Thai Industrial Policies Towards the Challenges of an Aging Society

By Morragotwong Phumplab

Introduction

Since 2005, Thai society has experienced a notable demographic shift characterized by the emergence of an aging society. This term refers to a societal condition wherein the proportion of individuals aged 60 years and above reaches or exceeds 10% of the overall population. Furthermore, Thailand is anticipated to become the world's first developing nation to transition to a completely aging society. Currently, Thailand is experiencing a complete transition into an aging society. Both governmental and non-governmental entities have initiated efforts to prioritize and raise awareness about the official transition to an aging society in Thailand, in response to the challenges posed by this demographic shift.

The Ministry of Social Development and Human Security, the Ministry of Public Health, and the Ministry of Labor have implemented a range of programs aimed at providing support for an aging population. Nevertheless, the multifaceted social landscape including political, economic, and social dynamics during the past approximately 20 years has exerted a discernible influence on the strategies employed to address the challenges posed by Thailand's aging population. Thailand is primarily recognized as a favored destination for elderly individuals from outside who seek care from Thai elderly-oriented enterprises. However, uncertainties persist over the forthcoming trajectory of Thailand's senior citizen population, with indications pointing towards a probable increase in numbers.

Thailand's progression into a fully-fledged aging society has been notably swift when compared to many of its ASEAN counterparts. Despite the broader ASEAN region undergoing a transformation into an aging society due to the presence of more than seven countries with large populations exceeding 60 years of age, Thailand stands out as experiencing the most profound changes in the region. Both Thailand and Singapore have successfully made the transition into complete aging societies, characterized by a demographic composition where individuals aged 60 and above constitute more than 20% of the total population.¹ Moreover, there is a compelling projection that Thailand will reach the status of a super-aged society by the year 2031, with the proportion of individuals aged 60 and above surging to 28% of the total population.^{2, 3}

A noteworthy aspect of Thailand's demographic transition is the rapidity of the process. To put it succinctly, the journey towards entering an aging society is being accomplished in less than two decades. This accelerated transition can be attributed to several pivotal factors, chief among them being the enhancement of healthcare infrastructure, which has significantly extended the life expectancy of the Thai populace. Additionally, the persistent decline in the birth rate, with an annual birthrate of approximately 600,000 individuals, has contributed significantly to the substantial growth of the elderly population.⁴

This article will delve into three primary aspects: the status of Thailand's aging society, governmental preparatory policies aimed at addressing it, and the challenges and impediments associated with an aging workforce, particularly within the industrial sector. Thailand's transition into a fully aging society has substantial ramifications for the labor market. As the working-age population decreases, the imperative to import foreign labor becomes increasingly pronounced. This is especially crucial given Thailand's high dependence on labor to drive its economy. Failing to import foreign workers could potentially hinder the nation's economic growth trajectory. Crucially, this underscores the need for both public and private sectors to adapt proactively to the evolving dynamics of an aging population in Thailand, set against the backdrop of swiftly transforming societal paradigms.

Thailand's Transition Towards a Complete Aged Society

In 2022, Thailand officially transitioned into a Complete Aged Society. Data sourced from the National Statistical Office revealed that in the same year Thailand's elderly population comprised 12,116,199 individuals aged 60 and above, constituting 18.3%⁵ of the total population of 66,090,475.⁶ The data indicates that Thailand is on track to become a Super Aged Society by 2031, with a predicted elderly population surpassing 28%. The limited timeframe of less than a decade from the present underscores the urgency of preparations across various domains, with a particular emphasis on the labor market and the provision of diverse welfare benefits. These aspects represent formidable challenges for government agencies tasked with managing the evolving demographic landscape as Thailand undergoes a profound transition into a long-term aging society.

Furthermore, as of 2023 there is a compelling estimation that Thailand may accelerate its entry into a Super Aged Society by a year, primarily due to a notable population decline since 2020. This demographic shift is marked by a declining birth rate of 0.76% and a reproductive rate of only 1.33%.⁷ The aforementioned statistics indicate an ongoing decrease in population, especially when compared to the Baby Boomer generation, a cohort characterized by a continually increasing number of individuals transitioning into the elderly demographic.

The challenge confronting the Thai government lies in the complexity of boosting birth rates and fertility rates. This endeavor encounters hurdles stemming from the values and lifestyles embraced by the upcoming generation, which prioritizes career success and economic stability ahead of family planning, particularly with regard to having children. Furthermore, the prevailing social conditions, economic uncertainties, and political instability contribute to a climate where the working-age population, particularly Generation Y and Generation Z, who will assume pivotal roles in Thailand's workforce in the coming years, find themselves compelled to prioritize their individual pursuits. Notably, they grapple with the specter of income insecurity, characterized by meager earnings in an era marked by soaring living costs. Additionally, heightened concerns pervade the political landscape, infrastructural deficiencies, and prevailing social conditions. These concerns encompass unforeseen circumstances, such as emergent security challenges like the Covid-19 pandemic and ecological disasters arising from the global environmental crisis. Collectively, these multifaceted factors reshape the outlook for the new generation concerning family formation and child-rearing. The cumulative impact of these variables strongly suggests a future where an increasing proportion of older individuals may find themselves living in isolation.

The necessity to tackle the difficulties of changing population demographics is of utmost importance, encompassing not just the government sector but also the private and business sectors. The effort to adequately prepare for and handle the intricate challenges posed by a rapidly aging population ought to go beyond temporary considerations and be recognized as a long-lasting national priority, based on sustainable resolutions. Therefore, this matter arises as a crucial obstacle for the incoming administration, necessitating prompt action. Its significance is underscored by its intricate interplay with the overarching economic trajectory and the future competitive standing of the nation.

The Thai Government & Aging Society Policy

For nations transitioning into an aging society, the foremost challenge that necessitates preparation is the prospective dwindling of the workforce, ultimately culminating in a shortage of labor. The World Health Organization (WHO) has advocated critical attributes that need to be cultivated to effectively adapt to the burgeoning aging demographic. These include the promotion of overall well-being and robust health, and the establishment of security and stability in the lives of the elderly populace. Additionally, a pivotal aspect entails the integration of the elderly into the labor force, affording them opportunities for meaningful employment.¹ This initiative represents a strategic measure not only to empower them but also to alleviate the burden of reliance on government welfare programs.

Numerous countries across the globe formulate and implement policies with the aim of effectively managing and enhancing employment opportunities for the elderly. Many nations recognize the aged as a demographic possessing great talents and untapped potential that can make significant contributions to societal advancement. Certain locations are implementing strategies to encourage the inclusion of older individuals in the workforce. These measures involve providing tax incentives to private enterprises and extending the retirement age to a range of 65 to 70 years, with the aim of augmenting the labor force by increasing the participation of older individuals. Additionally, it encompasses the creation of long-term healthcare facilities specifically designed for the aged population, with the aim of enhancing their overall quality of life.

For the Thai government, an immediate and pressing concern revolves around the necessity to overhaul and fortify the infrastructure, not only in major urban centers but also in rural provinces, to effectively cater to the needs of an aging population. The present state of affairs compels us to acknowledge that the existing infrastructure is ill-prepared to accommodate the exigencies of the aging society. Furthermore, in the longer-term perspective, the government faces the prospect of diminishing tax revenues owing to a significant reduction in the working-age population. This scenario could potentially precipitate a fiscal crisis, as the government grapples with the dual challenge of disbursing increased welfare payments to the elderly while grappling with lower tax collections. In light of these multifaceted challenges, the government has taken proactive measures for the year 2023. A comprehensive integrated plan, with a budget exceeding 438 million baht (US$12 million), has been devised, with allocations earmarked for the related ministries. This initiative encompasses a welfare promotion project specifically designed to prepare and ensure a high-quality retirement for individuals within the working-age range of 25 to 59 years.⁸

In fact, the Thai government has been actively engaged in addressing the needs of the elderly population since 1982, initiating its efforts with the implementation of the National Elderly Plan No. 1 (1982-2001), followed by No. 2 (2002-2021). These national strategic plans have been instrumental in delineating the trajectory for the development and comprehensive care of the elderly across the entire nation. Recent Thai governments have continued to underscore the significance of policies aimed at enhancing the well-being of the elderly by incorporating them into the ambit of 20-year national strategic plans. Additionally, the 12th National Economic and Social Development Plan places a prominent emphasis on unlocking the potential of the elderly, with an emphasis on fostering literacy and technological proficiency among this demographic.⁹ Furthermore, this plan delineates strategies for the development of technology and innovation that cater to the specific needs of the elderly and harness their potential as a driving force for national development.

The Ministry of Labor initiated a notable effort in March 2019 by issuing a statement that aimed to facilitate collaboration in promoting and expanding career prospects for the elderly. This entailed seeking cooperation from business establishments willing to engage individuals aged 60 and above in gainful employment. The stipulations of this effort include a mandate for employers to provide compensation at a minimum rate of 45 baht per hour ($1.23), along with a requirement that the work assigned should not jeopardize the well-being of the elderly, with a particular emphasis on service-oriented occupations and local handicrafts, among other suitable positions.¹⁰ Furthermore, government policy extends incentives to establishments that hire elderly workers, allowing them to deduct expenses up to twice the amount paid for their employment, provided that the employment does not account for more than 10% of the total workforce. In addition to these endeavors, there exist initiatives such as the Civil State Project for the Elderly, which facilitates employment opportunities for the elderly, and the "1 District 1Wisdom" initiative designed to empower the elderly to develop themselves and foster independence. However, it is important to note that while these projects have made commendable efforts, they remain relatively limited in scope and have not fully addressed the overarching structural challenges associated with elderly employment (Chart).

On Sept. 15, 2023, the Minister of Labor, in partnership with the Federation of Thai Industries, issued a noteworthy policy announcement within the framework of the newly established government. The implementation of this policy marked the initiation of automation as a strategy to mitigate the existing scarcity of labor and enhance the expansion of Small and Medium-sized Enterprises (SMEs). In conjunction with the ongoing automation initiative, there is a coordinated endeavor to augment the proficiency of employees through upskilling and re-skilling initiatives, with the objective of enhancing their capabilities to satisfy rigorous industry benchmarks.¹¹ Moreover, the Ministry of Labor has been considering the potential expansion of work lengths within specific sectors. This idea aligns with a strategic initiative to increase the daily minimum wage to 400 baht ($11) by the year 2024.⁸ The government's diverse measures exemplify a proactive stance in tackling the intricate issues arising from labor shortages and enhancing the competitiveness of the workforce within the ever-changing economic environment.

The year 2023 has been officially designated by the Ministry of Public Health as the year dedicated to the health and well-being of senior citizens in Thailand. Among the myriad governmental priorities, public health services and comprehensive health support emerge as paramount concerns demanding immediate attention and preparation. To underscore the urgency, it's essential to consider the dependency rate based on 2017 statistics, revealing that for every 100 individuals of working age, there are 51 individuals comprising the elderly and children who rely on them. Projections indicate that this ratio is set to increase to 64 people by the year 2027.¹² Furthermore, insights gleaned from the 2022 Health Data Center report underscore prevalent health issues among the elderly population. Notably, chronic illnesses such as cardiovascular disease, diabetes, and high blood pressure are prevalent, as is the challenging issue of dementia. Particularly striking is the alarming statistic that records as many as 1,046 elderly individuals succumbing to fatal falls, averaging three fatalities per day.¹³ This underscores the critical imperative of prioritizing health services and preventive measures for the elderly in Thailand.

In the midst of 2022, the Thai Cabinet took a significant step by endorsing the "Population Development Draft for the Long-Term Development of the Country 2022-2037". This blueprint is centered on the overarching concept of nurturing the Thai population across all age groups with the guiding principle of "Born Well, Live Well, Eat Well".¹⁴ This comprehensive approach encompasses the aspiration for individuals to be born into quality circumstances, to lead lives of quality while actively contributing to national development, and ultimately to age and pass on with dignity and quality of life. Furthermore, this visionary plan encompasses six strategic pillars, designed to support and address the challenges posed by an aging society in both the immediate and distant future. These strategies are:

1) Establishing quality family environments and cultivating a supportive framework for childbearing and child-rearing.

2) Enhancing and optimizing the productivity of the population.

3) Enhancing financial stability.

4) Promoting health and longevity through the reduction of premature mortality and the establishment of long-term care systems, including end-of-life care.

5) Creating conducive living conditions that facilitate quality of life across all age groups.

6) Managing migration effectively to align with demographic goals and objectives.

These strategies collectively serve as a comprehensive roadmap to address the multifaceted challenges and opportunities associated with Thailand's demographic evolution into an aging society. Furthermore, the Ministry of Public Health has instituted a policy aimed at facilitating comprehensive health promotion for the elderly, fostering their capacity for self-care on an ongoing basis. This proactive approach seeks to diminish dependency and encourage the adoption of favorable health behaviors among the elderly population. The overarching objective is to create an environment conducive to elderly-friendly communities that actively promote health and well-being. These health-related initiatives are strategically framed as investments in the long-term, with health issues viewed as costs that, when addressed effectively, can mitigate the burden of future public health expenditures. By extension, such efforts have the potential to alleviate the economic strain on the nation by reducing the healthcare costs associated with an aging population.

Elderly Tsunami: (Lack of) Economic Readiness

Despite the persistent dialogue surrounding the complexities associated with an aging population, the economic and administrative structures exhibit a lack of readiness to effectively navigate the shift towards a sustainable society that accommodates the needs of older individuals. The gradual increase in the percentage of individuals aged 60 and over within the population has resulted in a wide range of economic consequences, such as financial savings. However, the most urgent issue is the scarcity of individuals within the working-age population. The aforementioned advancements have substantial ramifications for the government's financial and economic obligations in tackling these difficulties. Indeed, a considerable number of economic professionals argue that if these situations are not handled properly, they could have long-lasting and wide-ranging impacts on the Thai economy.

Moreover, within the business sector in Thailand, a pressing concern emerges: the desire for growth amid a shrinking workforce. This predicament is further exacerbated by the inefficiency of aging workers who struggle to adapt to the rapidly evolving technological landscape within their respective industries. In today's global landscape, changes in organizational structure and the escalating costs associated with employment compound these challenges. The limitations in embracing technology stem from a lack of familiarity with swiftly evolving innovations. Multiple studies underscore the prevalence of entrepreneurs resorting to early retirement measures as a means to mitigate the impact of this technological gap. Addressing this issue is further complicated by the necessity of upskilling workers, either by updating existing skill sets or acquiring proficiency in entirely new technologies. From an employer's perspective, one potential avenue for resolution involves the adoption of automation systems and digital technology to supplant reliance on manual labor.^{11, 15} Some view technology as a means to bolster the productivity of an aging workforce. However, it is regrettable that the state has not accorded this issue the level of importance it warrants. The potential consequences of this mistake may have far-reaching implications for the future expansion of retirement durations among aged employees in Thailand.

Potential Resolutions for Labor Policy Challenges in Industrial Sector

Numerous analysts and researchers have put forth proposals to address the issue at two distinct levels, involving both the public and private sectors. On the one hand, it is imperative for the government to implement measures aimed at incentivizing and encouraging entrepreneurs to hire elderly workers. Simultaneously, entrepreneurs themselves must remain adaptable and responsive to shifts in the labor market dynamics. Central to these efforts is the government's readiness to equip older workers with the requisite skills to enable them to continue working efficiently. Of particular importance is the provision of opportunities for older workers to undergo re-skilling and upskilling programs, thereby ensuring income security during their later years.

Research data emanating from the Foundation of Thai Gerontology Research and Development Institute underscores the efficacy of tax-based measures. Specifically, the government is advised to permit business establishments to claim deductions equal to twice the wages of workers aged 60 and above who are employed on a full-time basis. Concerning tax deductions, entrepreneurs should be entitled to request deductions encompassing import duties and corporate income tax when they introduce technology, machinery, or automation systems into their operations for a minimum period of three years.¹⁶ These measures hold the potential to incentivize employers and promote the integration of aging workers into the workforce, while simultaneously fostering technological advancements in the business sector.

Socioeconomic Disparity Among the Elderly

The substantial income disparity between the affluent and the less privileged engenders another category of workers who lack access to adequate savings or are confined to low, or even very low, income levels. Within this sizable demographic, individuals are compelled to subsist on daily wages, devoid of the opportunity to contemplate a comfortable life post-retirement. Consequently, this segment of the workforce finds itself in a precarious situation, necessitating employment until the very threshold of retirement. Such a circumstance inevitably exerts a deleterious impact on their overall quality of life.

This particular group of elderly individuals predominantly resides in rural areas and confronts a stark reality wherein saving for their later years remains an elusive prospect. Many among them are compelled to engage in manual labor, often in construction or, at best, resort to daily handicraft activities to secure a meager income necessary for day-to-day subsistence.¹⁷ While the government does extend a form of financial support through a living allowance for these elderly citizens, the sum disbursed is relatively modest, ranging from only 600 to 1,000 baht (c. $16-28) per month. Consequently, this governmental subsidy serves as a temporary respite from hardship but cannot serve as the primary source of income to sustain their livelihoods and self-sufficiency.

In light of these circumstances, it is suggested that local communities can play a pivotal role in providing mutual support by effectively managing village funds in accordance with government directives. These funds could serve as a vital lifeline for families grappling with economic crises. The responsibility is on the governmental bodies to not only provide greater care and assistance to these elderly individuals but also to create avenues for employment, thereby empowering them to maintain good health and cater to their own needs and responsibilities, including the welfare of their offspring, without enduring undue hardships.

Conclusion

The necessity of adequately preparing for and efficiently tackling the issues presented by a society that is seeing an increase in the proportion of elderly individuals has gained significant recognition in diverse fields. Nevertheless, achieving a clear and all-encompassing guidance, especially in relation to operational efficiency, still poses a challenge. There is a growing recognition that it is the responsibility of the government to establish a favorable setting for meeting the requirements of an aging population, considering their heightened susceptibility to dependency in comparison to other demographic groups. However, notable gaps and obstacles continue to exist.

Income security is a pressing and significant concern in Thailand, surpassing numerous other issues in terms of its magnitude and urgency. The issue of income inequality continues to be a significant concern, and despite the Thai government's active endeavors to address it through diverse policies, such as the implementation of living allowances, it has become evident that enormous financial resources are necessary to sustain these measures. In practical application, the assigned resources frequently fail to adequately cover the real living expenses of the senior demographic. Moreover, the aged population faces exclusion from government assistance programs due to constraints in legal status and limited technological access, resulting in the denial of their lawful entitlements. The aforementioned constraints have additionally led to a lack of adequate representation in official government surveys, intensifying the problem of fair accessibility to support and resources for the aged population in Thailand.

A prominent challenge confronting Thai society is the notable lack of synergy between the public and private sectors, particularly among systematic business owners. This underscores the necessity for the government sector to proactively champion and foster opportunities for elderly workers, aligning its strategies with the changing global landscape. The cultivation of a heightened awareness of self-reliance and the establishment of adaptable systems to address changing societal dynamics are vital for the government.

Foremost among these measures is an expedited focus on the development and refinement of the welfare system. This system should be geared towards empowering individuals to achieve self-reliance while upholding their dignity and honor. The emphasis should shift from passive reliance on government assistance to active participation in self-sufficiency. In essence, the government's role needs to progress beyond only offering assistance to persons who are unable to help themselves, and instead focus on enabling their path towards self-sufficiency in a manner that is comprehensive and respectful.

References

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Japan SPOTLIGHT November/December 2023 Issue (Published on November 10, 2023)

(2023/11/13)

Morragotwong Phumplab

Dr. Morragotwong Phumplab is an assistant professor at the Faculty of Liberal Arts, Thammasat University, Thailand. Her interests include diplomatic history, and socio-political and cultural history in Southeast Asia, especially Vietnam and Thailand.