How well has Thailand prepared for the aged society?

Economy July 20, 2016 01:00

By Special to The Nation

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WHILE THE proportion of the Thai population aged 60 years old and above is rising, the proportions of working adults and children are declining.

The National Economic and Social Development Board (NESDB) forecasts that Thailand will become an absolute aged society in five years, when the proportion of elderly people makes up one-fifth of the total population.

A recent public forum held by the Thailand Research Fund in cooperation with the NESDB and the United Nations Population Fund (UNFPA) indicated that demographic change would affect the Thai economy in three major areas.

First, the diminishing labour force will cause a decline in total productivity, pulling down annual economic growth by an average of 1-1.5 per cent for the next decade. The situation could cancel out all previous efforts to improve income distribution, as the per capita income will be reduced by about 30 per cent in 30 years.

Second, public spending on old-age pensions is soaring, going from Bt120 trillion in 2008 to Bt300 trillion in 2014, and will mount up to Bt800 trillion, equivalent of 3 per cent of gross domestic product, in 10 years. Expenditure on old age thus is threatening fiscal sustainability in the medium term.

Furthermore, the maximum payment from the universal old-age pension programme of Bt1,000 a month falls short of providing the income required to keep an elderly citizen above the poverty line of Bt2,647 a month.

According to a 2014 socio-economic survey, only 4 per cent of elderly Thais could rely on their own retirement savings for a living. A majority of them (56 per cent) depended on income transfers from their own children, but that tendency is dropping.

Third, the well-being of Thai families is at risk of falling apart. In rural areas, more elderly people are being left to live by themselves or with their grandchildren while their adult children migrate to work in the cities.

With higher social and economic pressures in urban areas and more job opportunities for women, many Generation Y people (19-36 years old), who are in their fertile period, are deciding to defer marriage and having children, hence continuing to reduce Thailand’s total fertility rate (TFR).

Meanwhile, some Generation X workers (aged 37-51 years) whose parents suffer from chronic illnesses have to take early retirement to care for them, thus reducing Thailand’s labour force.

Changing demographic structure is proving a major threat to the sustainable development of Thailand. The issue has been raised in various platforms and is noted in the 12th National Economic and Social Development Plan and the National Strategies for Long Term Development as a major challenge for Thailand’s future growth.

However, it is important that the general public have a proper understanding of the issue and not fall into dismay. All social enterprises have to work hand in hand so as to handle the issue more effectively.

For example, private companies should be encouraged to hire elderly workers. Some tax incentives may be required to get companies to adjust their working environments, but families and younger colleagues need to change their mindsets about older workers as well.

In addition, local jurisdictions should be more involved in looking after their elderly and children who live in misery.

Working adults need to have more financial literacy and discipline for saving for retirement.

Furthermore, the central government should provide more concrete action plans on how to maintain the TFR, improve labour productivity, and promote technological advancement by enterprises.

Though the country cannot avoid getting older, we can choose to become healthier and well prepared for our future.

Amornrat Apinunmahakul, who has a PhD in economics, is with the School of Development Economics, National Institute of Development Administration.