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publication June 22, 2021

Aging and the Labor Market in Thailand


Key Findings

Thailand’s working-age population was 57 million in 2019 of whom 67% participated in the labor market. At around 38 million, the labor force is the sixth largest in the East Asia and Pacific region and the fourth largest of countries in the Association of Southeast Asian Nations (ASEAN).

  • Thailand’s labor market faces several challenges including a declining labor force participation, slow shift of jobs out of agriculture, and high rates of informality.
    • Between 2012 and 2019, the size of the labor force shrank by more than 1.2 million people.
    • Agriculture still employs about 33% of all workers in Thailand compared to 23% of employment in the Philippines, 10% in Malaysia, and 5% in the Republic of Korea.
    • 54% of employment was informal in 2019
  • Older people face particular challenges in the labor market due to care responsibilities, health challenges and lower education levels.
  • These challenges are complicated by an aging population, which is occurring quickly in Thailand. The share of the population 65 or older is projected to rise from 13% today to 31% in 2060.
  • The working-age share of the population is projected to decline from 71% of the population in 2020 to 56% in 2060. This is equivalent to a nearly 30% decline in the working-age population, the third largest decline in the East Asia and Pacific region after the Republic of Korea (43%) and Japan (34%).
  • Population aging in Thailand is occurring while Thailand is at a relatively low-income level. The East Asia and the Pacific region’s older countries – Hong Kong SAR, China; Japan; Korea; and Singapore – had a GDP per capita of around $41,000 when their elderly dependency ratio was at the same level as Thailand’s today. This is more than twice the level of Thailand’s current GDP per capita.
  • Population aging could have a negative effect on economic growth. All else equal, Thailand’s declining working age population implies a mechanical decrease in growth in income per capita. Projections of the potential impact suggest that, absent any adjustments, changes in demographics will decrease growth in GDP per capita by 0.86% in the 2020s. (Source: Park and Shin 2011)
  • The report shows that, assuming constant labor force participation rates by age and gender, Thailand’s projected demographic changes would lead to a reduction in the overall labor force participation rate of about 5 percentage points between 2020 and 2060 and a reduction in the overall size of the labor force of 14.4 million people.
  • But negative impacts of aging are not inevitable:
    • Expansions in labor supply
      • Increases in healthy life expectancy mean that older people are likely to be able to work longer.
      • The large gap between male and female labor force participation means that there is significant potential to activate the labor supply of women.
      • Migrants have been filling gaps in Thailand’s labor force in recent decades, and could be better utilized to do so in the future
    • Increase labor productivity
      • A more productive workforce can counterbalance its smaller size

Several policies are essential to mitigate the negative and reinforce the positive impacts of population aging in Thailand:

  • Policies to extend working lives of older people
  • Policies to increase female labor force participation
  • Improvements to the migration system
  • A commitment to a lifelong approach to learning
  • Taking advantage of opportunities created by aging