Global Policy Forum

By Frederic C. Deyo

Centre for Development Studies, The University of Auckland

The 1997-1999 Asian financial crisis brought a far-reaching reassessment of on-going programmes of liberalizing economic reforms across the Asian region and beyond. In part, this reassessment was driven by new political pressures generated by widespread job loss, debt, and bankruptcy. By late 1999, as the crisis abated and growth prospects improved, public and scholarly discussion shifted from immediate and largely policy-driven concerns to questions of the more enduring structural and institutional outcomes of this dramatic interruption of a pattern of continuous, rapid economic growth across much of the region. Relatedly, it now appears necessary to move away from a view of the crisis as a self-contained ‘event' in favor of a view which sees it as one of several critical episodes (or in this case external shocks) influencing and partially deflecting a longer trajectory of continuing economic restructuring. From this standpoint, the crisis is understood largely from the standpoint of its implications for on-going transformations of policy and economic structure.

This article seeks to assess the extent to which post-crisis economic and social policy has been durably influenced by the political turmoil and conflict rooted in the deep Thai recession of the late 1990s. More specifically, to what extent were workers and trade unions able to insert a labor agenda in those government and corporate policies which most affect workers. It is argued that a major initial outcome of the crisis was to accelerate economic structural reforms that had been underway since the 1980s, as well as to exacerbate and thus politicize the already apparent negative social outcomes of those reforms for workers. But while this politicization has slowed some of the more socially destructive reform programs, its longer term impact has been blunted by a number of economic structural and political institutional changes associated with and accelerated by those same reforms as well as by the crisis itself. Further, given that economic globalization has comprised both an implicit strategic goal and a structural outcome of market-augmenting policy reforms, the politics of crisis management have become in part a politics of globalization as well, as symbolically suggested by the growing presence of anti-IMF slogans and posters as the crisis deepened.

A systematic understanding of the labor consequences of reform, globalization, and crisis requires a generalized model of the labor process which permits an integrative view of the interconnections among various elements of labor policy at national, corporate, and local levels, and which subsumes and relates sectoral and geographical specificities. A labor systems approach offers such a model.

The labor systems approach is rooted in labor process theory, the study of the ways in which human labor is actualized, which is to say transformed into realized labor at the point of production. As developed by Burawoy, the labor process may be distinguished from the socio-political and cultural institutions or ‘regimes' which govern and determine the nature of particular labor situations. Labor process theory provides a useful starting point for an analysis of the changing nature of work and employment insofar as it identifies some of the broader economic and political parameters within which labor processes emerge and function. Situated within a critical political-economy perspective, it suggests a view of labor structures as socially constructed through negotiation, conflict, and mutual accommodation among key stakeholders as they pursue often divergent economic goals and interests. In particular, it identifies the various linkages between characteristics of the labor process on the one hand, and the nature of political contestation on the other.

Useful though this approach is for understanding social constructions of work at the site of production, it must be extended and contextualized in order to address the broader issues of social change, development, globalization, and crisis to which this case study of Thailand is directed. In attempting this extension, we refer to labor systems in lieu of the labor process. A labor systems approach, it is argued, permits a systematic understanding of the inter-relationships among the various processes of labor mobilization and transformation, as well as the manner in which such processes are organized at local, national, and global levels. In addition, it offers a framework for the systematic comparison of the diverse experiences of economic reform and social transformation across sectors and national economies.

Labor systems refer generally to the inter-connected social processes through which particular types of labor, as required for various production processes, are reproduced such that a pool of healthy, literate workers is available for production; allocated to work roles through internal or external labor markets or through other institutional means; adequately maintained through employment-related compensation; protected from market, health, safety, and other risks; organized across multiple labor systems for actual production activities; enskilled; controlled; transformed into surplus/profit; and ultimately expelled from the labor process. These phases of labor transformation may be undertaken by various combinations of private and public agencies, including states, business associations, educational institutions, firms, communities, and families. Labor systems are empirically identified and characterized by reference to broadly defined similarities in the nature of realized labor as well as to the transformative processes through which particular types of labor are generated. Corporate and sectoral approaches to labor systems move to a further step in labor systems analysis in looking at the manner in which multiple labor systems are organized and articulated for the actual production, distribution, and consumption of goods and services.

Labor systems are viewed as social constructions rooted in the first instance in the economic strategies of dominant elite groups or fractions as well as in the broader state policies which promote, rationalize, and support elite strategies. These strategies, which are themselves influenced by organizational, market, and technological imperatives, influence labor systems and HRD policies and practices by narrowing the range of functionally appropriate types and modes of organization of labor. On the other hand, the contested nature of labor systems, as between disparate elite factions on the one hand, and between labor and capital on the other, suggests that the institutional and distributional characteristics of labor systems at a given time must be seen as no more than transitory outcomes of on-going conflict and compromise relating to the distribution of risk, security, contribution and reward across the chain of processes of labor transformation, thus avoiding the static and deterministic tendency of much of the institutionalist literature. In recognition of the tentative, contextually influenced, and politically contested status of elite labor strategies, we hereafter distinguish between strategic and structural aspects of labor systems, the second referring to the actual outcomes of elite strategies. It is important to note that Burawoy's ‘politics of labor' are here extended well beyond the point of production itself. Indeed, the shifting of the locus of struggle among arenas of conflict and across phases of labor transformation, itself becomes both a tactic of contention and an outcome of changes in relative bargaining power in different arenas.

It may be noted in this connection that the implications of globalization for labor systems are most readily understood as a process of global rescaling. Following the distinction between strategic and structural aspects of labor systems, strategic rescaling refers to the labor and HRM/HRD policies of governments and businesses, in turn linked to the changing competitive strategies of companies on the one hand, and structural adjustment and reform programs on the other. Structural rescaling, on the other hand, refers in this context to the actual (politically contested and economically constrained) outcomes of such strategies for labor systems. In part, rescaling refers to a restructuring of the various elements of labor systems at ever higher (including transnational) levels (e.g. labor allocation through international migration, or labor control through state intervention in local labor disputes). But in part too, rescaling refers to the successively higher order integration and organization of diverse labor systems in actual economic activities. Such organization occurs first within production systems (whether on the shop floor, within systems of inter-organizational collaboration, or along supplier chains). Labor system organization occurs as well, however, at successively higher corporate, regional, and global levels.

Labor system rescaling is in turn driven by larger political, ideological, and institutional forces. In this context, one speaks of the rescaling of governance institutions and labor politics, the focus of discussion and debate relating to the often conflicting core principles and agendas underlying emerging global economic and social governance regimes. It may be noted in passing that a domestic corollary of global governance rescaling is an extroversion of state structures and policy networks. This extroversion refers to a growing participation and influence of transnational corporations, agents of foreign states and of multilateral organizations, and representatives of international business (e.g. Chambers of Commerce), in national, sectoral, and local policy networks. In the context of the economic reforms and crisis, these pressures have become ever more forceful in reducing the state's regulatory and provisionary role across virtually all phases of labor systems, and in reducing through state deregulation the social encumbrances facing businesses in their efforts to adapt and reregulate employment to accommodate changing market contingencies and government reform policies. It is clear that such extroversion has tended to reduce and subordinate labor's policy influence within national industrial and political institutions.

The cyclical effects of the crisis for non-agricultural Thai workers have centered most dramatically on job layoffs and pay cuts. During the two years following the financial collapse of July 1997, manufacturing employment was halved while production output declined to 30% of total capacity in the five largest manufacturing export industries. Under renewed pressure to downsize, corporatize, and privatize, job loss and reduced job security have become realities even for the relatively protected workforce in government and state-owned enterprises,. Further flow-on effects included attenuated labor standards, government efforts to encourage unemployed Thai workers to return to their places of rural origin, and the forceful expatriation of foreign workers. Rural repatriation policy has been buttressed by new financial and other support for agricultural coops as well as by substantial World Bank and ADB funding for community-initiated local development projects intended to create rural employment and to provide job training to permit workers and their families to survive the worst of the economic crisis. Similar in outcome were new efforts initially to restrict and subsequently to regulate immigrant labor through selective employment licensing confined to special economic zones alongside an enhanced articulation of migration with sectoral and local labor requirements through newly instituted labor information systems and manpower planning.

These well-documented short-term effects and policy interventions have been accompanied by deeper institutional and policy changes which can be expected to continue well beyond the crisis itself. Foremost among these, and at the core of many of the more immediate cyclical effects of the crisis for workers, is a strong reinforcement of existing short-term-oriented, cost-focused competitive strategies on the part of companies seeking to respond to severe cost-pressures and market contraction over the past two years. The short-term nature of these strategies has been encouraged by volatility in policy environments, markets, interest rates, and currency exchange rates as well as by the costliness, risk, and immediate competitive disadvantage associated with longer-term investments in R&D, training, and work re-organization. Short-termism is in turn closely linked to human resource strategies of casualization and informalization as firms have sought simultaneously to cut costs and to enhance flexibility in their management of workers and subcontracting firms.

An acceleration of cost-based outsourcing directs attention to the implications of the crisis for small and micro- enterprise. The social importance of small enterprises (SEs) derives from the very large percentage of workers employed and self-employed in this sector, the growing tendency of large firms to outsource production to local suppliers (thus further expanding SE employment), and a corresponding growth of the informal sector resulting from both outsourcing and crisis. It may also be noted that the analytical distinction between labor and firm all but disappears at the smallest size SE category, micro-enterprise, where unpaid family labor and self-employment are especially prominent.

The crisis has taken a devastating toll in the SE sector, especially among domestic-market oriented, simple-technology enterprises not linked as upper-tier suppliers to international firms. Particularly troublesome has been a liquidity crisis resulting from the reticence of banks to advance capital to a sector which accounts for over 90% of all outstanding non-performing loans. A further blow to local SEs relates to the impact of the crisis on economic governance. If close, ‘developmental' relations between larger firms and their SE suppliers have emerged primarily among upper tier suppliers, those relations have themselves become ever more exclusionary and restrictive by virtue of the attenuation of close, trust-based, network-like relations governing inter-firm relations. As uncertainty and financial difficulties have beset supplier SEs, larger firms have grown less and less willing to extend new lines of credit, to offer long-term training and technology assistance, and in general to nurture local (especially domestic) SE suppliers. More often, supplier linkages have increasingly been governed by short-term market-like relations, associated in turn with exploitative, cost-focused, rather than developmental linkages. In this sense, the institutional governance outcomes of the crisis have created additional and perhaps more enduring negative social consequences for domestic SMEs than the immediate consequences to which most observers have attended.

It should be emphasized that a predominance of short-term coping strategies does not preclude concomitant efforts to preserve skills and innovative capacities within core production processes and among first tier suppliers. Indeed, a primary concern of many larger firms has been to protect these ‘islands of innovation' from the ravages of the crisis. Thus, a more accurate characterization of corporate responses is one of dualism: low-road strategies pursued across most sectors and activities alongside the protection of skill and technology-intensive enclaves. Such dualism is explained not only as a residual effect of efforts to maintain innovative capacities in core activities, but also as an effort simultaneously to retain core skilled employees and key suppliers and at the same time to cut costs in other areas in order to compensate for the increasingly burdensome cost of maintaining innovative capacity in the context of overcapacity and crisis.

An acceleration of public sector reforms and structural adjustment, an outcome of externally negotiated crisis-management programs, comprises a further dimension of the social impact of the crisis. The above-mentioned possibility of a widening of employment dualism and inequality would, for example, be further exacerbated by labor market deregulation measures now under official consideration. Such measures seek to enhance wage flexibility by relaxing minimum wage provisions and amending the recently enacted Labor Protection Act of 1998. As important from the standpoint of labor welfare was a marked acceleration until mid-1999 (see below) of existing policies of privatization of state-owned enterprises (SOEs). SOE privatization, with its perceived threat to pay levels, benefits, and job security, was given a legal basis under a new State Enterprise Corporatisation Bill. It was driven in the first instance by the need to secure new sources of capital as well as to provide assurance to foreign investors regarding Thailand's commitment to market opening. Too, it flowed from the demands and loan conditionalities of external creditors, as illustrated by recent World Bank insistence on the partial privatization of Thailand's largest power plant at Rachaburi, currently owned and managed by the Electricity Generating Authority of Thailand (EGAT), in order to meet a contractually binding requirement that EGAT become at least 25% self-financing. IMF-negotiated austerity budgets, high interest rate policies, and reduced public service subsidies have comprised additional policy-mediated privations. Protest and Policy Response:

In response to these various consequences of the crisis, labor strikes and demonstrations have centered on a few core issues: extension of social security protection, job security, maintenance of pay and bonuses, labor standards (especially health and safety), severance pay, and, among SOE workers, continued opposition to privatization. Building on earlier efforts to extend social security benefits and coverage, workers and unions have mounted periodic public demonstrations and appeals for minimum severance compensation and extension of maternity, health, and other benefits for laid-off workers. Similarly, unions have increased efforts to mobilize Thai workers and international groups and agencies in support of a proposal to establish a tripartite institute to monitor work health and safety standards. Similarly, SOE workers have fought hard to slow or reverse the privatization process. In the case of the Rachaburi power plant dispute, workers, joined by other SOE and private sector workers' organization, have argued that the sell-off would create further worker redundancies and devolve ownership to foreign interests in a critical national industry. A worker counter-proposal, backed by work stoppages and public demonstrations, would retain 75% government ownership, preclude foreign ownership, and use new capital resulting from the partial privatization to introduce new technologies and efficiency measures in the plant. Similar conflicts are to be found in other SOEs, as for example in the Dairy Farming Promotion Organization, where workers have insisted on an opportunity to themselves operate a DFPO milk factory prior to its offering for public sale.

The policy outcomes of labor protest in these and other areas have been mixed. On the one hand, despite a continued ban on formal unionization in the public sector, SOE workers, now organized in ‘associations,' succeeded in defeating a Ministry of Finance proposal to cut public sector pay levels by 30%, as well as in obtaining government commitment, at least in principle, to redirect a portion of any proceeds from privatization to worker education, job retraining, and family welfare. While the EGAT privatization dispute was not yet resolved at the time of this writing, the Finance Ministry (key negotiator in this matter) partially backed down by offering to set up a tripartite panel to examine alternatives to the Rachaburi privatization proposal, to endeavor to reduce redundancies, and to commit a portion of privatization proceeds to an EGAT employee fund. In another privatization dispute, workers forced agreement from Finance to bar foreign investors from purchasing shares in the Petroleum Authority of Thailand. But most dramatic was the late August announcement of a delay and rethinking of the entire privatization program ‘to better accommodate public sensitivities and market realities.' While it is yet unclear whether this announcement constitutes a true policy reversal, the continuing influence of SOE workers in labor policy debates is clear. This influence may generally be attributed to opposition political party linkages, the relatively advantaged position of SOE workers under existing labor legislation, and perhaps most importantly, clientelist relations between worker association leaders on the one hand and SOE management (in many cases as opposed to privatization as are worker groups). In the case of the EGAT dispute for example, management has generally supported worker anti-privatization protests, arguing that this sell-off is contrary to the public interest and would mainly benefit foreign and private interests.

Similarly, strongly unionized private sector workers possessing superior education or skills (e.g. bank workers, and technicians and skilled workers in the core production processes of large firms and their major suppliers) have enjoyed a strong bargaining position at corporate and policy levels in matters directly affecting employment and training possibilities. Workers in the well-organized banking sector, for example, obtained an agreement from the Ministry of Labor and Social Welfare to assist retrenched bank workers and to offer these workers a ten-month salary replacement. And private sector unions played a key role in pushing through improved severance pay legislation under the newly enacted Labor Protection Act noted earlier.

Apart from activating workers and their associations, the crisis has also forged greater co-ordination and mutual support across sectors in part by forcing relatively privileged SOE and unionized workers to broader their efforts to incorporate unorganized and manual workers, including factory women, into their campaigns. Women workers, for example, have been incorporated into these campaigns through appeals to health and safety and other issues of particular concern to them. In part too, academics and NGOs have helped to consolidate a more unified opposition to reforms, denationalization, and austerity. A case in point is the group of academics represented in the United Front to Return Privatization to the People Campaign to invoke a referendum on the Enterprise Corporatization Act. Similar in effect are the efforts of international and domestic NGOs (see below), the ILO, opposition political parties, and international trade secretariats. Particularly important is the growing role of NGOs in linking rural and urban issues and thus in broadening protest beyond particular local concerns and in creating wider class loyalties. A widening of the agenda of farm protest, as illustrated by the decision on the part of some farmers' organizations to support EGAT workers in their fight against privatization, has been bolstered as well by the return of displaced urban workers to rural areas.

Small enterprises appear to have enjoyed the greatest success in eliciting government assistance in coping with the crisis, although it is unclear whether the resultant gains have substantially enhanced the employment prospects of SE workers or reached very small, micro-enterprise. While proposed changes to bankruptcy and foreclosure laws have been passed despite domestic SE opposition, a new Small and Medium-Sized Enterprise (SME) board has been established in the Stock Exchange of Thailand to raise fresh capital for local firms. A two-year grace period on principal repayment of bank loans has been enacted. The Board of Investments has revived a previously moribund tax-incentive based support program (BUILD) to encourage local supplier linkages to large firms. To compensate for the anticipated competitive pressures flowing from WTO-mandated elimination of domestic content requirements in the auto industry, tariff protection against imported CKD auto parts will be increased in year 2000 from the current 21% to 33%, while tariffs on raw materials and machinery are to be reduced. And, most important, a very large SME financial support program is being organized to channel a large portion of Thailand's share of Japan's regional recovery fund through an expanded Small Industries Finance Corporation, recapitalized from 300 million baht to 2.5 billion baht in 1999-2000. SME assistance efforts have in turn provided some measure of compensatory relief to small and household-based firms and their workers at lower levels of supply chains.

These SME assistance programs may in part be attributed to the political pressure of both workers and SME owners. But in larger measure, they are best seen as flowing from efforts on the part of large, especially Japanese firms, to consolidate their regional position. The SME recovery program has been publicly defended as a critical component of economic recovery. SME revival is seen by major foreign companies generally, and by locally established Japanese corporate affiliates more specifically, as important for the post-crisis period. In part this follows from the major investments of large firms in the development of their local supplier chains. Toyota, for instance, maintains supplier relations with over 100 upper-tier (and 2000 total) local suppliers. Similar dependence by large electronics firms on local suppliers has led to a targeting of ceramics and glass suppliers for special assistance. It should finally be noted that a large and growing number of the local suppliers who will benefit from SME assistance efforts are themselves foreign, a flow-on effect of the predominance of small and SME projects among recent direct investments from Japan and elsewhere.

The foregoing account suggests that the crisis may be seen as having precipitated renewed and subsequently contested elite efforts to adapt national and transnational labor systems to the pressures of crisis but within the guiding principles of a liberal reform vision. The most important of these changes may be summarized as follows:

a) Corporate strategies which increase the dualism between core and peripheral labor systems

While somewhat reduced in scope and inclusiveness, workers in critical and core production processes have been relatively protected from threat of layoff despite severe overcapacity, and have enjoyed a continuance of paternalistic, mutual commitment human resource policies in support of participatory, team-based, flexible production. The major sacrifice demanded of core workers has been a cut-back in annual bonuses and some benefits. Peripheral labor, on the other hand, has been subject to massive layoffs, stringent cuts in pay, benefits, and protection, more aggressive anti-unionism, work casualisation, and a corresponding intensification of external labor market discipline in workplace controls. Casualisation in this employment sector may be further encouraged under labor market deregulation measures now under consideration.

Despite the relatively greater protection enjoyed by core process workers in large, well established firms, the greater organizational and professional commitment of this group has encouraged and supported sustained protest in response to those staff and benefit reductions they have experienced. Well organized bank workers, for instance, have been able to moderate and redirect a number of restructuring programs announced by banks in response to the financial crisis.

b) Closer integration of disconnected phases of labor transformation

Industrial relocation to the provinces and closer linkage of employment needs with immigration and training policy have generated a tighter articulation among processes of labor reproduction, allocation, and enskillment. In the first case, employment requirements are spatially articulated with the rural sources of labor from which much casual labor is drawn. In the latter case, those requirements are functionally and flexibly integrated with regulated migratory flows of labor from Myanmar and other foreign countries which provide both physical labor and needed skills. The initial phases of the crisis saw official efforts simply to evict and repatriate many of these workers, in part in response to union pressure to reserve these jobs for unemployed Thai nationals. Subsequent pressure from employers unable to recruit sufficient Thai nationals to keep their factories in operation forced a reconsideration of this blunt-edged policy, and its replacement by a finer textured regulatory regime reflective of the needs of employers.

c) A shift/externalization of market risk and labor protection costs under increased casualisation and informalization.

Just as increased casualisation within firms shifts market risk to workers, an intensification of subcontracting encouraged by greater risk aversity on the part of firms and need for greater workforce flexibility to cope with volatile and uncertain global markets, further externalizes such risks, and the costs of protection and maintenance associated with them, to the informal sector of families and communities. To a degree, worker demonstrations and political pressure for improved severance pay and benefits for laid-off workers have succeeded in at least temporarily shifting some of these costs back to employers.

d) An externalization of the costs of labor reproduction and protection to rural ‘labor reserves'

Government moves to encourage redundant workers to return to rural provinces, increased funding for rural community development projects, and more restrictive immigration policy have similarly shifted some costs of labor reproduction and protection from the state (and, via reduced tax levies, from business) to families, rural communities, and foreign governments.

Of particular interest in this regard is the Thai ‘self-sufficiency movement' promoted by the King, several prominent monks, and various Ministries as a means of partial insulation from the vulnerabilities and hardships of the crisis. This movement has assumed diverse forms, including growth in informal sector non-market activities (credit and mutual assistance societies, service exchange, barter, communal equipment sharing arrangements, etc.), an expansion of diversified subsistence agriculture, renewed interest in community forestry programs, increased household production for family use, and even provision by factory employers of small plots of land for food production by workers.

These various programs have been variably welcomed by workers, NGOs, and unions as offering short-term relief in the context of crisis. On the other hand, their increasing institutional consolidation through official funding and encouragement, their positive functionality for agendas of reform and crisis management (see below), and their likely post-crisis retention as parallel- economy hedges against future economic shocks suggests something more. How may we understand these officially sanctioned forms of economic withdrawal from the standpoint of evolving national and transnational labor systems?

First, the self-sufficiency movement, through its creation of a parallel, locality-based social safety net, furthers the externalization of labor force reproduction and maintenance so clearly preferred by corporate and government elites. In effect, rural subsistence and informal sectors become labor reserves. Second, in the context of industrial decentralization and agro-industrialization, they contribute to a closer integration of labor and industrial production by providing readily (and flexibly) accessible labor for provincial industry, reducing the frictions of space and time associated with the existing pattern of seasonal rural-urban migration to Bangkok. For these reasons, and especially noting the extent of official and World Bank support for ‘opting-out' strategies, it seems most plausible to understand the self-sufficiency movement as contributing paradoxically to the elaboration and integration of the very labor systems it seems to abandon. Indeed, more recent NGO, farmer, and worker appraisal of these programs displays growing skepticism about their intent and outcomes.

e) Labor market deregulation through SOE privatization, corporatisation, and outsourcing

SOE reforms, long in gestation over pre-crisis years but accelerated under IMF and World Bank influence during 1997-8, have encountered very strong worker resistance, often encouraged and supported by SOE management. The resultant delays in SOE reforms suggest a unique case of effective resistance to public sector reforms through invocation of the primacy of national interest by a cross-class coalition of state enterprise managers and workers.

f) A global rescaling and integration of labor systems

Efforts to more systematically regulate migrant labor, increased by transnational corporations on foreign workers to fill managerial, engineering, and technical positions, and the sectoral denationalization and tighter integration of local production systems (both manufacturing and agro-industrial) into transnational production and supplier chains reflect a global rescaling of processes of labor reproduction and enskillment along with a tighter integration of Thai labor systems into transnational production systems and commodity chains.

In Thailand, as in other economically depressed countries of the region, the crisis has speeded democratic pressures and reforms while at the same time sharpening social policy debates. Variously attributed to the economic destabilization of ruling parties, Western efforts to push aside non-reformist elites, and a politicization of urban middle classes, democratic reforms might well be expected to enhance popular sector voice in policy debates and decisions.

In the Thai case, economic crisis is widely accepted as an important factor underlying passage of a new constitution in October, 1997. This constitution establishes (in principle at least) a broad human rights umbrella for civil society, gives popular sector groups the right to introduce legislation for parliamentary debate based on securing 50,000 petition signatures, and creates a fully popularly elected Senate. And indeed, organized labor, domestic SMEs, and farmers' groups have availed themselves of their new constitutional prerogative to enter into or influence parliamentary debates. Thai farmers organizations, for example, have successfully mobilized sufficient petition signatures to force parliamentary consideration of a bill to establish a system of local, provincial, and national farmer councils through which farm representation may be inserted into sectoral policy debates. In view of these developments, it is surprising that popular-sector politics has, with a few important exceptions, had so little policy impact. How may we explain the continued political marginalisation of popular-sector groups in the shaping of strategies of reform and crisis management, especially in matters of particular interest to workers?

In part the answer lies in political coalitional factors: especially continued fragmentation and competition among farm and labor groups alongside co-optation through clientelist relations linking popular sector leaders and provincial and urban elites. While in some cases, as in the SOE sector, cross-class coalitions have lent strength to labor protest, their more general consequence has been to subordinate worker interests to those of employers and political bosses.

In larger measure, the political incapacity of Thai popular sectors is attributable to four further factors: the continuance of existing political constraints, uneven strategic rescaling as between labor and capital, intensified economic and structural demobilization, and political institutional changes associated with the reforms and crisis.

First, enduring constraints on political action continue to impede labor politics despite democratic reforms. SOE unions, banned under military rule in 1991, remain illegal. These unions, which comprised the backbone and essential core of the Thai labor movement during the 1980s, have been only partially supplanted by representational associations. Similarly, lack of legal protection for union organizers and activists, especially in the context of recent anti-union campaigns, has further depressed already low union densities in the private sector, where only around 2-3% of workers are organized.

Second, there is a striking disjuncture between locally-based protest directed at sector-specific policies on the one hand, and the broader national and transnational economic strategies (the concern of corporate and political elites) within which these localized sectoral policies are embedded. From the standpoint of popular sector groups, this disjointed and fragmentary response to policies of crisis management only invites piece-meal, localized concessions as driven by immediate political threats and disturbances. As well, it sometimes divides local groups, throwing them into competition one with another as illustrated by growing anti-immigrant sentiment among workers and anti-unionism among farmers and the urban poor. To a degree, this fragmentation of vision and collective action has been tempered by the efforts of politically active NGOs to encourage a more generalized understanding of elite strategies of reform and crisis management. This NGO role has been reinforced by a gradual shift, encouraged by high levels of unemployment, reduced social and community expenditure, and increasing job losses among a now threatened SOE labor aristocracy, from a workplace-centered politics of production to a more unifying community-based politics of consumption. It is nonetheless clear that labor politics and protest have failed directly to engage the larger strategic vision shared by corporate, national, and international elites: that of a continuance of the open market reform process, albeit with some palliative buffering against political and social turmoil.

A third explanation for the generally weak strategic position of workers relates to economic structural consequences of the crisis itself. Growing unemployment has of course undercut the bargaining power of workers and unions at the firm level, despite compensatory political activation. Employment casualisation has shifted market risk from firms to workers, while also impeding union organizing. Low-road strategies of casualisation alongside high levels of unemployment have resulted in a displacement of a politics of production at worksites to a politics of consumption in communities and public places, with the further effect of forging at least temporary alliances among middle and working class groups. Outsourcing and informalization have increased the market vulnerability of SMEs, thus undercutting their bargaining position vis-í -vis larger firms. Privatization is gradually reducing the politically secured employment and work rights which SOE workers previously enjoyed. Political moves to repatriate migrant workers increases their political and employment vulnerability. And the return of urban workers to the provinces undercuts organized labor through dispersion and mobility.

Finally, if in these and other ways the reforms and crisis have created economic structural impediments to the effective insertion of a labor agenda into processes of crisis management, their implications for political institutions have been equally important. One of the most important of these implications in Thailand as elsewhere has been to disempower popular sector groups by removing critical economic decisions from public (and potentially ‘democratic') arenas to private and corporate domains. The IMF-Thai assistance agreements, under which liberal reforms have been accelerated, have been privately negotiated between multilateral agency officials on the one hand and high-ranking Thai officials on the other. Indeed, the removal from public and parliamentary debate of developmentally and socially critical decisions relating to interest rate regimes, financial sector restructuring, and economic reforms has become an important political issue in itself, as evidenced by a parliamentary impeachment effort following negotiation of a late-1998 IMF letter of intent agreed upon without parliamentary debate.

A second political institutional effect of the crisis has been a redistribution of effective power from functional ministries (Industry, Agriculture and Co-operatives, Transportation, Labor and Social Welfare) to Finance and Commerce. The political displacement of labor and agricultural ministries in particular has effectively reduced popular sector political leverage. Thus, the social agendas of workers are increasingly subordinated to questions of economic stabilization and regulatory reform, the agendas of a Finance Ministry whose heightened influence derives from its brokerage role in negotiating and managing massive external funding and other financial assistance during the crisis.

A final political institutional outcome noted earlier relates to an ongoing extroversion of national economic policy networks. Such extroversion had already occurred under earlier reforms which opened local finance and product markets to growing foreign participation. The crisis has vastly accelerated this process. First, the IMF, World Bank, Asian Development Bank, and other multilateral organizations have by necessity acquired tremendous influence in strategies of crisis management, based on their role in providing loans and financial assistance. Second, foreign firms and associations (especially foreign chambers of commerce) have enjoyed an enhanced bargaining power in national policy both as a consequence of government efforts to attract new foreign investment, and as a structural effect of their growing presence in financial and industrial sectors. Indeed, it is this increased role of foreign capital which has precipitated a resurgent economic nationalism among domestic businesses, business associations, parliament, and NGOs, and which has thus defined an issue around which labor and some domestically oriented factions of capital have mobilized.

It has been argued that a labor system perspective permits an integrative and generalized understanding of the labor outcomes of the strategic directions taken by state and corporate elites. In the context of the reforms and crisis, such a perspective offers a unifying interpretation of a variety of seemingly discreet experiences and policies across economic sectors and labor processes.

In seeking to understand the social impact of the economic crisis for Thailand, it becomes clear that the crisis may be seen as having accelerated a number of the developmental and social tensions and imbalances already flowing from ongoing economic and market reforms, but increasingly politicized by their very acceleration. This politicization has encouraged greater immediate attention to social issues on the one hand, and to the longer-term developmental implications and opportunities embedded in the reform process on the other, at both national and international levels. Social programs, driven by the immediate (or threatened) pressures of public protest, have largely been addressed through short-term alleviative measures, while development issues, prompted by the more substantial institutional representations of domestic capital, have been addressed through longer-term initiatives relating to SME and agro-industry development, in both cases fully consistent with dominant elite strategies of open, world-market-oriented development. As both a means and structural outcome of such strategies, Thai labor systems have been institutionally reorganized and globally rescaled in ways which exceed the organizational and visionary scope of popular sector politics.

The political impacts of the crisis (state reconfiguration and extroversion, marginalisation of democratic politics, and an undercutting of the institutional and organizational strength of popular sector organizations) have in turn strengthened the dominant reform vision by undercutting popular sector policy representation even under democratic reforms and despite the growing mobilization and consolidation of labor and popular sector groups. Indeed, this confluence of crisis-induced political mobilization and exclusion suggests the possibility of heightened levels of political conflict extending far beyond the economic crisis itself.

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