Thailand: BoT: Labour to curb GDP

  • The Bank of Thailand forecasts that Thailand’s ageing demography will dampen the country’s annual GDP growth by 1.5% over the next 10 years. Thailand’s labour growth rate averaged 5% over the past decade. But such growth is expected to decline to 3.5% per year in the next decade, said Don Nakornthab, senior director of the economic and policy department.
  • The slowing rate will subsequently shave off 1.5% of Thailand’s GDP growth each year for the next 10 years, Don said.
  • Thailand’s workforce contributes 1.5% of the country’s GDP growth, according to central bank research.
  • Mr Don noted that Thailand’s GDP growth was about 5% per annum for the past decade. However, “as society and the workforce shrinks, Thailand’s GDP growth could be at 3.5% annually over the next decade if this structural problem remains unsolved”, he said.
  • He said Thailand is also expected to face pressure regarding migrant workers as many of them are expected to return their home countries on the back of economic development there.
  • Nakanang Kulnartsiri, a Bank of Thailand economist, said Thailand is transiting from an ageing society to aged society, which is expected to occur in 2020. Thailand will be the first developing country entering into a hyper-aged society by 2035, Miss Nakanang said.
  • Thailand’s per capita income stands at USD5,720 a year, meaning Thais are ageing faster than they build wealth. In the Asean region, Thailand has the highest ageing population ratio at 10% of total population. Ms Nakanang said the fall in Thailand’s labour force also restrains future economic expansion.
  • The country’s declining workforce is mainly due to early retirement, starting from 45 years, and a shift towards informal workers, of which around 20 million are 40-60 years old, making up a significant portion of the total population of 67 million, she said.
  • The central bank’s proposed solution to tackle this structural problem is to enhance and re-skill the workforce as part of a lifelong learning process. Increasing work flexibility, such as adjustment in jobs designed to fit labourer’s requirements and enhancing labour rights are other solutions to boost workforce productivity, according to the central bank.

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