Thailand’s working-age population is set to peak next year with the percentage of the population over 65 more than doubling between now and 2030. Experts already predict that Thailand may have entered into a period of reduced growth and economic challenges posed by an ageing population.
Thailand’s implementation of ‘progressive’ UN policies in the 1970s now means that it is the only country in Southeast Asia facing an ageing workforce and demographic crisis similar to Japan, western developed countries and China over the coming decades. Fertility rates in Thailand have declined sharply in the last forty years from 5.6 in 1970 to 1.5 in 2013. This is the result of an extensive contraception and planning advice programme carried out in conjunction with the UN in the 1970s.
Thailand’s demographic problem is unique
There are also other factors which accentuate the problem in Thailand’s case. Thailand has a large proportion of its population without secondary level education. Some estimates put this at 50% of the workforce. Another key issue for Thailand is the large segment of the population still engaged in agriculture. This helps to explain why Thailand also has an underdeveloped service sector as part of the overall economy. Experts predict that the demographic challenge faced by the Thai adult workforce will be the most severe in Southeast Asia over the coming decades. While these conditions may be unique and imply a more chronic demographic problem, Thailand’s culture and the resilience of the Thai population may prove that the situation is not as dismal as it appears.
Demographics may already be impeding economic growth
Thailand stands out among its ASEAN partner countries. Although the Thai economy is the second-largest, its labour force growth rate has been minimal in recent years. This is in stark contrast to other Southeast Asian economies. In fact, the Thai labour force is projected to begin its decline next year in 2017.
It may already be a factor in Thailand’s sluggish economic performance. This has hitherto been attributed to political instability and a slowdown in the world economy. These are undoubtedly factors but demographics are now beginning to contribute to the problem. In 2013, Santitarn Sathirathai, an analyst with Credit Suisse, predicted that Thailand’s average growth rate would fall by 1% over the next decade as a result of labour shortages, a skills deficit and lower investment rates. In this assessment, he pointed out that the IMF has attributed 0.8% of Thailand annual economic growth between 1990 and 2012 to an expansion of the working-age population.
Significantly, Thailand’s economic growth rate has, for some years, lagged behind its Asean peers who have higher rates of population growth. ‘Thailand faces not just ageing challenges but challenges from changing consumers and workers,’ says Amlan Roy of Credit Suisse. ’Thailand needs to face up to its demographic challenges in a very urgent, consolidated and holistic fashion.’
Calls for a programme to deal with elderly dependency
In 2013, the Thai National Economic and Social Development Board called on the Thai government to draw up a plan for family development to deal with projected growth in Thailand’s dependent population by 2040. It also called for self-sufficiency measures such as a scheme for retirement savings. It projected that in 2040, 25% of Thailand’s population will be over 65 years of age.
Supavud Saichae, Head of Research at the Thai securities firm Phatra Securities, said at that time: ‘I’m sure we can do better, there is no universal health care and benefits are being expanded from a social security system set up several decades ago. Industrial workers and civil servants have pension funds. But over 20 million workers in the agricultural and informal service sectors do not have such schemes and it is likely they will not have enough savings to retire on.’
Thailand’s government has not been inactive
What many may be surprised to learn is that Thailand has some very progressive policies for its elderly population. In 1982, in what was described as a ‘visionary move’, Thailand established the National Elders Council and in 2002, the Thai government put forward a second national plan for older people to run from 2002 to 2021.
Various legislative acts and policies, from the 1999 Declaration of Thai Senior Citizens to the Elderly Act of 2003, have all placed an emphasis on guaranteeing the rights of the elderly in Thai society. The elderly in Thailand are defined as Thai citizens of sixty years and over. The various policies and declarations place emphasis on guaranteeing fundamental rights for the elderly such as the right to accommodation, clothing and nourishment as well the protection and support of elderly citizens in society.
Elderly poverty rate compares well with western countries
The reality on the ground is somewhat different even though the government initiatives are of real benefit to the elderly. Thailand is a country where the elderly culturally play a very important role in society. The poverty rate for the elderly in Thailand is 10.9% which is in excess of the average at 7.7%. Nevertheless, it is important to note that this corresponds favourably with many other countries including those which are developed and undeveloped.
The Thai government is also committed, as one of its policy aims, to eliminating poverty among pensioners as a priority.
Thai government calls on companies to employ elderly
The World Bank projects that the number of working-age adults in Thailand will shrink by 11% by 2040. In order to address this challenge and to help pay for a corresponding increase in the cost of pensions, the Thai government has been encouraging companies throughout Thailand to keep the elderly in employment and provide as much opportunity as possible. Thailand does not have an extensive social welfare system and care for the elderly is, for the most part, the responsibility of family members. However, the Thai government has a number of advanced pension schemes and a basic universal scheme which analysts believe must be refined and developed to meet the challenges of future decades.
Bank of Thailand governor on the demographic challenge
In 2015 the Thai government paid out ฿61.37 billion in pension payments to the elderly and this is projected to increase by 16% over the next five years to ฿71.3 billion. In January 2016, the Governor of the Thai Central Bank also warned about the challenge facing Thai society. He said that Thailand will have to focus on increasing productivity to pay for the increased cost. ‘Everyone has to be able to earn more to be able to shoulder the cost of our ageing society,’ Bank of Thailand Governor Veerathai Santiprabhob said.
Thai women less interested in marriage, a new factor
The reduction of the birthrate is also being exacerbated by the rising age for marriage among Thai adults and it has also been noticed that many Thai women particularly those with financial independence are opting not to marry as all. It is a similar trend that has been observed by economists all over Asia. ‘The fact is that Thailand as a society is ageing more quickly than its neighbours. The Thai economy up to this point has been quite successful and has allowed many Thai people to embrace western culture and lifestyles but this will be challenged in the coming decades with the demographic problem, we have seen that part of the solution to this has been the importation of labour from neighbouring countries but that has had its own implications and Thailand may not be able to reply on this in the future,’ says James Morris, a commentator in Bangkok.
Thai elderly workers show how Thailand may yet overcome
A recent news report in Thailand featured an interview with a 72 years old bus conductor Pranom Chartyothin, who works in a bus operated from the main Bangkok bus terminal. The elderly Thai woman previously worked as a cleaner but took up the job as a conductor with the Bangkok Bus company when her husband died.
The manager of the bus terminal, Pornsak Bowornsrisuk, with grey hair and sixty-three years old himself, told the media: ‘you’ve got to be damn tough to do this job.’ Pornsak coordinates arrivals, departures and journeys across the Thai capital on a daily basis.
At the Bangkok Transport Company, the management is embracing the challenge and report that 13% of their workforce is over 60. A director of the company, Phatharawadee Klomjaroon, reports that older staff are more likely to keep their cool particularly when dealing with Bangkok’s infamous bumper traffic.’ Bangkok’s streets are jammed,’ the Bangkok Transport boss said. She went on: ‘Young employees sometimes still cannot control their temper, but the older employees are focused and more mindful. They can keep a calm demeanour when it comes to driving.’
One of the employees, Darunee Kamwong, interviewed for the news report told the media that a monthly pension available from the government of up to ฿1,000 per month made it simply not feasible to retire. She said that she had no choice but to keep working. ‘It is tiring but we just have to keep going, there isn’t anyone to take care of me.’
Elderly Thai woman has two jobs to support her family
Thanyaluk Boonsangiem is well past retirement age at sixty seven years of age. Retirement age in Thailand is sixty years of age. Originally from Buriram province, she moved to Bangkok in the 1980s. She works at a clothes factory as a canteen assistant. She also has a part-time job in a retail shop two days a week. Her son has a retail job on a low salary and has two young children. Thanyaluk must work in order to help support the family. ‘It is important sometimes for the older people to chip or pool resources,’ she says. She hopes to be able to continue to work as long as her health permits.
‘I think Thai people if you will meet them you will see that they are quite reasonable and very hard working,’ says Thanyaluk. She has reared five children but still helps pay for the education of her two grandchildren. ‘I think I will work another five years,’ she says. ’I suppose I am old already but the time has not yet come for me to rest,’ she tells a translator.
40% of elderly Thai people are still working
There are estimated to be over 10 million elderly Thais and the most accurate information available suggests that 40% of them are working. One Thai official, Anusan Thienthong, the head of the Department of Older Persons, recently revealed that the Thai government was considering extending the retirement age for some occupations.
Even though the demographic problem in Thailand is more acute than other East Asian countries and while the economy is currently stagnating, it would be wrong to write off Thailand’s prospects. The country has quite a good administrative infrastructure and has shown itself, over the past 50 years, to be quite dynamic.
More old people looking for work in Thailand
One Thai employer, speaking to the media, has reported a noticeable increase in the number of elderly positions seeking positions with his company. The director of the Cho Heng Rice Vermicelli Factory Co told the media that more and more older people are seeking jobs, ‘We’re getting more calls asking if we are accepting older applicants,’ Varatus Vongsurakrai said. He revealed that 62 of his 1,600 workers were elderly and often took the positions in order to pay education fees or English language school fees for college for children or grandchildren. This is a common theme among many of the elderly who aspire to see the younger Thai generations achieve higher goals.
Thailand’s elderly show courage and a noble spirit
Traditionally in Thai culture, the younger generations take care of the elderly and this is still the norm. This new trend indicates that there may be something new happening in Thailand as economic conditions and trends demand. Anurat is a factory worker facing retirement in two years. He has reared two children with his wife who works as a teacher. But Anurat has still not completed the mortgage on his home. He is a valued member of staff at the engineering factory where he works but is still not sure whether he will be able to extend his job beyond the retirement age of 60. ‘I am worried that they may not extend, I think I would like to work until I am 70 so that I have a little security and I can pay for my house. I do not want to be a burden to my sons and daughter,’ he tells our translator.