- ‘Financial extortion’ of children is escalating. What parents can do
- The rise in Chinese stock prices has echoes of the 2015 bubble. What’s different?
- Bill Ackman’s initial public offering of closed-end fund Pershing Square has been postponed: NYSE
- Chevron Slows Permian Growth in Hurdle to Trump’s Oil Plan
- Top 10 S&P 500 Stock Gainers Since Election Day
- American companies will invest $1 billion in the Philippines, says Commerce Secretary
The demographic situation of China alone – even if you consider the increasing marginalization of global trade, its dependence on food and energy imports, and the total eradication of the bureaucracy of anyone who would bring it accurate but unwelcome news – by President Xi Jinping ignores – could collapse China’s economy in the coming years. decades. Between now and 2050, by conservative estimatesthe working population will shrink by 220 million people, about a fifth.
This has rightly raised major concerns about whether the Chinese state can survive in the coming decades. Thailand will also experience a demographic decline, which has led to similarly ominous predictions about the country’s future stability.
The Thai workforce could do that reject from about 50 million people in 2020 to 38 million in 2050, so by about 400,000 people per year (or also by about a fifth). At the same time, people over 60 will make up about 40 percent of the population by then (compared to almost 20 percent in 2020).
There are now almost twice as many people over 65 as there are young people under 14. By 2050 there will be only 7.8 million children, compared to 21 million retirees and fewer than two workers paying their taxes and growing the economy for every retiree sapping public money.
Thailand joins the rapidly aging Asian states without any benefits from those countries.
Super-rich Singapore had fewer than 5 million workers at its peak, making it much less difficult to attract a few million high earners, and the state can easily fund its retirees.
Japan and South Korea have much larger economies and wealthier citizens than Thailand. Both have also effectively relocated their industrial bases; their companies invest abroad, rent abroad and sell abroad before sending the profits home to pay their masses of retirees. Thailand cannot export its industrial base.
However, Thailand has some advantages that these countries do not have. It is used to migrant workers (maybe one tenth of the current labor force) and is surrounded by poorer states that will see their labor force increase. Cambodia will do that to have 2.2 million additional 15-64 year olds in 2050; Laos will do that to have 1.6 million; Myanmar and Additionally 3 million.
Admittedly, not all those young people will move to Thailand. Even if they did, they represent only half the number of workers Thailand needs. But at least those migrants can pick up some of the slack.
Bangkok could also get a bit more creative and try to attract more Filipino and Indonesian workers; by 2050, so will the Indonesian workforce increase with 18 million, and the Philippines Through 28 million.
Moreover, it could increase the total fertility rate through some interesting programs that Bangkok is coming up with, such as state-funded programs fertility treatment. But even if that works, you’ll have to wait almost twenty years before those babies enter the labor market.
The rapidly growing population of retirees (32 to 38 percent of the population in 2050, depending on whether the retirement age changes) will place an enormous burden on the public purse. But Thailand isn’t in a bad place to start on that path.
The country already has one of the lowest out-of-pocket healthcare expenditures, as a percentage of current healthcare expenditure, in Asia, meaning the state is used to paying for healthcare services. It was all around 10 percent in 2020, compared to 35 percent in China. Tax revenues do all around 15 percent of GDP, much higher than most Southeast Asian countries, so Thais are already used to the state feeling in their pockets, which they will have to do much more of in the coming years. The national debt has pointed to around 60 percent of GDP since 2019, but the government does have some leeway.
In 2019, only 34 percent of those over 65 were lived alone or with only a partner, a smaller percentage than in Vietnam, the Southeast Asian country that is aging the fastest after Thailand. About two-thirds of Thais over the age of 65 still live with their relatives. And there is room for more older Thais to work. The employment rate of people aged 65 or over in Thailand is only 26 percent, quite low by Southeast Asian standards.
Thailand is not at risk of food shortages. It has 0.24 hectares of arable land per person, compared with 0.08 for China or 0.07 for Vietnam. Thailand belongs to the world 13th largest food exporter, accounting for 2.3 percent of the global food market. The country is reported to have a self-sufficiency rate for basic foods (rice, chicken, eggs, etc.) of about 100 percent. By comparison, Singapore, China, Japan and South Korea are all net importers of food, and no one can dream of self-sufficiency on that front.
Last year, Thailand restarted potash mining and the government thinks the country has the world’s fourth largest reserve of these minerals that make up potassium fertilizer. Ideally, Thailand will become less dependent on fertilizer imports in the coming years, making the country self-sufficient in food production and inputs for food production.
Automation of agriculture is needed, and the government is making waves in this regard. As cities industrialize, farmers are drawn to urban areas due to the lure of higher wages. When farms industrialize, farmers are driven to the cities because so few hands are needed to do the work.
Fortunately, Thai cities can absorb the burden of the newly urbanizing migrants. The urbanization rate is all around 52 percent, compared to 66 percent in China. Moreover, the coming pressure on farmers to move to the cities will lead to more workers for urban industries, which will soon be short of workers.
The Thai economy is not as dependent on scale as others. In 2019, Thais had the third highest ranking productivity rate of Southeast Asians, after Singaporeans and Malaysians. It was much higher than that of Vietnamese, Indonesians and even Chinese.
Education and retraining reforms are needed because Thailand must rely on attracting high-end investment based on the skills of its workforce, rather than its size or cheap labor. China will have the opposite problem: a shrinking workforce that is relatively unproductive.
None of this is to say Bangkok can’t screw up. The government could end the ridiculous $14 billion cash program and reallocate that money to aspiring mothers and soon-to-be retirees. The country needs to roll out the red carpet for migrant workers, especially the Filipinos. The country must continue to improve productivity through education and retraining as it cannot compete with its nearest neighbors on a large scale. It also needs political stability, so not a military coup every decade.