Thanawat Polvichai, director of the Economic and Business Forecasting Centre at the UTCC, said that 96 per cent of the workers surveyed are shouldering a debt burden, which this year collectively reached the highest since 2009.
The survey was conducted recently on 1,194 workers earning less than Bt15,000 a month.
Workers’ household debts rose 4.95 per cent from last year to Bt137,000 per household. Of the total debt, 65.4 per cent was extended in the formal system, with an average lending rate of 10.6 per cent a year. Informal loans accounted for the rest, with an average lending rate of 20.1 per cent per month.
Some 36.1 per cent of the respondent said they had taken out loans to cover general spending, followed by purchases of assets such as cars, motorcycles and houses, as well as for investments.
Based on the survey, monthly debt repayments averaged Bt5,326 and 85.4 per cent of the respondents had defaulted due to a combination of reduced income and higher expenses, often caused by higher prices for products, as well as higher lending rates.
Thanawat said that 47.2 per cent of the workers questioned would spend less in the next three months and 68.5 per cent encountered financial difficulties as a result of higher livings costs, higher debt burdens and lower income. In regard to spending behaviour, 58.1 per cent had spend the same amount as their income, while 24.9 per cent spent less than their income. Some 58.6 per cent had no savings and the remaining 41.4 saved an average of Bt498 per month.
Another recent survey - of 2,193 workers – indicated that spending is expected to rise 3.7 per cent year-on-year for the Labour Day holiday on May 1, hitting the highest mark since 2009, due to the high living costs.
Thanawat said most of respondents reported that the minimum wage increases, which took effect on April 1, were moderately appropriate. Though they wanted the government to raise the wage every year to match the higher cost of living.
Other suggestions made in the poll extended from taking steps to reduce unemployment to the government exercising some controls over product prices.
Thanawat said that the survey found there was a fragile recovery in workers’ purchasing power with no savings, while the agricultural sector has seen low purchasing power due to the low prices of agricultural products. Both groups constitute 60 per cent of Thailand’s population and do not want to spend due to a lack of confidence and fear of unemployment.
With this scenario, economic growth is expected to come from tourism and exports only, not from the grassroots economy, Thanawat said.
Meanwhile, the centre still maintains its estimate for this year’s Thai economic growth at 4.2-4.6 per cent, he said, while expressing concerns over the baht situation and trade wars in the second quarter of this year.
Thanawat urges the government to accelerate the additional budget to the local areas to drive the grassroots economy particularly construction which could bring employment and prices of agricultural proiducts, while expediting the government’s investment projects.
Published : April 26, 2018
By : THE NATION