Thailand: Unemployment drops amid increasing economic activity

Unemployment declined thanks to increased economic activity and a rebound in tourism. However, household debt increased, albeit at a slower pace, while total loan quality improved.

The National Economic and Social Development Council (NESDC) reported on Wednesday unemployment in the third quarter tallied 491,400, representing 1.23% of the total workforce, declining from 546,600 or 1.37% of the workforce in the second quarter.

The unemployment rates in 2020 and 2021 were 1.69% and 1.96%, respectively. Before the pandemic, the unemployment rate was around 1%.

The workforce totalled 40.1 million in the third quarter, up 0.9% from 39.8 million in the previous quarter, with 39.6 million employed, a 2.1% increase from the same period last year, owing to 4.3% growth in non-farm employment.

Employment in the wholesale and retail sector and hotel and restaurant sector in the third quarter expanded by 4.5% and 8.3% year-on-year, respectively, as a result of the expansion of tourism activity.

The number of foreign arrivals in the third quarter increased significantly.

Manufacturing employment expanded by 1.4% from the third quarter of last year as the capacity utilisation rate and exports continued to grow. Employment in the agricultural sector was 12.4 million, a decrease of 2.4% because of damage caused by floods.

Working hours rose to nearly pre-pandemic levels. Total working hours and working hours in the private sector were 42.5 hours per week and 46.7 hours, respectively, reported the state planning unit.

Roughly 6.8 million people worked overtime during the period, while the number of workers who worked less than four hours per day dropped to 1.9 million.

Wages continued to rise, but real wages contracted. Total real wages fell by 3.1% year-on-year, while real wages in the private sector dropped by 1.7%.

According to the NESDC, household debt continued to slow, with a value of 14.8 trillion baht in the second quarter.

Household debt grew by 3.5% compared with 3.7% in the previous quarter.

Similarly, the debt-to-GDP ratio fell to 88.2% following the economic recovery and a slowdown in debt incursion due to concerns about rising living costs.

Overall credit quality improved as a result of financial institutions’ efforts to support debt restructuring and credit quality management.

The ratio of non-performing consumer loans (NPLs) to total loans stood at 2.62% in the third quarter. However, the quality of auto loans must be closely monitored, according to the NESDC, because the ratio of loans unpaid for less than three months to total loans is continuing to increase.

According to the National Credit Bureau, in the second quarter bad debt grew at a high level among debtors aged 41 and over, particularly senior debtors and NPL debtors affected by Covid-19.

The state planning unit warned factors that may affect household debt in the fourth quarter include the rising cost of living, flood-affected households that need to take out loans to repair their homes, and a continuous hike in interest rates.