the need to bring a legal suit.

The politics of the celebrated robot wave

Kriangsak Teerakowitkajorn

Finally, Kriangsak Teerakowitkajorn, a researcher from the Just Economy and Labour Institute and a labour expert of long-standing, points out that the wave of robotics technology or automated systems did not come about by itself naturally.  We have been made to believe that this is a path that we cannot avoid.  But in fact, there has been a serious campaign by industrial groups over the last 4-5 years to change the attitude of the industrial sector into thinking that they must start using robots, they must use automated technology.  And if we look at the growth of robot and electronic systems producers, we will see that it has increased very much in the past 5 years, with large-scale producers in just a handful of countries: Switzerland, Germany, South Korea and the US.

Kriangsak says that for Thailand it does not really make sense to introduce robot technology or automated systems because it involves more capital than labour and introducing robots is not easy.  There has to be a long-term business plan.  An analysis of preparedness studied whether the change was worth the investment, but it appears that Thailand has the Thailand 4.0 policy and a cabinet resolution[x] of 29 August 2017 which clearly specifies that the use of robots will be greatly increased.  So the state has the initial plan to stimulate demand or need for the use of robots in the country.  The next target is to increase supply.  The target of the third phase is to build utilities for a digital economy sector.

 ‘There is a great risk because the first target is to stimulate demand.  Right now, the government is the first to invest, ordering or importing robots to use in some administrative agencies.  But the question here is not when or how the Thai industrial sector uses automation.  The main point now becomes the efforts to create an artificial demand for automation with a policy and a huge budget,’ said Kriangsak.

The labour movement must create its own narrative

Kriangsak’s proposal to the labour movement for dealing with these changes is for labour itself to keep up to date with the changes.  To slow things down or to use a development plan so that labour benefits, negotiations need a strategy.

If you look at examples of the labour movement in Europe, you will see that their campaigns are not just on legal issues but the thing that the European labour movement can do well is creating a narrative for society to understand that the 4.0 issue is not science as the capitalist side are trying to campaign, but it is an issue about politics, about political economy.  It is an issue about deciding which way to develop.

Robot taxes and universal basic income

Apart from these proposals by Kriangsak, another interesting issue that is a big challenge in western countries is the idea of the robot tax, whether it is the idea of Bill Gates[xi], the billionaire, who proposes that this tax will help to compensate for the loss of work of many millions of people and also help maintain a welfare system for children and the elderly.

Jane Kim, a lawyer from San Francisco, has conducted a study[xii] on whether a robot tax would increase inequality or not.  Kim plans to set up by a working group on this issue with the participation of people from IT, education and labour to find answers to the questions of how much income people will lose from being replaced by robots, and which industries will be affected.  She also wants to see the robot tax used for investment in the education sector.  However Kim has not thought that a robot tax is the best alternative because it must go together with a universal basic income and other policies.

Yanis Varoufakis[xiii], an economics professor from the University of Athens and former Greek Finance Minister, expressed his opinion on a robot tax by stating that it could be used with a universal basic income, which means giving an equal basic income to the people who can look for work to increase their income.  He proposed that there is another alternative, which is a universal basic dividend.  These are ideas about the future which are becoming questions that challenge all of us.[1]


[i] Bangkok Post, 27 Nov 2017, Labour risks going under amid AI wave

[ii] Prachachat Business Online, 25 December 2017, ‘Robot Association pushes to extend BOI deadline’ [in Thai]

[iii] The Director-General of the Department of Skill Development further explained the establishment of MARA, stating that the government was implementing the Eastern Economic Corridor project in the 3 provinces of Chachoengsao, Chonburi and Rayong in order to develop the eastern seaboard as a production base for 10 target industries driving a ‘New Engine of Growth’ through the introduction of a greater role for technological innovation, robots, robotic arms, artificial intelligence and automation in the business and industrial sectors in accordance with the Thailand 4.0 policy.  The Department of Skill Development (DSD) is the core agency in developing human resources to have ‘Brain Power’ over the next 20 years according to the 20-year strategy.  The Ministry of Labour has responded to this project by driving several mechanisms.  Most recently, it has joined with the Federation of Thai Industries to establish the Manufacturing Automation and Robotics Academy (MARA) as an agency under the DSD, the Skill Development Institutes and the 3 provincial skill development offices.  (For more information see Department of Skill Development, 29 May 2017, Labour Min joins Federation of Thai Industries to Establish Manufacturing Automation and Robotics Academy for EEC [in Thai])

[iv] An FOP study by Sanhanat Satetasakdasiri ‘Opening the wide world of Artificial Intelligence …?’ uses information from Accenture (the IT consulting company of Apple), the International Labour Organization (ILO) of the UN and the McKinsey Global Institute.  (For more details see Khaosod Online ‘Finance reveals unemployment in 10 professions replaced by AI’ [in Thai].)

[vii] Patcharaporn Lipipatpaiboon and Nuntanid Thongsri, 2018, Research Study ‘Industrial Robots and Their Impact on the Labour Market

[viii] At that time (February 2016), the Deputy Director General of the Department of Labour Protection and Welfare stated that at present the layoff situation was normal.  Overall the automobile production industry was changing production methods or production models as well as raw materials in automobile production.  At the time it was a matter of Industry 4.0.  Each company was adapting to using high technology so that industry could operate with appropriate quality and investment.  (See here for further information. [in Thai])

[ix] ‘Summary layoffs of subcontractors reduces employees’ security while automobile industry grows’ Toyota case study [in Thai].

[x] The cabinet resolution of 29 August 2017 approved ‘Development Measures for the Robot and Automated Systems Industries’ with 5 basic measures.  1) Marketing measures to stimulate demand in industrial production/business to change production systems to use robots and automated systems.  A target group are entrepreneurs who must change to use robots and automated systems because the investment costs are high, at 80-90% more than the machinery being replaced.  So measures are needed to encourage the change to robots and automated systems.  2) Measures to increase the competitiveness of System Integrators (SI) in Thailand in order to increase the number sufficient to meet the future expansion of the robot and automated systems production industry (at present there are only 200 potential SI).  3) Supply measures to raise the robots and automated systems production process to a globally accepted level.  4) Measures to create a Centre of Robotics Excellence (CoRE) to develop robot technology and promote their use in various fields as a mechanism to support and accelerate the development of a robots and automated systems industry by integrating the participation of leading agencies in the country.  5)  Other measures