Thailand’s poverty rate on the rise, accelerated by virus crisis

People queue up for free food handouts from a temple in Bangkok’s Don Mueang district earlier this April

The number of people living below the poverty line in Thailand, currently defined as having less than $5.50 a day to spend as per the definition for the upper-middle-income country poverty line by the United Nations, has been gradually rising over the past few years and is now being accelerated by the economic fallout of the coronavirus crisis.

While over the past three decades, owing to respectable economic growth, strong foreign direct investment and purposeful government policies, the percentage of Thais living in poverty has fallen dramatically from over 65 per cent in 1988 to less than ten per cent in 2018, the trend has reversed in recent years as household incomes stagnated amid lackluster economic growth, rising prices for basic goods and deteriorating job security.

Between 2015 and 2018, the poverty rate in Thailand increased from 7.2 per cent to 9.8 per cent as per latest available figures, while the overall number of Thais living in poverty rose from 4.85 million to more than 6.7 million out of a population of 68.5 million, World Bank data shows.

More falling back into poverty as the coronavirus crushes the economy

And the rate is expected to rise further, most likely at a much faster speed in the current situation. Economic growth in Thailand is expected to contract significantly in 2020 due to the impact of the coronavirus outbreak owing to a decline in external demand affecting trade and tourism, supply chain disruptions and weakening domestic consumption.

The coronavirus pandemic has touched people from all walks of life. Across Thailand, children are out of school, many employees are working from home, most with reduced salaries, and business owners are struggling to stay afloat with revenues drying up. The less fortunate have lost their jobs or incomes at all and are forced to seek alternative livelihoods.

Declining incomes pose a serious challenge for poverty reduction, the World Bank noted in a recent comment on the situation in Thailand. More than half of all workers in Thailand are informal, meaning they are not registered and covered by a social security scheme and are particularly vulnerable. In 2018, there were an estimated 21.2 million informal and 17.1 million formal workers. Besides agriculture, with a 92 per cent informality rate, jobs in trade and retail have the second highest rate of informality at 60 per cent.

While the Thai government has introduced a series of fiscal and monetary packages for affected population brackets – including soft loans and relaxed loan repayments, reduced social security contributions and tax deductions for small and medium enterprises, as well as emergency cash handouts of 5,000 baht per month for three months for informal workers not covered by social security – the organisation and distribution was not very well organised and a number of people were left empty-handed.

Reports of long lines of hundreds of people at a time lining up in front of temples or at charities for free food distributions made the headlines in the country.

Thailand facing a profound contraction in GDP growth

Given the fact that the economic crunch isn’t going to end soon – the World Bank has revised Thailand’s growth projections for 2020 down from 2.9 per cent to a range of minus three to minus five per cent, reflecting a sharp economic contraction – prolonged pain in the less well-off population seems inevitable as a sound recovery in 2021, especially in tourism and exports, is highly in doubtful, as it stands.

The World Bank is suggesting that Thailand uses the time to build up a much wider-ranging social protection system than the rudimentary programme it has now, introducing a better unemployment insurance system,  employment subsidies and sustainable measures for reskilling and upskilling unemployed workers. This should be complemented by more generous, but also more targeted programmes for the poor, the World Bank suggests.

In the medium and long term, an improved social protection system in Thailand will need to be complemented by labour market policies tailored to the needs of a knowledge-based economy by training programmes that reflect the shifting demand in the labour market towards more and much-needed socioemotional skills and higher-order cognitive and technical skills, it added.

People queue up for free food handouts from a temple in Bangkok's Don Mueang district earlier this April The number of people living below the poverty line in Thailand, currently defined as having less than $5.50 a day to spend as per the definition for the upper-middle-income country poverty line by the United Nations, has been gradually rising over the past few years and is now being accelerated by the economic fallout of the coronavirus crisis. While over the past three decades, owing to respectable economic growth, strong foreign direct investment and purposeful government policies, the percentage of Thais living...

People queue up for free food handouts from a temple in Bangkok’s Don Mueang district earlier this April

The number of people living below the poverty line in Thailand, currently defined as having less than $5.50 a day to spend as per the definition for the upper-middle-income country poverty line by the United Nations, has been gradually rising over the past few years and is now being accelerated by the economic fallout of the coronavirus crisis.

While over the past three decades, owing to respectable economic growth, strong foreign direct investment and purposeful government policies, the percentage of Thais living in poverty has fallen dramatically from over 65 per cent in 1988 to less than ten per cent in 2018, the trend has reversed in recent years as household incomes stagnated amid lackluster economic growth, rising prices for basic goods and deteriorating job security.

Between 2015 and 2018, the poverty rate in Thailand increased from 7.2 per cent to 9.8 per cent as per latest available figures, while the overall number of Thais living in poverty rose from 4.85 million to more than 6.7 million out of a population of 68.5 million, World Bank data shows.

More falling back into poverty as the coronavirus crushes the economy

And the rate is expected to rise further, most likely at a much faster speed in the current situation. Economic growth in Thailand is expected to contract significantly in 2020 due to the impact of the coronavirus outbreak owing to a decline in external demand affecting trade and tourism, supply chain disruptions and weakening domestic consumption.

The coronavirus pandemic has touched people from all walks of life. Across Thailand, children are out of school, many employees are working from home, most with reduced salaries, and business owners are struggling to stay afloat with revenues drying up. The less fortunate have lost their jobs or incomes at all and are forced to seek alternative livelihoods.

Declining incomes pose a serious challenge for poverty reduction, the World Bank noted in a recent comment on the situation in Thailand. More than half of all workers in Thailand are informal, meaning they are not registered and covered by a social security scheme and are particularly vulnerable. In 2018, there were an estimated 21.2 million informal and 17.1 million formal workers. Besides agriculture, with a 92 per cent informality rate, jobs in trade and retail have the second highest rate of informality at 60 per cent.

While the Thai government has introduced a series of fiscal and monetary packages for affected population brackets – including soft loans and relaxed loan repayments, reduced social security contributions and tax deductions for small and medium enterprises, as well as emergency cash handouts of 5,000 baht per month for three months for informal workers not covered by social security – the organisation and distribution was not very well organised and a number of people were left empty-handed.

Reports of long lines of hundreds of people at a time lining up in front of temples or at charities for free food distributions made the headlines in the country.

Thailand facing a profound contraction in GDP growth

Given the fact that the economic crunch isn’t going to end soon – the World Bank has revised Thailand’s growth projections for 2020 down from 2.9 per cent to a range of minus three to minus five per cent, reflecting a sharp economic contraction – prolonged pain in the less well-off population seems inevitable as a sound recovery in 2021, especially in tourism and exports, is highly in doubtful, as it stands.

The World Bank is suggesting that Thailand uses the time to build up a much wider-ranging social protection system than the rudimentary programme it has now, introducing a better unemployment insurance system,  employment subsidies and sustainable measures for reskilling and upskilling unemployed workers. This should be complemented by more generous, but also more targeted programmes for the poor, the World Bank suggests.

In the medium and long term, an improved social protection system in Thailand will need to be complemented by labour market policies tailored to the needs of a knowledge-based economy by training programmes that reflect the shifting demand in the labour market towards more and much-needed socioemotional skills and higher-order cognitive and technical skills, it added.

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