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Grant Thornton


Shifting Demographics: The Hidden Derailer of the Thai Economy

 

Thailand, like a growing number of other countries, must come to terms with a serious demographic problem: As birth rates decline and life expectancy increases, its population is getting older and older. Indeed, Thailand is well on its way toward becoming a ‘super aged society’, defined as having 20% of its population over the age of 65.

The consequence of this demographic change is that a shrinking number of working-age people will be forced to support an increasing elderly population. For a country whose household debt is already at an alarming 90% of GDP, the economy is simply unable to bear such an additional burden. And yet, with Thailand’s birth rates now consistently well below replacement level, this demographic crunch is already starting to occur – and the time to address it is running out.

Analysis from our audit firm in Thailand indicates that such a large-scale shift will require all of society to adapt. For the private sector, adaptation initiatives should focus on:

  • Developing new products and services to cater to the nation’s growing elderly population
  • Prioritising technology and innovation, to increase productivity even as the labour pool shrinks
  • Building a positive and inspiring corporate culture, to retain skilled talent whose leverage on the job market will increase amid higher demand
  • Upskilling in-house talent to better meet the needs of a digital economy
  • Hiring skilled or semi-skilled labour from overseas where local talent cannot be found
  • Outsourcing non-core tasks to allow for faster progress on the above tasks

 

At the same time, the Thai government should recognise its own role in building a more durable economy moving forward. Public initiatives should include:

  • Investing in a system of education that meets the needs of tomorrow’s economy, by cultivating technological literacy, inquisitive learning, and creative problem-solving skills
  • Following through on its Bio Circular Green initiative, by clarifying strategy and investing in solutions that can make the project a success
  • Establishing a national system of childcare using public funds, to encourage more parents to remain part of the workforce
  • Improving access to public health services, especially fertility treatments
  • Loosening regulations on businesses, so they can more easily hire foreign experts in areas where Thai expertise remains lacking
  • Demonstrating sensitive, transparent, and fair-minded leadership, to avoid social unrest during times of economic instability

 

We would like to underscore this final point about leadership. Citizens of a country, as well as employees of an organisation, must be well informed about both the logic and the strategy behind the major changes that they will start to see occurring around them.

Particularly with social media fanning the flames, people tend not to give established institutions the benefit of the doubt. It is far better to keep everyone in the loop, listening to their ideas and responding in good faith to their concerns, than to stay silent and let people’s uncertainty give way to cynicism.

Although Thailand’s demographic crisis likely cannot be averted, it can be dealt with if we act now. If your organisation would like assistance on this or other issues moving forward, contact our audit firm in Thailand today.