Thailand Aging Society & Economic Challenges

The views expressed in this presentation are the views of the author and do not necessarily reflect the views or policies of the Asian Development Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.

THAILAND: Aging Society & Economic Challenges

DR. KIRIDA BHAOPICHITR Director TDRI Economic Intelligence Service (EIS) 26 February 2019

The Situation

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Unlike most aging economies, Thailand is middle-income

Thailand 37.7

Source: CIA Factbook, 2017

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Thailand is aging quickly Population over 60 years old

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Average age has been rising

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Number of working-age population is falling Population 15-59 years old

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In 15 years, almost half of Thais will be above 50 years old Thailand’s demographic structure

Age

Men

2017

Women Age

Men

2032

Women

Million

• Largest share of Thais (~10m) are 40-50 yrs old • 12 million are over 60; 4m over 70 yrs old • More are women

• Largest share of Thais (~10m) are 55-65 yrs old • 20 million will be over 60 with almost 10 million over 70 yrs old • More are women

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Most elderlies today have low education levels

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Majority of elderlies make less than Bt100,000 (US$3,125)/year

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Elderlies rely on themselves and their children for incomes

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Formal sector pension coverage in Thailand is low % of Workers & Retirees in Formal Sector Pension

Source: World Bank, Live Long and Prosper: Aging in East Asia and Pacific (2015)

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Urban women in Thailand leave labor force earlier than other groups

Source: World Bank, Live Long and Prosper: Aging in East Asia and Pacific (2015)

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Poverty is high among households in Thailand with older heads

Source: World Bank, Live Long and Prosper: Aging in East Asia and Pacific (2015)

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Economic Implications

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Economic implications of an Ageing Society

1. Less labor force

less incomes, less consumption, less taxes collected

2. Explosion of health care costs 3. Explosion of social welfare costs for elderly 15

Thailand’s share of labor force is falling Thailand’s population (Million)

Thailand’s share of labor force (%)

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Public health care expenditures have risen quickly over the past 20 years Percent

Share of public health expenditure to total Gov expenditures

2002Nation-wide coverage of Universal healthcare

Share of public health expenditure to GDP

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Public health care expenditures will triple in 15 years! Billion Baht

Source: TDRI (presentation), 23 January 2018

2016

2032

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One-fourth of elderly has no saving % of population over 60 yrs-old with savings 1/

Source: National Statistics Office, Elderly Survey 2014

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Elderly has debt of Bt351,000/ person; Gen X &Y’s debt has been increasing rapidly

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Preparing for Aged Thailand

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Policy options to lower dependency & sustain economic growth Labor Policies

1. Raising retirement age & incentives for hiring elderly 2. Increasing female labor force participation 3. Improve labor productivity through life-long learning & economic restructuring

4. Encouraging inward migration & Automation 5. Promoting preventive healthcare 6. . Promoting financial literacy & new financial products 7. Strengthening the pension systems 8.

Encouraging more child births 22

Thailand’s labor productivity needs to improve Labor productivity (US$ per person per annum) 100,000 Manufacturing

Service

80,000 60,000 40,000 20,000 0 Singapore

Malaysia

Thailand

Source: IMD World Competitiveness Yearbook 2012

Phillpines Indonesia

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As Thailand ages, service sector could be a future engine of growth

Share of Real GDP (%), 2016 Others 1%

Share of Employment (%), 2016 Others 1%

Agriculture 6%

Agriculture 31%

Services 62%

Manufacturing 28%

Services 45%

Construction 3% Construction 6%

Manufacturing 17%

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Thailand’s labor force will decline by more than other ASEAN countries

Source: World Bank, Live Long and Prosper: Aging in East Asia and Pacific (2015)

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More Policy Options  Aging implies a strong pension, effective health care system for all, and financial products for elderly  Aging society implies lower demand for many government services -> public sector downsizing Example: The right school size  Aging society also requires more efficient infrastructure planning. Example: City planning, road/rail network connectivity 26

THANK YOU

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