CONTENTS
FOREWORD V
EXECUTIVE SUMMARY VII
ABBREVIATIONS XI
PART 1: AGING AND THE LABOR MARKET 1
Main findings 1
Overview of Thailand’s labor market 1
Age and the labor market 6
References 12
PART 2: DEMOGRAPHIC TRENDS AND PROJECTIONS 13
Main findings 13
Thailand’s demographic transition 13
Population aging in Thailand 15
The implications of population aging 21
References 24
PART 3: POPULATION AGING’S CHANNELS OF IMPACTS 27
Main findings 27
Expanding the labor supply 27
Increasing productivity 41
Exploiting opportunities 41
References 44
PART 4: OPTIONS FOR POLICY REFORM 49
Main findings 49
Policy making for older people in Thailand 50
Policy recommendations to sustain growth amid population aging 51
Policy areas #1: Extend the working lives of older people 51
Policy areas #2: Increase female labor force participation 55
Policy areas #3: Use migration strategically to fill labor market gaps 57
Policy areas #4: Invest in lifelong learning to increase productivity 59
Policy areas #5: Leverage opportunities created by population aging 65
References 66
APPENDIX A: DECOMPOSITION OF THE DEMOGRAPHIC DETERMINANTS OF AGING IN THAILAND 71
APPENDIX B: CREATING THE JOB QUALITY INDEX 74
APPENDIX C: THE DETERMINANTS OF LABOR FORCE PARTICIPATION AMONG OLDER PEOPLE 76
APPENDIX D: THE ROUTINE INTENSITY, AGE STRUCTURE, AND AUTOMATABILITY OF OCCUPATIONS 78
APPENDIX E: SIMULATIONS OF THAILAND'S LABOR FORCE UNDER DIFFERENT SCENARIOS OF 80
LABOR FORCE PARTICIPATION AND INTERNATIONAL MIGRATION
APPENDIX F: DEFINING CARE JOBS 83
Aging and the Labor Market in Thailand IV
FOREWORD
This report is one in a series of notes being produced on leader), Pataraporn Laowong, Arvind Nair, Robert Palacios,
strengthening social protection and labor market policies in Pamornrat Tansanguanwong, Sarulchana Viriyataveekul, Thomas
Thailand in the context of aging and economic transformation. Walker, and Judy Yang. The team was assisted by Corinne
Other notes in the series provide an overview of the social pro- Bernaldez, Poonyanuch Chockanapitaksa, Pimon Iamsripong,
tection system, assess Thailand’s pension schemes, evaluate the and Buntarika Sangarun. The team is grateful for the productive
macro and fiscal implications of aging, and investigate the aged collaboration with the Office of the National Economic and
care system. Social Development Council.
The report does not address the COVID-19 outbreak and its The work was conducted under the guidance of Yasser El-Gammal
implications for Thailand’s labor market and the evolution of (practice manager for Social Protection and Jobs, East Asia and
population aging in detail. The crisis has had a significant impact Pacific Region), Philip O’Keefe (former practice manager for Social
on Thailand’s economy and labor market, but insufficient data Protection and Jobs, East Asia and Pacific Region), and Birgit Hansl
are currently available for a full assessment. The note does (country manager for Thailand). The team is grateful for the excellent
mention the COVID-19 outbreak in several places to point out advice provided by three peer reviewers: Matteo Morgandi, Ignacio
potential impacts. Raul Apella, and Dilaka Lathapipat. Ratchada Anantavrasilpa, Clarissa
Crisostomo David, and Kanitha Kongrukgreatiyos also provided
The note was written by Harry Moroz (task team leader) and useful comments. Junko Onishi, Frederico Gil Sander, and Thomas
J. J. Naddeo, with inputs from Kiatipong Ariyapruchya, Elena Walker provided comments at the Concept Note stage.
Glinskaya, Himanshi Jain, Francesca Lamanna (co–task team
Aging and the Labor Market in Thailand V
EXECUTIVE SUMMARY is occurring quickly: the 65-plus population in Thailand doubled
between 2000 and 2020 and will double again by 2040 to 26
percent of the population.
Thailand’s labor market faces several challenges. Labor force
participation has been declining, the shift of jobs out of the
Thailand is less wealthy than other countries were at similar
low-productivity agriculture sector has slowed, and informality
stages of population aging, meaning that fewer resources are
is the norm. The COVID-19 outbreak has likely reinforced these
available to confront the challenges of aging. Thailand is aging
trends. Thailand’s workforce has not transitioned to the types of
at a lower level of income than other countries. Analysis for the
jobs involving nonroutine tasks and interpersonal communication
report shows that, at every stage of aging, Thailand has had lower
that increasingly characterize knowledge-driven economies. The
GDP per capita than the global average. Indeed, the East Asia and
labor force participation of women is 20 percentage points
Pacific region’s older economies—Hong Kong SAR, China; Japan;
lower than that of men, a gap that has persisted for two decades.
Korea; and Singapore—had GDP per capita of around $41,000 (pur-
Needs associated with caring for a growing population of older
chasing power parity in 2011 international dollars) when their
people could put additional pressure on working women. The
elderly dependency ratios were at the same level as Thailand’s
higher labor force participation rate of older people in rural areas
today. This is more than twice the level of Thailand’s current
reflects a need to work longer to make ends meet despite the
GDP per capita.
nearly universal Old Age Allowance social pension.
Population aging has significant implications for Thailand’s
Older people face particular challenges in the labor market.
labor market and for its overall economic development. All
Older people often have care responsibilities and, despite living
else equal, Thailand’s declining working-age population implies a
longer and healthier lives than in the past, continue to face health
mechanical decrease in growth of income per capita. Projections
challenges. The report uses data from the Socioeconomic Survey
of the potential impact suggest that, absent any adjustments,
to show that both factors are associated with lower labor force
changes in demographics will lower growth of GDP per capita by
participation among older people. The report also draws on the
0.86 percent in the 2020s. Impacts on the labor market could
Socioeconomic Survey to show that Thailand’s contributory pen-
be substantial. The report shows that, assuming constant labor
sions can have disincentive effects on older people’s labor force
force participation rates by age and gender, Thailand’s projected
participation, although low coverage means that these effects
demographic changes would lead to a reduction in the overall labor
are not of immediate concern. The Old Age Allowance, a social
force participation rate of about 5 percentage points between
pension, may have some disincentive effects as well, although
2020 and 2060 and a reduction in the overall size of the labor
in this case the adequacy of benefits is likely a greater concern.
force of 14.4 million people. Such a decline could result in labor
The report also raises concerns about how prepared current and
market shortages that could further hinder Thailand’s prospects
future older people are for the changes taking place in the world
for growth. Automation, digitization, and other trends associated
of work. Analysis of the task intensity of occupations shows that
with Industry 4.0 may alleviate some of these shortages while
older people are not working in the jobs of the future, which re-
exacerbating others as the demand for skills evolves.
quire a set of less manual, more cognitive skills. Young people
are transitioning out of the more routine occupations that were
The negative effects of population aging are not inevitable, but
in demand in the past and into quickly growing occupations. But
addressing them requires changes across labor markets and by
prime-age workers—the older workers of the near future—re-
people of all ages. Population aging is not just about older people.
main in more routine jobs where demand is falling.
The causes of and responses to population aging are tied to the
actions of and policies affecting people of all ages.
This difficult labor market is complicated by a rapidly aging
population, which implies a smaller workforce in the future.
Expansions of Thailand’s labor supply could counteract the
The working-age share of Thailand’s population is projected to
shrinking labor force implied by population aging. Increases in
decline from 71 percent of the population in 2020 to 56
healthy life expectancy mean that older people are likely to be able
percent in 2060. This is equivalent to a decline in the working-age
to work longer. The large gap between male and female labor force
population of nearly 30 percent, the third largest decline in the
participation means that there is significant potential to activate
East Asia and Pacific region, after only Japan and the Republic
the labor supply of women. Migrants have been filling gaps in
of Korea. Meanwhile, the share of the population 65 or older is
Thailand’s labor force in recent decades and could be better
projected to rise from 13 percent in 2020 to 31 percent of the
used to do so in the future.
population in 2060—the 22nd largest share globally. This aging
Aging and the Labor Market in Thailand VII
Simulations undertaken for this report confirm that expanding just below retirement age, but also the prime-age workers
the supply of labor could offset some of the negative implications who are working in declining occupations so that they can
of population aging. Simulations of different scenarios of labor continue to work as they get older.
force participation and migration show that higher rates of labor
force participation among older people and women and a liberalized • Policies to increase female labor force participation can target
migration system could increase Thailand’s labor supply in women directly, such as by providing training programs
the long run relative to current projections under population that break down occupational segregation, and can activate
aging. Liberalized migration and increased female labor force women’s participation indirectly, such as by increasing the
participation would have the largest effect. income security of older people and providing paternal leave.
Even under these scenarios, Thailand’s labor force will still • Improvements to the migration system can help to fill short-
decline as its population ages, implying that the labor force ages in low- and high-skill occupations. A national migration
will need to become more productive. A smaller labor force plan or strategy could set the stage for more predictable
will need to be more efficient in order to maintain and improve migration policy. Changes to the migration system could
living standards. As fertility declines, this process will require include allowing migration of longer duration to take advan-
more intensive investment in human capital as well as higher tage of the improved productivity of migrants as they work
saving rates, capital deepening, and adoption of labor-saving in a country and incentivizing high-skill migration.
technologies that offset labor scarcity. These latter changes
will themselves require the appropriate human capital to
• A commitment to a lifelong approach to learning can help to
complement investments in physical capital.
stimulate the productivity gains needed as the working-age
population shrinks. This effort would involve developing
Policy can help to address the challenges created by popula-
new approaches to technical and vocational education and
tion aging. Policy can help to activate the labor supply of older
training as well as nonformal training focused on the needs
people, women, and migrants. At the same time, policy makers
of individual learners and adapted to labor market demand.
can help to ensure that sufficient investments are made in
Performance-based financing and learner-targeted subsi-
the quality of present and future workers so that they become
dies and vouchers are important approaches to consider.
more productive. Finally, population aging creates several
opportunities, particularly in the care sector but also in the
• Opportunities created by aging can be exploited by providing
larger “silver economy,” that policy makers can exploit.
training for workers in the care sector, particularly unem-
ployed and other vulnerable workers, and by complementing
• Policies to extend working lives can target older people in ur-
investments in services for local older people with those for
ban areas, who tend to retire at earlier ages than their rural
older people from abroad.
peers. These policies will need to target not just people at or
Aging and the Labor Market in Thailand VIII
Table ES.1 summarizes the enabling conditions in each of these areas, the challenges that must be confronted, and potential policy
responses.
Table ES.1 Summary of policy recommendations
1. Extend • Healthy life expectancy • Older people have care • Leverage partnerships and use incentives to encourage
working is increasing responsibilities flexible working arrangements and age-friendly
lives workplaces
• Successive age cohorts • Health problems (for example,
have higher education noncommunicable diseases) • Study the influence of wage compensation schemes on
levels are common the employment of older workers
• Jobs are becoming less • Age discrimination is evident • Evaluate the effectiveness of the existing tax subsidy
manual and physical for promoting the employment of older people
• Contributory pensions may
• Technologies that reduce have labor market disincentive • Explore options for raising the retirement age
physical strain at work effects
• Create upskilling and reskilling programs adapted to
could make older workers
• Flexible work such as remote the needs of prime-age and older people in urban areas
more productive
work is still rare
• Promote healthy lifestyles throughout the life cycle
2. Increase • The gap between female • Women have greater care • Expand access to and decrease the cost of child care
female labor and male labor force responsibilities for children and
force • Expand access to long-term care options for older people
participation is significant older people
participation
• Ensure income security for older people
• Women have increasingly • There has been an increase in
high levels of education teenage pregnancy, which is • Increase the generosity and coverage of parental leave
inked to lower educational policies, including providing for paternal leave
• A low fertility rate means attainment
fewer care responsibilities • Deploy training programs targeted to and designed
for children • A marriage penalty persists for for women
women
• Consider legal changes and undertake communications
• Sectoral segregation leads to campaigns to influence gender norms
a gender wage gap
• Women are underrepresented
in management positions
• Women are underrepresented
in fields of study linked to
high-productivity jobs
3. Use • Migrants to Thailand tend • Migrants may have a negative • Develop a long-term national migration plan
migration to be young, to migrate for impact on employment and
strategically • Consider lengthening the duration of migration work
work, and to be employed wages, although any impacts
to fill labor permits, including for low-skill workers
market gaps are likely small
• High-skill migrants can
fill skills gaps • Brain drain of high-skill locals • Simplify the memorandum of understanding migration
process to encourage formal migration
leaving Thailand can create
additional skills gaps • Create a package of interventions, including permit
migrant workers to change employers
• Expedite permit renewals, perhaps through a trusted
employer system
• Create a package of interventions, including streamlined
admissions and incentives to promote high-skill migration
• Engage Thailand’s diaspora and incentivize return
4. Invest • Declining fertility can • Current and soon-to-be-older • Explore alternative models of employer engagement in
in lifelong allow for more intensive workers lack in-demand skills skills development
learning to investments in human
increase • Soon-to-be-older workers • Consider performance-based financing models for training
productivity capital
are more likely to work in
• Explore learner-centered approaches to training, such
• There is no strong automatable jobs
as subsidies or vouchers
evidence that older people
• The training sector is
are less productive • Adapt training programs to the learning needs of
characterized by lack of
adult learners
coordination, lack of linkages
with the private sector, lack of • Strengthen employment services, particularly the labor
accountability mechanisms, market information system, and link them to training
and perceptions of poor quality
Aging and the Labor Market in Thailand IX
5. Leverage • Domestic demand for • Recruiting, deploying, and • Provide training in care work, particularly to unemployed
opportunities care work is growing retaining qualified care workers and other vulnerable workers
created by are challenging due to poor
population • Overseas demand for • Promote Thailand as a destination for older tourists,
aging working conditions, low pay,
tourism targeted to retirees, and medical tourists, leveraging investments
and lack of access to social
older people, retirement for local older people
protection
services, and medical
tourism is growing • The care workforce is small relative
to Thailand’s international peers
• Care jobs are growing
• The existing care workforce lacks
• Opportunities exist in the required skills
the “silver economy”
• The health workforce is aging
Despite the need for action on multiple policy fronts, invest- people whose financial health is at risk. Many older people,
ing in human capital across the life cycle and stabilizing the particularly in rural areas, have to work well into old age. Although
financial security of older people are top priorities. Rapid universal, the Old Age Allowance is insufficient to support the
c h a n g e s in technology and in the nature of work, including livelihoods of older people. Barriers to employment of older people
those stimulated by the COVID-19 outbreak, will require workers remain high. Table ES.1 includes several policy recommendations
with new types of skills to fill labor market needs created by to help to improve the financial security of older people. A separate
population aging. These skills will require not only a good technical note on pensions reform covers pensions policy and proposes
understanding of emerging digital technologies, but also soft more detailed potential reforms.
skills like communication, critical thinking, and persuasion.
Thailand will have to focus intently on improving the skills of The report is structured as follows. Part 1 provides an overview
its workforce. Thus the recommendations in table ES.1 include of the labor market in Thailand with a focus on older people. Part 2
several policies related to improving skills development. The introduces the issue of population aging in Thailand and discusses
financial security of older people will also be a priority. Thailand its implications for past and future economic development. Part 3
has recently enacted policies related to older people, including discusses the channels through which aging will affect Thailand’s
expansion of the Old Age Allowance and various efforts to facilitate labor market. Part 4 presents policy recommendations to mitigate
longer working lives. These policies should be coordinated with the negative impacts and reinforce the positive impacts of
other policy areas, particularly pensions policy, to protect older population aging in Thailand.
Aging and the Labor Market in Thailand X
ABBREVIATIONS
AIDS acquired immunodeficiency syndrome
ASEAN Association of Southeast Asian Nations
COL Critical Occupations List
ESS Employment Services System
GDP gross domestic product
HIV human immunodeficiency virus
ICT information and communication technology
ILO International Labour Organization
ISCO International Standard Classification of Occupations
LMI labor market information
MOU memorandum of understanding
MRA mutual recognition arrangement
MSDHS Ministry of Social Development and Human Security
NCD noncommunicable disease
NESDC National Economic and Social Development Council
NSF National Skills Fund
NV nationality verification
OECD Organisation for Economic Co-operation and Development
PCA principal component analysis
PHE Preston, Himes, and Eggars
PPP purchasing power parity
RP-T Residence Pass-Talent
RTI routine task index
SAR special administrative region
SNIES Sistema Nacional de Información de la Educación Superior
SOC Standard Occupational Classification
STEM science, technology, engineering, mathematics
TVET technical and vocational education and training
UN WPP United Nations World Population Prospects
Aging and the Labor Market in Thailand XI
PART 1:
Older people in rural areas tend to work until advanced ages in
low-quality jobs. Labor force participation rates begin to decline in
earnest at age 60—the age of eligibility for the Old Age Allowance
AGING AND and the retirement age for public sector pensions, but five years
THE LABOR MARKET
later than the retirement age for private sector pensions. However,
about one-quarter of older people continue working until advanced
ages in Thailand, similar to upper-middle- and high-income
countries in the East Asia and Pacific region. Older men are more
Part 1 provides an overview of the labor market likely to work than older women. Older people have significantly
in Thailand with a focus on older people. The higher labor force participation rates in rural areas, consistent with
first section summarizes the main findings. having less access to social protection, which means that older
The second section describes the labor market people must continue working to support themselves. Overall
in Thailand. The third section investigates two-thirds of Thailand’s employed older people live in rural areas.
segmentation of the labor market by age. Wages decline with age such that by age 65 men make 59 percent
of their peak wages and women make 46 percent. Older people tend
to work in lower-quality jobs with high rates of self-employment,
MAIN FINDINGS high informality, and poor working conditions.
Despite low unemployment, Thailand’s labor market faces OVERVIEW OF THAILAND’S LABOR MARKET
several challenges. The size of Thailand’s labor force has
declined in recent years, as have labor force participation rates. Thailand has a large labor force that can compete with the
The gap between female and male labor force participation is other large economies of the East Asia and Pacific region.
significant—around 20 percentage points—and has remained Thailand’s working-age population1 was 57 million in 2019 (figure
constant for two decades. The unemployment rate is very low, 1.1), of whom 67 percent participated in the labor market. At
although job growth has been weak in recent years. While around 38 million, the labor force is the sixth largest in the East
employment has shifted away from the agriculture sector over Asia and Pacific region and the fourth largest of countries in the
the longer term, this transition has slowed. Education levels Association of Southeast Asian Nations (ASEAN). Of those not
have increased, but mid-skill jobs dominate. Consistent with participating in the labor market, 23 percent were in school and
the continued prominence of agricultural employment, most 77 percent were inactive for other reasons. Of those who were
workers are informal. Private wage employment has not grown employed, 38 percent were private sector wage workers, while
as a share of employment in the last two decades. another 31 percent were self-employed.
1
Consistent with the definition used by Thailand’s National Statistical Office, the working-age
population is defined as people 15 years of age and older.
Figure 1.1 The labor market status of Thailand’s population, 2019
Source: Thailand Labor Force Survey 2019.
Aging and the Labor Market in Thailand 1
Labor force participation rates have trended down in recent years. period, female labor force participation has consistently been
Labor force participation was fairly steady in the 2000s and early around 17 percentage points lower than male labor force partic-
2010s at just above 70 percent (figure 1.2). However, people began ipation. In 2019 the participation rate was 76 percent for men
dropping out of the labor market after 2013: between 2012 and 2019, compared to just 59 percent for women. The most common rea-
the size of the labor force shrank by more than 1.2 million people and sons reported for being out of the labor force are retirement and
the labor force participation rate declined nearly 5 percentage household duties. The gap in participation rates is slightly higher
points. Despite this decline, the current rate is comparable to the in rural than in urban areas (18.2 percent versus 14.7 percent).
participation rate in other middle- and upper-income countries Thailand’s female labor force participation rate is similar to that
in the East Asia and Pacific region, such as China and Indonesia of Australia and China (figure 1.4, panel a), but the gap between
(figure 1.3). female and male labor force participation is larger in Thailand
than in several other countries in the East Asia and Pacific region
Female labor force participation lags significantly behind male (figure 1.4, panel b). Labor force participation rates within Thai-
labor force participation. Male and female labor force participation land vary from 69.7 percent in Bangkok and 70 percent in the
rates have generally followed the same pattern as the overall labor Central region to 62.6 percent in the Northeast.
force participation rate since 2000 (figure 1.2). During this
Figure 1.2 Labor force participation rate in Thailand, 2001–19 Figure 1.3 Labor force participation rate in the East Asia and
Pacific region, 2019
Source: Thailand Labor Force Survey 2001–19. Source: ILOSTAT database.
Figure 1.4 Labor force participation rate in the East Asia and Pacific region, by gender, 2019
a. Female labor force participation rates b. Difference between male and female labor force
participation rates
Source: ILOSTAT database.
Aging and the Labor Market in Thailand 2
Thailand’s labor market is close to full employment. Thailand’s The services sector provides most of the jobs in Thailand, but
unemployment rate is very low. The rate declined from 3.4 per- agriculture remains important. Structural transformation of
cent in 2001 to a low of 0.7 percent in 2011, 2012, and 2013, people moving from the lower-productivity agriculture sector
before ticking up slightly in more recent years (figure 1.5). Differ- to the higher-productivity manufacturing and services sectors
ences between male and female unemployment rates are small. stalled in Thailand in the 2000s and early 2010s (World Bank
Unemployment rates are consistently low across all regions of 2016). Higher real wages in the agriculture sector and weak job
Thailand, with the exception of the conflict-affected southern growth in other sectors drew people to on-farm jobs. Agriculture
province of Narathiwat, where 4.1 percent of the population is still employs about one-third of all workers (figure 1.7). Agricul-
unemployed. The next highest rate of unemployment is still rel- ture’s share of employment sets Thailand apart from its peers:
atively low: 2.5 percent in Sakaeo in the east and Songkhla in agriculture accounts for just 23 percent of employment in the
the south. Philippines, 10 percent in Malaysia, and 5 percent in the Republic
of Korea. Employment in services has expanded since 2014,
Job growth has been weak in Thailand for the last several years. making services the country’s largest employer, while employment
Annual employment growth averaged 2 percent between 2000 in manufacturing has been steady at about 15 percent of employ-
and the early 2010s (figure 1.6). However, job growth weakened ment. Average annual growth rates in the five-year periods leading
in the middle 2010s, recovered briefly in 2018, and fell again in up to 2019 reflect this pattern (figure 1.8). With the exception of
2019. This weakness occurred as economic growth stalled due to services and public administration, all sectors averaged negative
political uncertainty. The labor force participation rate declined in growth between 2015 and 2019. Agriculture dominates
those years, while the unemployment rate ticked up slightly. Since employment in the Northeast, North, and South regions (figure 1.9).
2014, employment has shifted slightly away from the Northeast Services dominate employment in Bangkok. Employment in the
and North and toward the Central region, which is home to about Central region is more diversified across services, manufacturing,
one-third of jobs in Thailand, the most in the country, followed by and agriculture.
the Northeast, which has one-quarter of Thailand’s jobs.
Figure 1.5 Unemployment rate in Thailand, 2001–19 Figure 1.6 Annual employment growth in Thailand, 2001–19
Source: Thailand Labor Force Survey 2001–19.
Source: Thailand Labor Force Survey 2001–19. Note: Data are not shown for 2014 because of a change in sampling in the
Labor Force Survey in 2014.
Aging and the Labor Market in Thailand 3
Figure 1.7 Employment in Thailand, by sector, 2014 and 2019 Figure 1.8 Average annual growth rate of employment
in Thailand, by sector, 2015–19
Source: Thailand Labor Force Survey 2014 and 2019.
Source: Thailand Labor Force Survey 2015–19.
Figure 1.9 Distribution of employment in Thailand, by sector and region, 2019
Source: Thailand Labor Force Survey 2019.
The education level of workers has risen significantly, but mid-skill or technician or associate professional. The implications, which
jobs still dominate employment. In 2001, around 40 percent of are discussed in more detail in part 3, are important for how au-
workers in Thailand had no education (figure 1.10, panel a). By tomation will affect the labor force, as these technologies tend
2019, this had been cut in half to 21 percent. During the same to affect mid-skill jobs the most. The skill level of the workforce
period, workers with a university education more than doubled varies significantly by sector (figure 1.10, panel b). Nearly all
from 8 percent to 17 percent. However, most workers in Thailand agricultural workers are classified as mid-skill, while a substantial
are employed in mid-skill jobs,2 particularly as agriculture workers, portion of workers in services (21 percent) and public administration
who make up 29 percent of employment, and services, and sales (48 percent) are classified as high-skill.
workers, who make up 20 percent of employment. Just 13.8
The International Standard Classification of Occupations (IOSCO) is used to classify occupations into
percent of workers are employed as a high-skill manager, professional,
2
high-, medium-, and low-skill levels. High-skill corresponds to managers (ISCO 1), professionals (ISCO 2),
and technicians and associate professionals (ISCO 3). Mid-skill corresponds to clerical support workers
(ISCO 4), services and sales workers (ISCO 5), skilled agricultural, forestry, and fishery workers (ISCO 6),
craft and related trades workers (ISCO 7), and plant and machine operators and assemblers (ISCO 8).
Low-skill corresponds to elementary occupations (9).
Aging and the Labor Market in Thailand 4
Informal employment is prevalent. Private wage employment 54 percent of employment was informal in 2019—similar to
has not grown as a share of employment in the last two decades. the percentage in 2016, 2017, and 2018. Women and men have
Private wage employment made up 35 percent of all employ- similar rates of informality. Informal employment is much more
ment in 2001 versus 38 percent in 2019. During this period, common in rural than in urban areas: in 2019 two-thirds of em-
the share of self-employment also remained constant at about ployment was informal in rural areas versus around 40 percent
one-third of employment. The Informal Employment Survey con- in urban areas. Nearly all employment (91 percent) in the agri-
ducted by the National Statistics Office defines informality as culture sector is informal (figure 1.11). Informality rates are also
employed people who are not protected by or eligible for social very high in construction (44 percent) and services (42 percent).
security (Buddhari and Rugpenthum 2019). According to the survey,
Figure 1.10 Employment in Thailand, by education level, skill level, and sector
a. By education level, 2001–19 b. By skill level and sector, 2019
Source: Thailand Labor Force Survey 2001–19.
Figure 1.11 Informality rate in Thailand, by gender, urban and rural areas, and sector, 2019
Source: Thailand Informal Employment Survey 2019.
Aging and the Labor Market in Thailand 5
Internal migrants move to find longer-term employment and to Vietnam. Migrants from these four countries represent 10 percent
fill seasonal labor demands. According to the 2010 Population of Thailand’s labor force. Most migrants to Thailand migrate for
and Housing Census, 6.2 million people migrated for at least six work in low-skill sectors, primarily in agriculture, construction,
months between 2005 and 2010 (NSO 2010), representing 9.4 and fisheries; a comparatively small number work in professional
percent of the population. More than one-quarter of these migrants occupations (OECD and ILO 2017; Testaverde et al. 2017). Outmi-
moved to look for work, and another 14 percent moved to take gration is common, but not nearly as significant as inmigration. In
up a job. Nearly one-quarter of the population lived in a different 2017, around 1.1 million people from Thailand were living overseas
location from their birthplace in 2010. The 2019 Migration Survey, (Smith, Lim, and Harkins 2019). The COVID-19 outbreak and the
which asks about migration within the last year only, found that transmission control policies implemented by the government sig-
around 570,000 people or 1 percent of the population had moved nificantly disrupted migration flows into Thailand and caused an
internally. About one-third of internal migrants migrate for work. exodus of migrant workers from Thailand to neighboring countries,
Longer-duration internal migration in Thailand involves mainly potentially leading to labor shortages.
flows away from the North and Northeast regions and to Bangkok
and the Central region, while seasonal migration involves flows AGE AND THE LABOR MARKET
away from Bangkok and the Central region during the wet season
and the opposite during the dry season (Smith, Lim, and Harkins A significant number of older people continue to work until ad-
2019; UNESCO 2019). Neither the census nor the Migration Survey vanced ages in Thailand. The labor force participation rate begins
captures this seasonal migration. Rural areas have served as safety to decline in earnest at age 60—the age of eligibility for the Old
nets during previous economic downturns, with migrants returning Age Allowance and the retirement age for public sector pensions,
to agricultural areas during the 1997–98 Asian financial crisis and but five years later than the retirement age for private sector pen-
during the 2008–09 global financial crisis (Pholphirul 2012). sions (figure 1.12, panel a). About one-quarter of people 65 and
older participate in the labor market, with higher rates for those
Movement of people to Thailand from abroad plays an between 65 and 74 (34 percent) and lower rates for those 75 and
important role in filling shortages in low-skill sectors. Thailand older (8 percent). The labor force participation rate of older people
is a hub for migration in Southeast Asia, with 50 percent more rose gradually between 2000 and 2010, before leveling off and fall-
migrants than any other country in the subregion (Testaverde et ing slightly between 2010 and 2019 (figure 1.12, panel b). But la-
al. 2017). Migration has grown significantly in the last two decades. bor force participation is higher now than in 2000. The labor force
Thailand was home to an estimated 3.7 million migrants in 2014 participation rate of older people is about the same in Thailand as
(Smith, Lim, and Harkins 2019). By 2018, Thailand hosted 4.9 in upper-middle- and high-income countries in the East Asia and
million migrants, including 3.9 million migrant workers from Pacific region, although it is lower than Korea’s rate, which is 32
Cambodia, the Lao People’s Democratic Republic, Myanmar, and percent (figure 1.13).
Figure 1.12 Labor force participation rate in Thailand, by age, 2001, 2010, and 2019
a. 2019 b. 2001, 2010, and 2019
Source: Thailand Labor Force Survey 2001, 2010, and 2019.
Note: On panel a, the red bars indicate age 55 and age 60.
Aging and the Labor Market in Thailand 6
Figure 1.13 Labor force participation rate of people 65 Figure 1.14 Main source of income reported by people 60
and older in the East Asia and Pacific region, 2019 and older in Thailand, 2017
Source: ILOSTAT database. Source: UNFPA 2019.
Older people rely on work as a primary source of income. Older men are more likely to work than older women. In 2019,
Thailand’s Survey of Older Persons, which was last conducted 33 percent of men 65 and older participated in the labor market
in 2017, shows that around 38 percent of people 60 and older versus 17 percent of women in this age group (figure 1.15). The
reported working in the last 12 months, down from 41 percent gap between the labor force participation of older men and older
in 2014 but about the same as in 2007 (UNFPA 2019). This per- women is about 16 percentage points, similar to that of the
centage declines as age increases. Among older people, 31 percent population as a whole (figure 1.16). Consistent with this gap,
reported that work is their main source of income, second only women are significantly more likely than men to report their
to the 35 percent who reported that their children are their spouse as an income source (Teerawichitchainan et al. 2019).
main source of income (figure 1.14). The percentage reporting The gap in participation rates increased between 2001 and
work as the main source has remained similar in successive 2005, but has declined since. The gap is significantly larger for
rounds of the Survey of Older Persons even as the percentage people between the ages of 65 and 74 than for those 75 and
reporting children as their main source of income declined from above. This aligns with the increase in widowhood among older
54 percent in 1994 to 35 percent in 2017. In contrast, reliance women, which means that few have their spouses as sources
on the Old Age Allowance increased from 3 percent in 2007 to of income (Teerawichitchainan et al. 2019). These patterns are
20 percent in 2017 consistent with universalization of the program. supported by evidence from the Survey of Older Persons, which
Most older workers said that they work either because they are shows that nearly 50 percent of men 60 and older reported
strong enough to work or because they need income for their working in the last 12 months in 2017 compared to around 30
families or themselves (NSO 2018). percent of women (UNFPA 2019). This gap between men’s and
women’s work has persisted through the 1994, 2007, 2014, and
2017 rounds of the survey.
Aging and the Labor Market in Thailand 7
Figure 1.15 Labor force participation rate of people 65 and older Figure 1.16 Percentage point gap between female and male
by gender, 2001–19 labor force participation at older ages, 2001–19
Source: Thailand Labor Force Survey 2001, 2005, Source: Thailand Labor Force Survey 2001,
2010, 2015, and 2019. 2005, 2010, 2015, and 2019.
Older people have significantly higher labor force participation people are entering rural labor markets early and forgoing additional
rates in rural areas. In 2019, about 40 percent of men 65 and older schooling. At older ages, the gaps are consistent with the lower access
and 20 percent of women 65 and older participated in the labor market to social protection in rural areas, which means that older people must
in rural areas versus 27 percent of men and 16 percent of women work into old age to support themselves. Indeed, the 2017 Survey of
in urban areas (figure 1.17, panel a). The gap was largest in 2005 at Older Persons shows that about 41 percent of people 60 and
18 percentage points for men and 7 percentage points for women, older in rural areas reported work as a source of income in the past 12
declining to 10 percentage points for men and 3 percentage points months compared to 32 percent of older people in urban areas. Urban
for women by 2019. The gaps in participation between urban and rural older people are more likely to cite pensions and interest, savings, and
areas are not apparent among the working-age population (figure property as income sources. Overall, two-thirds of Thailand’s
1.17, panel b). At younger ages, these gaps likely suggest that young employed older people live in rural areas.
Figure 1.17 Labor force participation rate in urban and rural areas of Thailand, by gender and age
a. Men and women age 65+, 2001–19 b. Difference in participation, by age, 2019
Source: Thailand Labor Force Survey 2001, 2005, 2010, 2015,
and 2019.
Aging and the Labor Market in Thailand 8
Figure 1.18 Percentage change in hours worked since age 55 in Figure 1.19 Distribution of employment in Thailand, by sector
urban and rural areas in Thailand, 2019 and age, 2019
Source: Thailand Labor Force Survey 2019. Source: Thailand Labor Force Survey 2019.
Older workers in rural areas reduce their hours of work more Agricultural workers who are older are not necessarily less
quickly than those in urban areas. Older workers work slightly productive, but they may require targeted support. The
fewer hours than younger workers. Workers between the ages aging of the agricultural workforce could create challenges
of 55 and 64 worked an average of 40.6 hours a week in 2019 for increasing Thailand’s low agricultural productivity if older
and those 65 and older worked an average of 37.8 hours a week. farmers have poorer health or are less willing or able to adopt
Younger workers between age 25 and 44 worked 44 hours on new technologies. One recent study of agricultural productivity
average per week. Based on earlier data, HelpAge International and the aging agricultural workforce in Thailand found that this
(2016) found that workers 60 and over in Thailand work more aging does not affect on-farm productivity, while another found
than their peers in the Philippines and Vietnam. Despite their that aging farmers increase a sector’s technical inefficiency but
higher labor force participation, older people reduce the hours that older farmers combined with capital decrease this inefficiency
they work more rapidly with age in rural areas than in urban (Saiyut et al. 2017; Suphannachart 2017). Although mixed, these
areas, perhaps reflecting the greater prevalence of older workers results suggest that an aging agricultural workforce does not
in self-employment, which allows for more flexibility in hours necessarily imply lower agricultural productivity. Instead, older
worked (figure 1.18) farmers, like their younger peers, may benefit from training and
access to productivity-enhancing technologies.
The prevalence of older workers in agriculture indicates
age-based segmentation of the labor market. Older people Older people, particularly in rural areas, tend to have low levels
are much more likely to work in agriculture. About 60 percent of education. Education levels have been improving in Thailand,
of older people working in 2019 worked in agriculture versus and younger people are much better educated than older people
about 30 percent of people between 15 and 64 years of age, (figure 1.20). In 2019, nearly 30 percent of people between the
who were more concentrated in services and manufactur- ages of 25 and 34 had a university education or above, compared
ing (figure 1.19). While agricultural employment fell about with just 2 percent of workers 65 and older. More than 80 percent
9 percentage points among working-age people between of older people had no education (that is, less than a primary
2008 and 2019, the share of older workers working in agri- school education). There is also an urban-rural education gap for
culture barely changed. Indeed, the average age of workers older people. Education levels are higher among older people in
in agricultural employment is increasing at a faster rate (12 urban areas, where around 13 percent of workers 55 and older
percent) than the average age of the total labor force (7.3 have completed secondary school, than in rural areas, where only
percent). 6 percent have.
Aging and the Labor Market in Thailand 9
Figure 1.20 Distribution of employment in Thailand, by education and age, 2019
Source: Thailand Labor Force Survey 2019.
Wages decline at older ages. Controlling for education level their lifetime, workers in rural areas, female workers, and workers
because older workers tend to be less educated than younger with less education accumulate less income than urban workers,
ones, wages peak for women at around B 17,200 per month at male workers, and more highly educated workers (figure 1.22). For
age 36 before declining fairly quickly, while wages of men peak instance, the lifetime earnings of women with a university education
slightly lower, at around B 16,700 per month at age 41, where are 2.5 times higher than those of women with just some secondary
they plateau for several years (figure 1.21). By age 65, both women education. This has significant implications for the ability of these
and men make substantially less: men make 62 percent of their workers to support themselves when they are old.
peak wages and women make just 50 percent. Over the course of
Figure 1.21 Monthly wages in Thailand, by gender and age, 2019 Figure 1.22 Average lifetime accumulated earnings in
Thailand, by gender, education, and location, 2019
Source: Thailand Labor Force Survey 2019. Source: Thailand Labor Force Survey 2019.
Note: Monthly wages are predicted using a regression of the natural log Note: Based on synthetic estimates of lifetime earnings between ages
of employment income on age, age-squared, and education. 20 and 59.
Aging and the Labor Market in Thailand 10
Older people work in lower-quality jobs. Older people have more job quality. 3 Figure 1.25 shows the job quality index calculat-
precarious employment. Rates of self-employment are much higher ed for each age group in Thailand in 2019. An index value of
among older people: in 2019, around two-thirds of workers 65 1 indicates having a job that is 1 standard deviation above the
and older were self-employed, the largest share of any age group. mean job quality that year. The index shows that job quality over-
While an important source of income, self-employment lacks the all declines as workers age. Older workers have job quality that is
stability and job-linked benefits of wage employment. Consistent two-thirds of a standard deviation below that of the average job in
with the prevalence of less stable employment, older people also 2019. Younger workers, in contrast, have jobs that are about half a
have much higher rates of informality, indicating that they lack standard deviation above the quality of the average job.
access to social protection (figure 1.23). Three-quarters of workers
between 55 and 64 and 91 percent of those 65 and older work in Thailand faces these labor market challenges in the context of
informal jobs. Work in second jobs is also more prevalent among a population that is aging quickly. Part 2 turns to a discussion
older workers (figure 1.24). of population aging in Thailand and its implications for the labor
market and economic development.
An index combining different aspects of job quality shows that
overall job quality declines with age. Several indicators of job Del Carpio, Gruen, and Levin (2017) outline a procedure to capture different dimensions of job quality
3.
in a single index. That procedure is replicated using data from Thailand’s Labor Force Survey to measure
quality such as having a second job, underemployment, informality, if a worker is underemployed, self-employed, working in the informal sector, overqualified, or working in
poor conditions. Appendix B provides details on the methodology.
and working conditions can be combined to define a single index of
Figure 1.23 Informality rate in Thailand, by age, 2019 Figure 1.24 Share of workers with a second job in Thailand, by
age, 2019
Source: Thailand Labor Force Survey 2019. Source: Thailand Labor Force Survey 2019.
Figure 1.25 Job quality in Thailand, by age, 2019
Source: Thailand Labor Force Survey 2019.
Aging and the Labor Market in Thailand 11
REFERENCES
Buddhari, Anotai, and Pornsawan Rugpenthum. 2019. “A Better Understanding of Thailand’s Informal Sector.”
Bank of Thailand, Bangkok.
Del Carpio, Ximena, Carola Gruen, and Victoria Levin. 2017. “Measuring the Quality of Jobs in Turkey.”
World Bank, Washington, DC.
HelpAge International. 2016. “Work, Family, and Social Protection: Old Age Income Security in Bangladesh, Nepal,
the Philippines, Thailand, and Vietnam.” HelpAge International, Chiang Mai..
NSO (National Statistical Office). 2010. Population and Housing Census: Major Findings. Bangkok: NSO.
NSO (National Statistical Office). 2018. Report on the 2017 Survey of the Older Persons in Thailand. Bangkok:
NSO
OECD (Organisation for Economic Co-operation and Development) and ILO (International Labour Organization). 2017.
How Immigrants Contribute to Thailand’s Economy. Paris: OECD and ILO.
Pholphirul, Piriya. 2012. “Labour Migration and the Economic Sustainability in Thailand.”
Journal of Current Southeast Asian Affairs 31 (3): 59–83.
Saiyut, Pakapon, Isriya Bunyasiri, Prapinwadee Sirisupluxana, and Itthipong Mahathanaseth. 2017.
“Changing Age Structure and Input Substitutability in the Thai Agricultural Sector.”
Kasetsart Journal of Social Sciences 38 (3): 259–63.
Smith, Harry, Reuben Lim, and Benjamin Harkins. 2019. “Thailand Migration Profile.” In Thailand Migration Report 2019,
edited by Benjamin Harkins, 9–25. Bangkok: United Nations Thematic Working Group on Migration in Thailand.
Suphannachart, Waleerat. 2017. “What Drives Labour Productivity in the Ageing Agriculture of Thailand?”
Advances in Management and Applied Economics 7 (1): 89–105.
Teerawichitchainan, Bussarawan, Wiraporn Pothisiri, John Knodel, and Vipan Prachuabmoh. 2019.
“ Thailand’s Older Persons and Their Well-Being: An Update Based on the 2017 Survey of Older Persons in Thailand.”
HelpAge International, Chiang Mai.
Testaverde, Mauro, Harry Moroz, Claire H. Hollweg, and Achim Schmillen. 2017.
Migrating to Opportunity: Overcoming Barriers to Labor Mobility in Southeast Asia.
Washington, DC: World Bank.
UNESCO (United Nations Educational, Scientific, and Cultural Organization). 2019.
"Overview of Internal Migration in Thailand.” UNESCO, Bangkok.
UNFPA (United Nations Population Fund). 2019. “Population and Development for a Sustainable Future in Thailand:
25 Years after the ICPD.” UNFPA, Bangkok.
World Bank. 2016. Getting Back on Track: Reviving Growth and Securing Prosperity for All.
Thailand Systematic Country Diagnostic. Washington, DC: World Bank.
Aging and the Labor Market in Thailand 12
PART 2: responses could counteract these negative impacts by, for example,
increasing the number of people working, improving the productivity
DEMOGRAPHIC
of the workforce, and leading to higher saving rates, capital deepen-
ing, and adoption of labor-saving technologies. Policy can reinforce,
TRENDS AND complement, and supplement these behavioral responses.
PROJECTIONS THAILAND’S DEMOGRAPHIC TRANSITION
Economic development and demographic changes are closely
intertwined. Economic development is closely linked to the
Part 2 introduces the issue of population aging demographic transition from a period of high mortality and
in Thailand and discusses its implications for fertility when population growth is relatively constrained to a
past and future economic development. period of low mortality and fertility when population expands
(Bloom, Canning, and Sevilla 2003). As development proceeds,
improvements in public health and medicine result in a decline
MAIN FINDINGS in mortality rates, especially for young children, and an increase
in life expectancy. This trend increases the growth rate of the
Thailand is aging rapidly. The working-age share of the population population and the number of children relative to the
is shrinking, and the older-age share is increasing. The share of working-age population, creating a youth population “bulge.”
the population 65 or older is projected to rise from 13 percent The decline in mortality is followed by a decline in fertility, as
today to 31 percent in 2060. This will be the 22nd largest decisions about childbearing are influenced in part by the greater
share globally. These trends will ultimately result in a decline likelihood that children will survive. This decline in fertility results
of Thailand’s population beginning in 2029. Overall, Thailand’s in a decline in the number of younger people relative to the work-
population aging looks more like that of the wealthy countries of ing-age population, which itself has increased as a result of
East Asia than that of its middle-income peers. Older people are declining mortality rates. The population “bulge” then moves
not distributed evenly across Thailand: they represent a higher into the working ages.
proportion of the population in the North and Northeast, a result
of higher rates of outmigration of younger people from these Thailand has undergone its demographic transition. With
regions. improvements in medicine and sanitation, mortality rates,
particularly infant mortality rates, fell steadily in the middle
Thailand faces significant economic pressures from aging, of the 20th century, resulting in the so-called “million birth
but these pressures could be offset by behavioral responses cohort” (Carmichael 2011; Prasartkul, Thaweesit, and Chuanwan
reinforced by policy. Thailand has benefited from a demographic 2019). This decline was followed by a decline in fertility beginning
dividend that has boosted economic development during a in the early 1970s (figure 2.1). The result was first a bulge in
demographic transition driven by a rapid decline in fertility and, the population of people younger than age 15. The youth bulge
to a lesser extent, by net inmigration and higher life expectancy. then grew older as population aging set in: the working-age
However, the increasing share of older people in Thailand and population between ages 15 and 64 represented the largest
the shrinking working-age population could have a negative share of the population in 2010. Figure 2.2 shows the evolution
impact on economic growth and fiscal sustainability. Behavioral of this bulge over time.
Aging and the Labor Market in Thailand 13
Figure 2.1 Infant mortality and fertility rates in Thailand, Figure 2.2 Figure 2.2 Distribution of population in Thailand, by
1955–2060 age, 1960, 2010, and 2060
Source: UN 2019b. Source: UN 2019b.
A demographic dividend can boost economic growth during the Thailand benefited from a demographic dividend as its
demographic transition given the right policy environment. The population grew older during its demographic transition.
demographic dividend is the rise in income per capita that results The demographic dividend has been an important factor in
from the relative increase in the working-age population during economic growth in East Asia since 1965 (Bloom, Canning, and
the demographic transition. The dividend arises from three main Malaney 2000; Bloom and Finlay 2009; Bloom and Williamson
mechanisms (Bloom and Canning 2008; Bloom, Canning, and Sevilla 1998). Thailand was an important beneficiary, as shown by the
2003). First, the dividend arises via increases in labor supply. The evolution of the total dependency ratio, which divides the number
effect is mechanical: the larger the share of people in ages typically of young and older people by the number of working-age people (a
associated with working, the greater the number of people who smaller ratio indicates a larger working-age population). Thailand’s
are likely to be working, which in turn increases per capita out- total dependency ratio declined from 1970 until 2010, indicating
put. This is often called the first demographic dividend. Increas- a growing number of working-age people relative to “dependents”
es in labor supply also arise from a behavioral effect: women are and resulting in a (first) demographic dividend (figure 2.3). Providing
more likely to enter the workforce when fertility is low (Bloom et evidence for this, Ha and Lee (2016) find that the contribution of
al. 2009). Second, the dividend arises from the growth of savings declining dependency to economic convergence in Thailand was
because working-age people tend to save more (a compositional greatest in the 2000s. Bloom and Finlay (2009) estimate that
effect) and because better health and longer lives may incentivize between 1965 and 2005 demographic changes accounted for 20
saving (a behavioral effect) (Bloom et al. 2007; Lee, Mason, and percent of economic growth in Thailand.4 This figure compares to
Miller 2000). Third, the dividend arises via human capital, as lower 10 percent in Japan, 16 percent in China, and 51 percent in Singapore
mortality rates and longer life expectancies alter the incentives (figure 2.4). A similar estimate for the period 1960 to 2000 finds
for investment in education and health. These changes in female that the demographic dividend was responsible for 16 percent of
labor supply and in physical and human capital are often called economic growth during that period (Mason and Kinugasa 2008).
the second demographic dividend (Mason, Lee, and Jiang 2016). Demographic changes at the household level were also important.
These mechanisms make clear that policy matters for how the Between 1988 and 2013, working-age adults increased as a share
demographic dividend operates and whether it operates at all: of household size, which may have boosted household production
labor markets must be flexible to absorb more potential workers, capacity. Indeed, changes in the demographic composition of
savings devices must be in place, and health and education must households accounted for 8 percent of the decline in poverty in
be accessible. this period (World Bank 2016).
Demographic change contributed 0.88 percentage point to economic growth in this period (Bloom
4.
and Finlay 2009).
Aging and the Labor Market in Thailand 14
Figure 2.3 Total dependency ratio in Thailand, 1960–2060 Figure 2.4 Share of economic growth accounted for by
demographic change in East Asia and Pacific, 1965–2005
Source: UN 2019b. Source: Bloom and Finlay 2009.
POPULATION AGING IN THAILAND and Fuchs 2012). The working-age share of the population in Thai-
land grew continuously from 1950 until 2010 but then declined be-
Thailand is now in the stage of population aging in which the tween 2010 and 2015 and again between 2015 and 2020 (figure
working-age share of the population is shrinking and the old- 2.5). The share of the population that is 65 or older, in contrast,
er-age share is increasing. Once the demographic transition barely changed until the 1980s but then began growing. Indeed, 9
is complete, longer life expectancy combines with low fertility million people, representing 13 percent of Thailand’s population, are
rates and the aging of the large working-age population to cre- now 65 or older, which is double the share in 2000. This is the
ate a sizable population of older people. At this stage, gains in fifth largest share in the East Asia and Pacific region and the 58th
life expectancy occur primarily toward the end of life (Eggleston largest globally (figure 2.6).
Figure 2.5 Share of population in Thailand, by age group, Figure 2.6 Share of 65-plus population in East Asia and Pacific,
1950–2060 by country, 2020 and 2060
Source: UN 2019b. Source: UN 2019b.
Aging and the Labor Market in Thailand 15
Thailand’s working-age population is projected to continue will ultimately lead to a decline in Thailand’s population beginning
shrinking, while the population of older people is projected to in 2029.
continue growing. The working-age share of the population is pro-
jected to decline from 71 percent of the population in 2020 to 56 Categorizing the East Asia and Pacific region’s demographic diver-
percent in 2060 (figure 2.5). This is equivalent to a nearly 30 per- sity can help to put Thailand’s aging in context. A recent World Bank
cent decline in the working-age population, the third largest decline report on aging in the East Asia and Pacific region, Live Long and Pros-
in the East Asia and Pacific region after the Republic of Korea (43 per, categorized countries in the region into three groups in order to
percent) and Japan (34 percent) (figure 2.7). Meanwhile, the share classify their demographic diversity (World Bank 2015). This same ty-
of the population 65 or older is projected to rise from 13 percent to pology is useful for placing Thailand’s aging population in context. The
31 percent (figure 2.5). This is the 22nd largest share globally. The region’s wealthy economies that have the highest shares of population
population of the “oldest old”—that is, people age 80 and older—is 65 or older are classified as “red”: Hong Kong SAR, China; Japan; Korea;
projected to increase significantly from less than 1 percent of the and Singapore. Quickly aging countries are classified as “orange”: Chi-
population in 1960 to 3 percent in 2020 and to 13 percent in 2060, na, Indonesia, Malaysia, Mongolia, and Vietnam. Thailand is a member
one of the highest in the region (figure 2.8). The continued aging of of this group, but is kept separate for this analysis. Finally, Cambodia,
Thailand’s population can be seen in the movement of the popula- the Lao People’s Democratic Republic, Myanmar, Papua New Guinea,
tion “bulge” in figure 2.2 from the young ages in 1960 to the working the Philippines, and Timor-Leste are classified as “green”: although
ages in 2010 and finally to the older ages in 2060. These trends they are still young, they will begin to age in the coming decades.
Figure 2.7 Percentage change in the working-age population in Figure 2.8 Percent of the population age 80 and older in East
East Asia and Pacific, by country, 2020–60 Asia and Pacific, by country, 2060
Source: UN 2019b. Source: UN 2019b.
Aging and the Labor Market in Thailand 16
Thailand’s population aging looks more like that of the wealthy the red economies in the 1950s and in Thailand in the late 1980s
countries of East Asia than its middle-income peers. In 1950, (figure 2.9, panel b). The dependency ratio is projected to grow in
the share of the population 65 or older was quite similar across Thailand and the red economies at a similar rate from 2020 to
Thailand and the red, orange, and green countries (figure 2.9, pan- 2040, reaching ratios of 0.43 and 0.57, respectively. In the orange
el a). By 1970, the 65-plus population in red economies had begun countries, in contrast, the old-age dependency ratio began to rise
to increase quickly. This increase began in Thailand in 1990 but in the 2010s and will increase at a slower rate, reaching just 0.23
did not begin in the orange countries until around 2010. By 2040, in 2040. In contrast, differences in the remaining years of life—life
the share of the 65-plus population is projected to be 32 percent expectancy—are less apparent between Thailand and the orange
in red economies, 26 percent in Thailand, and just 15 percent in countries. This is clearest for life expectancy at birth, but also for
orange countries. The old-age dependency ratio, which divides the life expectancy at age 60 (figure 2.10). Red economies have expe-
number of older people by the working-age population, provides rienced fast growth in life expectancy, while Thailand has experi-
an alternative measure of the old-age population, but this time in enced fairly constant growth on this metric. This finding is consis-
relation to the number of working-age people, who are more like- tent with the smaller role of life expectancy in population aging,
ly to be in the labor market. This measure began to accelerate in which is discussed in more detail below.
Figure 2.9 Population aging in East Asia and Pacific, 1950–2060
a. Share of 65-plus population b. Old-age dependency ratio
Source: UN 2019b.
Note: Green = young populations that will begin to age in the coming decades. Orange = populations that are aging quickly. Red = old populations that have
the highest shares of people 65 or older. See the text for more detail.
Figure 2.10 Life expectancy in East Asia and Pacific, 1955–2060
a. At birth b. At age 60
Source: UN 2019b.
Note: Green = young populations that will begin to age in the coming decades. Orange = populations that are aging quickly. Red = old populations that have the
highest share of people 65 or older. See the text for more detail.
Aging and the Labor Market in Thailand 17
Population aging is occurring quickly in Thailand. In The Thailand is aging at a lower level of income than other countries.
65-plus population in Thailand doubled between 2000 and Figure 2.11, panel a, plots the old-age dependecy ratio of all countries
2020 and will double again by 2040 to 26 percent of the between 1980 and 2018 against GDP per capita (purchasing pow-
population. Between 2000 and 2020, the 65-plus population er parity [PPP] at constant 2011 international dollars) with a best fit
in orange countries increased by only a quarter. Between 2020 line representing the average GDP per capita of a country at a specific
and 2040, their older population will also double, but only old-age dependency ratio. As shown in this figure, Thailand has aged
to 15 percent of the population. The number of years for the without ever crossing this line, implying that at every stage of aging
share of the 65-plus population to increase from 7 percent Thailand has had GDP per capita that is lower than average. Figure
of the population to 14 percent is often used to gauge the 2.11, panel b, which replicates panel a for Thailand and the red, orange,
speed of population aging. This transition took 115 years in and green countries, shows that the older red economies had GDP per
France and 69 years in the United States; it is projected to capita of around $41,000 when their elderly dependency ratio was at
take only 20 years in Thailand, the fourth-fastest rate in the the same level as Thailand’s today. This is more than twice the level of
region, behind Singapore (17 years) and Korea and Vietnam Thailand’s current GDP per capita. In sum, Thailand is less wealthy than
(18 years). other countries were at similar stages of population aging.
Figure 2.11 Income and old-age dependency, 1980–2018
a. Around the world
b. East Asia and Pacific
Source: World Bank, World Development Indicators; UN 2019b.
Note: GDP per capita is purchasing power parity (constant 2011 international $). Green = young populations that will begin to age in the coming decades. Orange =
that are aging quickly. Red = old populations that have the highest share of the people 65 or older. See text for more detail.
Aging and the Labor Market in Thailand 18
Declines in fertility and increases in life expectancy have played and Myanmar, meaning that more people arrive in Thailand than
an important role in population aging in Thailand. The rapid pace leave. This has been true in each five-year period since 1970, with
of aging is in part a result of the sharp drop in fertility rates asso- the exception of 1990 to 1995, although net migration rates have
ciated with a family planning program that spurred contraceptive been lower in recent years (figure 2.14). Migrants in Thailand tend to
use (Knodel, Chamratrithirong, and Debavalya 1987; Prasartkul, be younger than the local population (figure 2.15). In fact, Thailand’s
Thaweesit, and Chuanwan 2019; UNFPA 2019). Improvements in aging population is likely a driver of migration, as migrants seek to
life expectancy have also driven the aging of the population. Life fill gaps created by aging workforces (Testaverde et al. 2017).
expectancy at birth grew 24 years between 1960 and 2020: a Past studies have found that older populations are associated
child born in 1960 was only expected to live until age 53, while one with higher rates of inmigration (Zaiceva and Zimmermann
born in 2020 is expected to live until age 77 (figure 2.12). 2016). Notably, outmigrants from Thailand are also young. The
positive net migration rate means that this effect is being offset,
International migration has also influenced population aging but it also implies that a negative net migration rate in the future
in Thailand. Thailand has historically been a net recipient of mi- could contribute to population aging.
grants, particularly low-skill migrants from Cambodia, Lao PDR,
Figure 2.12 Life expectancy in Thailand at different ages, 1960, Figure 2.13 Net migration in Thailand, 1970–2020
2020, and 2060
Source: UN 2019b. Source: UN 2017.
Figure 2.14 Age distribution of migrants and locals in Figure 2.15 Share of 65-plus population in Thailand under
Thailand, 2019 different demographic scenarios, 1975 and 2015
Source: UN 2019b. Source: UN 2017.
Aging and the Labor Market in Thailand 19
A rapid decline in fertility is the primary factor explaining the rural areas in 2018. A smaller share of working-age people (44
speed of population aging in Thailand. Overall, changes in fertility percent) lived in rural areas. Within urban and rural areas, the
have dominated changes in life expectancy and migration. Figure distribution of the population by age is similar across urban and
2.15 compares the share of the population that is 65 and older rural areas, with a slight skew toward the working ages in urban
under different scenarios: constant fertility, constant mortality, areas. Older people are not distributed evenly across Thailand:
and constant migration.5 The scenarios show the significant impact they represent a higher proportion of the population in the North
of fertility: had fertility rates remained at 1975 levels, the share of and Northeast (map 2.1), where nearly 15 percent of the popula-
the population that is 65 and older would have been 4 percent in tion was older than 65 in 2018 (figure 2.16, panel a). The NESDC
2015, 6 percentage points lower than the actual value of 10 percent. projects that this share will increase to more than one-quarter by
Life expectancy (mortality) and migration have had a much smaller 2040. Bangkok, which is currently the youngest region, is projected
impact. to age quickly to become the third youngest in 2040 (map 2.2). In
2018, 53 percent of Thailand’s older people lived in the Northeast
Aging patterns vary across geography in Thailand. Differences and North regions, which only accounted for 45 percent of Thailand’s
in aging are relatively small across urban and rural areas according total population (figure 2.16, panel b). By 2040, however, this share
to demographic estimates by the Office of the National Economic is projected to shrink, while that of Bangkok is projected to grow.
and Social Development Council (NESDC), a government economic
planning agency. Around half (48 percent) of older people lived in 5.
Appendix A discusses the simulations in more detail.
Map 2.1 Average age in Thailand, by province, 2018 Map 2.2 Change in average age in Thailand, by province,
2019–40
Source: NESDC 2019. Source: NESDC 2019.
Aging and the Labor Market in Thailand 20
Figure 2.16 Share of population age 65 and older in Thailand, 2018 and 2040
a. Share of regional population age 65 and older b. Regional share of total population age 65 and older
Source: NESDC 2019.
There are several explanations for this geographic variation. In working relative to the total population and due to the decline in
the now relatively youthful Bangkok, fertility rates declined more savings available for investment given older people’s low savings
quickly than in other regions (UNFPA 2011). However, this effect rates (Bloom, Canning, and Fink 2010). This effect gives rise to
was likely offset by higher rates of outmigration of younger people concerns about the negative implications of aging for economic
from the now relatively old North and Northeast, on the one hand, growth. Indeed, projections of the potential impact of this effect
and higher rates of inmigration to Bangkok, on the other (Fujioka based on estimates of past demographic dividends suggest that
and Thangphet 2009). Migration likely played a smaller role in the Thailand may not benefit from its changing demographics. Park
South. In the South, where women in the large Muslim population and Shin (2011) estimate that future changes in demographics
tend to have more children, fertility rates declined the slowest will contribute negatively to economic growth in the 2020s (fig-
in Thailand, likely explaining the relatively youthful population ure 2.17, panel a). The negative impact of -0.86 percent on growth
(UNFPA 2011). The higher prevalence of human immunodeficien- of GDP per capita is smaller than in Korea (-1.45 percent) and
cy virus (HIV)/acquired immunodeficiency syndrome (AIDS) and Singapore (-2.52 percent) but larger than in China (-0.79 percent)
changes in family support are also potential factors explaining the and Vietnam (-0.28 percent) as well as in Malaysia, where demo-
relatively older population in the North and Northeast (Fujioka and graphics are estimated to have a positive contribution (figure 2.17,
Thangphet 2009). panel b).6 Thailand’s changing demographics may even create the
risk for a middle-income trap (Ha and Lee 2018). Notably, however,
these projections do not take into account potential behavioral
THE IMPLICATIONS OF POPULATION AGING responses to population aging, which could counteract these
negative impacts. At the same time, having more older people
The increasing share of older people in Thailand could have a also implies more spending on social security, health care, and
negative impact on economic growth and fiscal sustainability. aged or long-term care.
Thailand’s working-age population is projected to decrease, while
6.
Bloom and Finlay (2009) extend these projections further to estimate that demographics will
the share of older people in the population is projected to increase.
contribute negatively to economic growth in Thailand between 2005 and 2050. Again, the impact
All else remaining equal, this change implies a mechanical decrease is lower than in Korea and Singapore, but larger than in China and Malaysia (where the impact is
positive).
in growth in income per capita due to the smaller number of people
Aging and the Labor Market in Thailand 21
Figure 2.17 Impact of demographic change on growth of GDP per capita in Thailand and in East Asia and Pacific
a. Thailand, 2011–20 and 2020–30 b. East Asia and Pacific, 2021–30
Source: Park and Shin 2011.
The shrinking working-age population, combined with and Restrepo 2017; Mason and Kinugasa 2008). Adoption of these
changes in the nature of demand, could result in occupational technologies may explain why no negative relationship is observed
and skills shortages. The decline in the working-age population between population aging and economic growth.
itself implies that shortages may arise as the number of potential
workers shrinks. Ongoing developments related to automation, Policy can reinforce, complement, and supplement these
digitization, and other trends associated with Industry 4.0 may behavioral responses. Policy has an important role to play
exacerbate these shortages. These technological advancements in responding to population aging (Bloom, Canning, and Fink
hold great promise for increasing productivity.7 However, they are 2010). Policies can reinforce behavioral responses by facilitat-
shifting the nature of demand for skills. Demand for basic literacy ing labor force participation or raising the retirement age;
and numeracy skills is already shifting to demand for socioemotional complement behavioral responses by expanding the availabil-
skills and higher-order cognitive and technical skills in the East ity of education and training opportunities or investing in the
Asia and Pacific region (Mason and Shetty 2019). Additionally, health of older people; and supplement behavioral responses
the aging of the workforce can create demand for certain types of by encouraging migration and adjusting pension systems
workers, resulting in shortages if supply does not keep pace. For to ensure fiscal sustainability. In Thailand, for example,
instance, the International Labour Organization (ILO) estimates simulations show that policies to increase the labor force
that the formal sector in Thailand already has a deficit of more participation of older people could increase GDP in a fiscally
than 225,000 long-term care workers (Scheil-Adlung 2015). sustainable way (Phijaisanit 2016).
However, behavioral responses could counteract these negative Much of the discussion in this part of the report has focused
impacts. These behavioral responses include responses that affect on changes in populations broken into different age groups.
the number of people working: population aging can incentivize However, this focus arises because population ages are easier to
increases in the number of working years as life expectancy in- project than labor force participation. Indeed, the consequences
creases (Bloom et al. 2007) and expansions in (female) labor force of changing demographics come from changes in participation
participation as fertility declines (Bloom et al. 2009). They also in the labor force and from changes in dependency. This fact
include responses that increase the productivity of the workforce: suggests that the negative consequences of population aging
population aging can result in increases in per child investments are not inevitable and highlights the mechanisms in the labor
in human capital as fertility rates decline (Bloom, Canning, and market that counteract negative impacts: engaging more people
Fink 2010). Indeed, in Thailand smaller family size has been linked in the labor force and making present and future workers more
to a higher probability of attending secondary school (Knodel and productive.
Wongsith 1991). Finally, population aging can even lead to higher
saving rates and capital deepening and to the adoption of In particular, these technological advancements could increase total factor productivity, the portion
7.
of economic growth not explained by inputs to production, which is generally thought to represent
labor-saving technologies that offset labor scarcity (Acemoglu technological improvements.
Aging and the Labor Market in Thailand 22
Dependency and its impacts are the real concern with popu- be more capable of making economic contributions than in the
lation aging, and age and dependency are not equivalent. Age past. Third, patterns of production and consumption vary over
does not automatically translate into dependency. Three factors the life cycle. Understanding these patterns can indicate where
explain this assertion. First, aging is typically defined by chrono- “dependency”—consuming more than one produces—occurs in
logical age. However, this definition overlooks an important the life cycle. In Thailand, these patterns suggest that older people
component of age, which is the number of years a person has become net consumers at age 58, even younger than the age 65
left to live (Sanderson and Scherbov 2005; Spijker and MacInnes cutoff typically used to define old age (figure 2.19). But even this
2013). A 60-year-old in Thailand in 1960 was expected to live 17 is an oversimplification, as older people in Thailand are net
years, while someone of the same age today is expected to live providers of their time for support of their households (Phanani-
23 years. This has implications for the distribution of population. ramai 2011). These three factors are a reminder that aging is not
But this so-called “age inflation” may also change the perception a monolithic phenomenon and that thresholds used to define old
of who is old and a person’s ability to contribute and so could age are not hard-and-fast rules that determine dependency.
warrant policy changes (Shoven 2008). Recent research on Thai-
land shows that the proportion of the population with 15 or fewer Part 3 of the report focuses on the channels through which the
years of life remaining will actually decrease from 80 percent potential negative consequences of aging could be mitigated
in 2000 to 65 percent in 2050 (Prachuabmoh 2019). Second, or reversed. In particular, it discusses the potential to increase
people are not just living longer in Thailand; they are also living participation in the labor market and to improve productivity and
healthily for longer (figure 2.18), suggesting that older people may examines opportunities created by aging.
Figure 2.18 Change in health-adjusted life expectancy at birth Figure 2.19 Per capita labor income and consumption in
and age 65 in East Asia and Pacific, 1990–2017 Thailand, by age
Source: GBD 2017 DALYs and HALE Collaborators 2018. Source: Flochel et al. 2014.
Note: Green = young populations that will begin to age in the coming Note: The vertical lines indicate the ages at which labor income is
decades. Orange = populations that are aging quickly. Red = old larger than consumption.
populations that have the highest shares of people 65 or older. See
the text for more detail.
Aging and the Labor Market in Thailand 23
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Aging and the Labor Market in Thailand 26
PART 3: segregation. Migrants also can contribute positively to Thailand’s
labor supply because they are young and often migrate for work.
POPULATION AGING’S
High-skill migrants can fill skills gaps. Barriers to increased
migration include potential negative effects on the employment
CHANNELS OF and wages of locals, although these impacts seem to be modest.
IMPACTS Productivity improvements can offset the negative impacts
of aging, and older people are not necessarily less productive.
Aging affects productivity through higher saving rates and
capital deepening in a so-called second demographic dividend.
Part 3 discusses the channels through which aging Aging changes the incentives for investing in health and educa-
will affect Thailand’s labor market. The first section tion, while technological innovation and diffusion can address
summarizes the main findings. The second section characteristics like creativity and technological adoption that are
discusses the potential for changes in labor force correlated with aging. There is no strong evidence that older people
participation and migration to offset Thailand’s are less productive than younger people, although the evidence on
declining working-age population. The third section how productivity changes with an individual’s age is incon-
discusses how changes in productivity could clusive. Population aging seems to lead to greater automation,
influence the impact of aging. The final section which could mean higher productivity. At the same time, technologies
investigates the opportunities created by population have the potential to make older workers more productive. The
aging. COVID-19 outbreak may hasten the adoption of alternative working
arrangements that may be attractive to older workers who value
flexibility.
MAIN FINDINGS
Population aging is creating new opportunities for economic
Policy has an important role to play in how aging affects the growth. Population aging is creating a need for more care work
labor market. Behavioral and policy responses will play a signif- provided outside of the home. The growth in demand for care
icant role in shaping how population aging affects labor markets creates an opportunity to train new and current workers to fill
and economic development. Three channels are important to these jobs. However, recruiting, deploying, and retaining qualified
consider in evaluating how population aging may affect the labor workers are challenging tasks, and care jobs are typically poor
market in Thailand. First, how will the supply of labor evolve as quality. Thailand faces an additional challenge, which is the aging
Thailand ages? Second, how will labor productivity change as of the health workforce itself.
Thailand ages? And third, what opportunities does population
aging create in the labor market? EXPANDING THE LABOR SUPPLY
Increasing labor force participation among older people and Thailand’s demographics imply a decline in labor force
women and increasing international migration are viable options participation rates in the coming years. Assuming constant
for expanding labor supply as Thailand ages. The longer, healthier labor force participation rates by age and gender, Thailand’s
lives of older people and their increasing education levels suggest projected demographic changes would lead to a reduction in the
that there is scope to increase the labor force participation of overall labor force participation rate of about 5 percentage points
this group. However, barriers to doing so remain, including care between 2020 and 2060 and a reduction in the overall size of the
responsibilities, health challenges, and discrimination. Pension labor force of 14.4 million people (figures 3.1 and 3.2). However,
benefits may have some disincentive effects, but they are not a the assumption of fixed labor force participation is a strong one.
significant concern given low coverage. A lack of skills to compete Part 1 showed that older people tend to have lower labor force partic-
in a changing labor market is not a challenge uniquely for older ipation rates than their younger peers, particularly in urban areas.
people; rather it is an issue for all workers in Thailand. There is It also showed that the labor force participation rate of women
significant room for women to increase their labor force participa- is significantly lower than that of men. Increasing the labor force
tion given the large gender gap in participation rates and improved participation of these groups has the potential to offset the pro-
education levels of women. However, women have greater care jected decline in Thailand’s labor force that will occur if participa-
responsibilities than men and must contend with occupational tion rates remain at their current levels.
Aging and the Labor Market in Thailand 27
Figure 3.1 Projected labor force participation rate in Thailand, Figure 3.2 Projected labor force in Thailand, 2020–60
overall and by gender, 2020–60
Source: Thailand Labor Force Survey 2016–2018; UN 2019. Source: Thailand Labor Force Survey 2016–2018; UN 2019.
Note: Assumes constant age-specific labor force participation rates. Note: Assumes constant age-specific labor force participation rates.
There are several reasons to believe that an increase in than younger ages—the so-called longevity transition—meaning
the labor force participation of older people is possible. In that workers will have more years to work at the end of their lives
the absence of incentives to retire at younger ages, the increased (Eggleston and Fuchs 2012). Indeed, life expectancy at age 60 in-
longevity that Thailand has experienced since 1960 should lead creased from 17 years in 1960 to 22 years in 2015 and is projected
to longer working lives (Bloom et al. 2007). Most of Thailand’s to increase to 27 years by 2060 (figure 3.3).
future gains in life expectancy are likely to occur at older rather
Figure 3.3 Life expectancy at age 60 in Thailand, 1960–2060 Figure 3.4 Healthy life expectancy at age 65 in
Thailand, 1990 and 2017
Source: UN 2019. Source: GBD 2017 DALYs and HALE Collaborators 2018.
Aging and the Labor Market in Thailand 28
The lengthening of working lives is made more likely by levels are higher among younger groups. It is true even within
improvements in the health of older people. In Thailand as older age groups (Teerawichitchainan et al. 2019). Thus
elsewhere, healthy older people are more likely to participate future older workers will have more education than current
in the labor market (Adhikari, Soonthorndhada, and Haseen older workers. Projections of future trends in education in
2011). Older people have been getting healthier in recent years. Thailand estimate that, by 2030, nearly two-thirds of the
The number of healthy years of life expectancy at older ages population will have at least a secondary education, rising
increased from 12 years in 1990 to 15 years in 2017 (figure to three-quarters by 2040 (Flochel et al. 2014).
3.4). The Survey of Older Persons shows that the proportion of
people 60 or older reporting poor or very poor health has declined Changes in the nature of work may also be favorable for
significantly since the 1990s across genders and urban and keeping older people in the labor force, particularly in urban
rural areas (UNFPA 2019). This “healthy” aging is summarized areas. Automation has increased in Thailand in recent years
succinctly in a new aging metric that incorporates health status: (Lipipatpaiboon and Thongsri 2018). With increased automation,
73-year-olds in Thailand are found to have the same burden work is becoming less manual and less physically demanding (ADB
of age-related disease as the average 65-year-old globally 2018b). In Thailand, jobs decreasingly require manual skills
(Chang et al. 2019). While, on average, older people are living and increasingly require (routine) cognitive ones. Employment
longer, healthier lives, disparities in health remain. is now around 30 percent less intensive in both routine and
nonroutine manual tasks than it was in 2014, while it is 40
Increasing education levels create an opportunity and percent more intensive in routine cognitive skills (figure 3.5).8
an incentive for extending working lives. In Thailand, As a result, there are more jobs that older workers can do (Abe-
more education is associated with better health, which, in liansky et al. 2020). Increased job flexibility could also help to
turn, can increase labor force participation (Loichinger and keep older workers in the labor force. Based on a methodology
Pothisiri 2018). More education is itself generally as- for estimating the number of jobs that could be done remotely,
sociated with a higher likelihood of participation in the about one-fifth of jobs in Thailand in 2019 could be done via
labor force; however, in Thailand more educated older work- telework, given the appropriate access to technology.9 While
ers have lower labor force participation rates, likely due to the share of jobs that could be done remotely has not increased in
the necessity for less-educated workers to continue working Thailand in recent years, the COVID-19 outbreak demonstrated
(Blau and Goodstein 2010; Burtless 2013; Larsen and Pedersen to many employers the possibility and benefits of remote work,
2017). While the education level of older people in Thailand which could accelerate its adoption in coming years. Finally, the
is currently very low—84 percent of the employed had less increasing education level of older people could lead to longer
than a primary school education in 2019—it has improved in working lives as these workers decide to remain in the labor
recent years, increasing the ability of older people to contin- market longer to increase the return to investments in their
ue participating in Thailand’s knowledge-based economy. A human capital.
decade earlier in 2008, more than 90 percent of people ages
8.
Changes in the Labor Force Survey in 2011 and 2013 mean that a longer time period cannot
65 and older had less than a primary education. This trend is
be analyzed. However, the decline in manual skills is also apparent between 2001 and 2010.
likely to continue. As figure 1.20 in part 1 shows, education 9.
See Dingel and Neiman (2020) for the methodology.
Aging and the Labor Market in Thailand 29
Figure 3.5 The task intensity of employment in Thailand, 2014–19
Source: Thailand Labor Force Survey 2014–19; based on Acemoglu and Autor 2011.
However, older people face several barriers to increasing their Socioeconomic Survey reduces the probability of labor force
participation in the labor market. First, older people often have participation for older workers by more than 25 percent (figure
care responsibilities. About one-third of people 60 and older 3.7). Noncommunicable diseases (NCDs) are also major contrib-
live in households with one or more grandchildren, and 14 percent utors to disability among older people in Thailand and may lead
live in “skip generation” households in which the parents of the to declines in labor force participation (Yiengprugsawan, Healy,
grandchild are absent, typically due to migration (Teerawich- and Kendig 2016). Third, older workers may face age discrimi-
itchainan et al. 2019). In one recent survey, nearly 30 percent nation. Although only qualitative evidence exists for Thailand,11
of grandparents reported caring for grandchildren under the laboratory and field experiments and a recent nonexperimental
age of 10, with older women playing a more significant role in study in the European Union and the United States found fairly
child care (World Bank 2018). Such care responsibilities can strong evidence of discrimination against older workers, par-
make working difficult and also have negative effects on health ticularly women (Neumark 2018, 2020). Research using on-
(Komonpaisarn and Loichinger 2019). Using the 2017 House- line job postings in China and Mexico also found evidence of
hold Socioeconomic Survey and controlling for other character- discrimination (Helleseter, Kuhn, and Shen 2016; Kuhn and
istics, having an additional child in the household reduces labor Shen 2013). Finally, seniority-based compensation schemes
force participation, with the effect driven by women in urban can disincentivize the hiring and retention of older workers by
and rural areas (figure 3.6). Still, the incidence of older peo-
10
increasing their cost relative to their productivity (OECD 2019).
ple living with grandchildren has declined over time, as lower Although these schemes seem to be declining in popularity in
fertility rates mean fewer grandchildren. Second, despite living Thailand, more research is needed to understand their current
longer and healthier lives now than in the past, older people still prevalence and impact.
face health challenges. A third of people 60 and over say that
See appendix C for a description of the methodology.
10.
they have one of four functional limitations, and these limita- 11.
A small qualitative study of American and Thai students found that Thai students agree more
tions increase with age (Teerawichitchainan et al. 2019). Poor with both negative stereotypes (older workers are less comfortable with new technology, less flex-
ible, and more cautious) and positive stereotypes (older workers are absent less, have a better
health has a substantial impact on the probability of working. attitude toward work, and have a higher level of commitment to the organization) (McCann and
Reporting a physical or intellectual disability in the Household Keaton 2013).
Aging and the Labor Market in Thailand 30
Figure 3.6 Impact of an additional child on the probability of Figure 3.7 Impact of a physical or intellectual disability on the
older people’s labor force participation in Thailand, 2017 probability of older people’s labor force participation in Thailand,
2017
Source: Thailand Socioeconomic Survey 2017. Source: Thailand Socioeconomic Survey 2017.
Note: All results statistically significant at 5% A blank column means a Note: All results statistically significant at 5%
result is not statistically significant at 5%
Thailand’s contributory pensions have some disincentive beneficiaries of noncontributory social pensions such as
effects on older people’s labor force participation, but the the Old Age Allowance are located (figure 3.9). Once other
currently low beneficiary coverage means that these effects factors are controlled for, receipt of a contributory pension is
are not of immediate concern. The availability of a sufficiently associated with a substantial negative effect on the probability of
generous pension has been shown to disincentivize labor force people older than age 45 participating in the labor force (figure
participation (World Bank 2015). Figure 1.12 in part 1 shows a 3.10). Although in this analysis contributory pensions cannot
drop in the labor force participation rate at age 60—the age of be disaggregated into public sector beneficiaries and private
eligibility for the Old Age Allowance, a noncontributory social sector beneficiaries of the Social Security Fund, public sector
pension, and the retirement age for the contributory public beneficiaries make up most current beneficiaries of contrib-
sector pension scheme, but five years later than the retirement utory pensions and their benefits are higher than those under
age for the contributory private sector scheme under the Social the Social Security Fund.12 Still, the coverage of contributory
Security Fund. This drop provides suggestive evidence of a pensions is limited: the 2017 Socioeconomic Survey shows that
disincentive effect. The contributory public sector pension only 11 percent of people 60 and over were covered (figure 3.11).
scheme is the likely culprit. Contributory pensions are sig- This means that disincentive effects are limited to a small
nificantly more generous than noncontributory pensions in group and are not a significant concern right now. However,
Thailand: contributory pensions make up around 87 percent of coverage under the Social Security Fund for formal private sector
beneficiaries’ consumption versus just 7 percent for noncontrib- workers has been increasing, suggesting that these disincentive
utory social pensions (figure 3.8). The Labor Force Survey shows effects are important to keep in mind, although the generosity
that the drop in labor force participation is more apparent in of benefits could also be diluted as coverage increases.
urban areas, where two-thirds of beneficiaries of contributory
pensions are located, than in rural areas, where two-thirds of The Social Security Fund scheme for the private sector was launched much later than the public
12.
sector scheme, and its first cohort of pensioners appeared only in 2014.
Aging and the Labor Market in Thailand 31
Figure 3.8 Adequacy of pensions in Thailand, 2017 Figure 3.9 Labor force participation rate in urban and rural ar-
eas of Thailand, by age, 2019
120%
100%
Labor force participation (%)
100%
% of consumption
90%
80%
80%
70%
60% 60%
40% 50%
40%
20% 30%
0% 20%
Nonpoor
Nonpoor
Rural
Rural
Urban
Urban
Total
Total
Poor
Poor
10%
0%
50 55 60 65 70
Contributory pensions Noncontributory social Age
pensions
Urban Rural
Source: Thailand Socioeconomic Survey 2017. Source: Thailand Labor Force Survey 2019.
Note: The red outline indicates age 60.
Figure 3.10 Impact of receiving a contributory pension on Figure 3.11 Share of population 60 and older receiving a
older people’s labor force participation in rural and urban contributory pension in rural and urban areas of Thailand.
areas of Thailand. by gender, 2017 by gender, 2017
Source: Thailand Socioeconomic Survey 2017. Source: Thailand Socioeconomic Survey 2017.
Note: All results statistically significant at 5%.
Aging and the Labor Market in Thailand 32
The Old Age Allowance social pension may also have some Old Age Allowance does not affect expenditures. This finding
disincentive effects, but adequacy of the benefits is likely a is consistent with the allowance’s low benefit levels.
greater concern. In contrast to contributory pensions, receipt
of a non-contributory pension, either the Old Age Allowance or Older workers may lack the skills to participate in growing
disability assistance, has no apparent effect on labor force par- occupations. Although the education level of older workers is
ticipation except a small impact for men in urban areas (figure likely to be higher in the future, current and soon-to-be older-
3.12). This is despite broad coverage (figure 3.13). Still, previous people may lack the skills that are increasingly in demand and
research has found some evidence that the Old Age Allowance work in occupations that are susceptible to automation. In oth-
in particular, Thailand’s social pension that is accessible to anyone er words, technological change may be age-biased (Chomik and
60 and over not enrolled in a public or private (contributory) Piggot 2019). Analysis of the types of tasks done by different
pension plan, has disincentivize effects on labor force participation age groups shows that the shift away from jobs involving manual
rates in rural areas, perhaps by shifting older workers out of tasks and toward jobs requiring cognitive tasks has occurred pri-
self-employment and into inactivity (Huang 2015; Paweenawat marily among younger age groups (figure 3.14). Indeed, the shift
and Vechbanyongratana 2015). This is an area of concern to employment requiring cognitive skills is much less apparent
not necessarily because of the impact on labor force partic- among people 55 and older. Uniquely for the older group, employ-
ipation itself, as labor force exit might be welfare improving ment in routine and nonroutine manual jobs has not declined.
for these rural workers. More concerning is that the pension Additionally, to the extent that the COVID-19 outbreak increases
may have these disincentive effects while also not improving the use of digital technologies and the demand for digital skills at
well-being. Indeed, Huang (2015) finds that receipt of the work, less-educated older people may struggle to keep up.
Figure 3.12 Impact of receiving a noncontributory social Figure 3.13 Share of population 60 and above receiving a non-
pension on older people’s labor force participation in urban contributory social pension in urban and rural areas of Thai-
and rural areas of Thailand, by gender, 2017 land, by gender, 2017
Source: Thailand Socioeconomic Survey 2017. Source: Thailand Socioeconomic Survey 2017.
Note: All results statistically significant at 5%. A blank column means
a result is not statistically significant at 5%.
Aging and the Labor Market in Thailand 33
Figure 3.14 The task intensity of employment in Thailand, by age group, 2014–19
Source: Thailand Labor Force Survey 2014–19; based on Acemoglu and Autor 2011.
Aging and the Labor Market in Thailand 34
The changes in task intensity of employment in Thailand standard deviation in the routine task intensity of an occupation
provide evidence that, regardless of age, workers may not be is found to be associated with an increase of more than a year in
prepared for the jobs of the future. In much of the East Asia the average age of that occupation.13 This approach allows for an
and Pacific region, demand is shifting from basic skills in literacy investigation of the drivers of this increase in mean age. Overall,
and numeracy to socioemotional skills like teamwork and com- young workers between age 15 and 34 are transitioning quickly
munication and higher-level cognitive and technical skills (Mason out of occupations with higher routine task intensities and into
and Shetty 2019). This shift is consistent with the maturation of growing occupations, while prime-age workers between age 35
automation technologies associated with Industry 4.0. However, and 54 remain in occupations with higher routine task intensities
figure 3.14 shows that no age group in Thailand is moving toward that are shrinking.
the types of nonroutine cognitive and interpersonal skills that are
associated with a knowledge-driven economy and that tend to be Automation could also change the nature of the jobs done by
more resistant to automation. One possible explanation for the older workers. While there is concern that older workers may
absence of a shift in task content is the availability of low-wage, be more likely to work in occupations that can be automated, in
low-skill migrants, which may disincentivize investment in la- Thailand these workers tend to be at somewhat less risk from
bor-saving technologies (OECD and ILO 2017; Pholphirul, Rukum- automation technologies. Based on the framework for estimating
nuaykit, and Kamlai 2010). The increase in routine cognitive tasks the probability of automation of occupations in Frey and Osborne
is a common finding in the East Asia and Pacific region (Mason and (2017), about one-quarter of people age 65 and older in Thailand
Shetty 2019). One possible explanation is the growth of retail jobs, work in occupations that are at high risk of automation (figure
as occurred in China. While the growing importance of routine 3.15).14 This compares to around 40 percent of workers between
cognitive tasks is notable, these tasks tend to be automated fairly the age of 15 and 44. Older workers are, however, more likely than
easily by computers, a trend that is being reinforced by artificial any other age group to work in occupations that are at medium
intelligence and machine learning. risk of automation. These results are consistent with the greater
prevalence of older people in mid-skill relative to low-skill jobs,
Prime-age people—the older people of the future—work in rou- as low-skill jobs tend to be highly routine and easy to automate.
tine-intensive, shrinking occupations. Some occupations may be Empirical research from the United States confirms that
“getting older” because occupation-specific skills make switching automation does not, in fact, hit the oldest workers the hardest.
to faster-growing occupations more costly for older workers than Instead, robots generally substitute the jobs of middle-age workers
for younger ones. Indeed, the average age in 2019 was 38 in the between 36 and 55 years old (Acemoglu and Restrepo 2018).
fastest-growing occupations compared to 42 in the fast-
See appendix D for a description of the methodology.
13.
est-shrinking occupations. Applying a methodology proposed by
Lekfuangfu and Nakavachara (2020) apply the Frey and Osborne (2017) methodology to Thailand,
14.
Autor and Dorn (2009) to test this more formally, an increase of 1 but do not investigate the prevalence of workers 65 and older in occupations at high risk of auto-
mation. See also Chang and Huynh (2016) and Lipipatpaiboon and Thongsri (2018).
Figure 3.15 The risk of automation of jobs, by age, 2019
Source: Thailand Labor Force Survey 2019; based on Frey and Osborne 2017.
Aging and the Labor Market in Thailand 35
There is significant room for the labor force participation of 2015). While a lower fertility rate implies spending less time
women to increase. As described in part 1, female labor force caring for children, women in Thailand are still responsible for
participation is significantly lower than male labor force par- most household work. Informal care work has been shown to
ticipation. In 2019, the participation rate was 76 percent for have a negative impact (ranging from small to large) on labor
men compared to just 59 percent for women. This gap is larg- force participation in Germany in the short term and potentially
er than that of several other countries in the region. Women larger effects in the longer term (Schmitz and Westphal 2017).
tend to have more years of education, and younger women are Daughters are much more likely than sons to take care of old-
more likely than younger men to have a university education, er parents. In a recent survey, 50 percent of older people said
meaning that they should have better opportunities to access that they receive care from a daughter versus 12 percent who
good jobs as employment shifts to require more advanced receive care from a son (World Bank 2018). A recent analysis
skills (figure 3.16). Improvements in women’s education are of time spent on household work, labor market activities, and
the most important factor in the decline of the gender wage leisure provides additional insight into the trade-offs facing
gap since the 1980s (Liao and Paweenawat 2019). Additionally, the women who provide care in Thailand (Yokying et al. 2016).
declines in the fertility rate of the kind that Thailand has ex- Nearly all women (96 percent) undertake household and care
perienced in recent decades mean that providers of care in activities, while only half (47 percent) of men do so. Women’s
households, who tend to be women, may have more opportu- household and care work is also more intensive, with women
nities to enter the labor force. Bloom et al. (2009) find that spending twice as much time on these activities each day as
lower fertility increases female labor force participation rates. men. Gaps are much smaller for labor market activities. Nota-
This effect has been observed in Thailand, although the rela- bly, having children 11 or younger increases the household work
tionship is weakest among the six members of the Association and decreases the labor market activities of women in urban
of Southeast Asian Nations (ASEAN) studied (Hartani, Bakar, areas; it also increases the household activities of men but has
and Haseeb 2015). no effect on their labor market activities. In rural areas, having
younger children leads women to devote less time to leisure.
However, women face barriers to participating in the labor Women may also face a risk of job loss if they become pregnant
market. Women’s greater care responsibilities can be a bar- (UNFPA 2019).
rier to their labor force participation (Bauer and Sousa-Poza
Figure 3.16 Average years of education of employed men and women in Thailand, 2001–19
Source: Thailand Labor Force Survey 2001–19.
Aging and the Labor Market in Thailand 36
Several other factors also create barriers. Teenage pregnancy and higher levels of disability (UNFPA 2019; World Bank 2018).
has increased in Thailand in recent years. Teenage pregnancy is While the gender wage gap overall has declined in Thailand
linked to lower rates of school completion and educational attain- in recent years as a result of women’s increasing education-
ment, which could affect longer-run outcomes like employment al attainment, segregation of women into sectors with lower
and earnings (World Bank 2019). The high rates of teenage preg- wage premiums such as education and health and social work
nancy may also be linked to the high percentage of young women creates a gap of about 6 percent between female and male
between 20 and 24 years old who are married (UNFPA 2019). Mar- wages once other factors are taken into account (Manachot-
riage leads some women to drop out of the labor force in Thailand phong 2019). There is preliminary evidence that this gender
(Liao and Paweenawat 2019). Indeed, labor force participation wage gap is more significant in the informal sector, where half
rates are substantially lower for married women throughout their of women work (Paweenawat, Vechbanyongratana, and Yoon
working ages (figure 3.17). Older women have lower literacy rates 2017).
Figure 3.17 Female labor force participation rate in Thailand, by age and marital status, 2019
Source: Thailand Labor Force Survey 2019; based on Frey and Osborne 2017.
Aging and the Labor Market in Thailand 37
Women also face challenges finding good jobs despite their industries, and less likely to work in both agriculture and services
higher levels of education. Women are underrepresented in (OECD and ILO 2017; Testaverde et al. 2017). Migrants were esti-
leadership positions. In 2018, women made up just one-third of mated to contribute between 4.3 and 6.6 percent of Thailand’s
management positions (figure 3.18). Socialization and gender 2010 GDP (OECD and ILO 2017). Migrants have several unique
stereotyping lead women into fields of study linked to lower-pro- characteristics that make them suitable for filling labor shortages
ductivity jobs. In 2018, 37 percent of male workers had studied associated with population aging. Migrants in Southeast Asia
engineering while just 2 percent of women had (figure 3.19). typically contribute positively to labor markets in destination
countries because they tend to migrate for work (Testaverde
International migration represents a significant opportunity et al. 2017). This is true in Thailand as well. While data on the
to increase the labor force in Thailand. Migrants can help to fill employment status of international migrants in Thailand are
shortages of low- and mid-skill workers created by population ag- limited, migrants have a higher employment-to-population ra-
ing. Population aging is likely to create labor shortages in low- and tio than locals (83 percent versus 74 percent) (OECD and ILO
mid-skill work in manufacturing, agriculture, and services (OECD 2017). High-skill migrants can fill skills gaps in particular areas
and ILO 2017). Migrants are already an important part of Thai- where local capacity has not yet been developed. There are
land’s labor market. Formal and informal migrants make up around more than 100,000 skill workers in Thailand (Smith, Lim, and
10 percent of the labor force (Smith, Lim, and Harkins 2019). The Harkins 2019). Figure 3.20, panel a, provides an example of the
vast majority of migrants to Thailand (around 80 percent) are types of skills gained from migration based on the migration
low-skill workers from Cambodia, Lao PDR, Myanmar, and Viet- of LinkedIn members to and from Thailand. Immigration can
nam (Smith, Lim, and Harkins 2019). Testaverde et al. (2017) show have positive impacts on other aspects of the labor market, as
that in 2015 90 percent of Thailand’s migrants worked in low-skill well. For instance, low-skill immigration to the United States
elementary occupations. Migrants are more likely than locals to increases the number of hours worked by high-skill women
work in industry, perhaps reflecting the growth of export-oriented (Cortés and Tessada 2011).
Figure 3.18 Female share of employment in high-skill Figure 3.19 Share of employment in Thailand, by field of study
occupations in Thailand, 2019 and gender, 2019
Source: Thailand Labor Force Survey 2019. Source: Thailand Labor Force Survey 2019.
Note: Only fields of study representing at least 3 percent
of female and male workers are shown.
38
Aging and the Labor Market in Thailand
Figure 3.20 Top 10 skills gained or lost in Thailand due to migration, 2019
a. Skills gained b. Skills lost
Source: World Bank Group–LinkedIn Data for Development.
There are challenges to using migration to increase the labor to understand the potential impact of increases in the labor force
force. There are concerns that migration may negatively affect participation rates of older people and women and increases in
the employment and wages of the local population. Summarizing migration.15 The simulations are undertaken for Thailand and for
the research on these effects in Thailand, OECD (2017) finds that several comparator countries in the East Asia and Pacific region.
foreign-born workers do not displace local workers at the national Four scenarios of the future evolution of the labor force in
level, although some studies have found negative impacts on wag- Thailand to 2060 are considered.
es. This negative impact may be concentrated among lower-skill
local workers, while workers with more education may experi- • Base case. Current age-specific male and female labor force
ence wage gains (Testaverde et al. 2017). Concerns may also arise participation rates are assumed to remain constant.
about the fiscal impact of migrants. As described in part 2, migrants
to Thailand tend to be young. Younger people are less likely to use • Scenario #1: increased old-age labor force participation. The
public services, suggesting that the fiscal impact of migrants labor force participation rates of men and women in the age
should be modest (OECD 2013). Additionally, the COVID-19 out- groups 55–59, 60–64, and 65 and older are assumed to converge
break has created significant uncertainty about exploiting inter- to the 95th percentile of the labor force participation rate of
national migration to fill labor market gaps, especially in the near high-income countries in the East Asia and Pacific region. In
term. While the ultimate impact of the outbreak on migration is Thailand, this means substantial increases: an increase of 10
not yet clear, the transmission control measures implemented in percentage points for men and 17 percentage points for women
Thailand and neighboring countries have significantly disrupted between the ages of 55 and 59; an increase of 19 percentage
migration flows and led to return migration from Thailand, poten- points for men and 24 percentage points for women between
tially creating labor shortages. Finally, outmigration from Thailand the ages of 60 and 64; and an increase of 8 percentage points
is also a concern. In 2017, an estimated 1.1 million Thais were living for men and women older than 65.
abroad (Smith, Lim, and Harkins 2019). This raises concerns about
talented Thai workers leaving the country and resulting in “brain
• Scenario #2: increased female labor force participation. The
drain.” The data on the migration of LinkedIn members are illus-
labor force participation rate of women is assumed to converge
trative here as well. Figure 3.20, panel b, shows the top 10 skills
linearly to the current labor force participation rate of men. In
that Thailand lost in 2019.
Thailand, this means that by 2060 the labor force participation
rate of women (and men) is 77 percent.
Simulations demonstrate the potential impact of different
paths for labor force participation and international migration These simulations update and elaborate on the methodology in World Bank (2015, 2016b).
15.
on Thailand’s labor force. A series of simulations is undertaken See appendix E for a description of the methodology.
39
Aging and the Labor Market in Thailand
• Scenario #3: increased temporary migration. The labor force is of the scenario assuming a constant flow of young workers
shocked with migrants between the ages of 25 and 34 such that into Thailand every five years, who then remain and age in the
20 percent of the labor force in that age group is composed of same way as locals. Increased female labor force participation
new migrants. In Thailand, this is slightly less than a tripling in the has the second-largest impact. While the impact is significant,
share of migrants in the labor force to around 28 percent. These the effect fades over time, as the increased female labor force
migrants are assumed to arrive every 10 years, have no children, participation rate (like that of older people) does not increase the
have identical mortality rates as locals, and leave after 10 years. pool of workers who can be drawn from but rather activates in-
The migrants are assumed to have entered the country to work, active ones. Temporary migration has the largest initial impact
which yields a labor force participation rate of 100 percent. because it involves an immediate shock, but the effect fades
quickly as the effect of the quickly aging local population takes
• Scenario #4: permanent migration. The labor supply is over. Comparing Thailand’s trajectory to that of other countries
shocked with migrants between the ages of 25 and 34 such in the East Asia and Pacific region shows that Thailand is again
that 10 percent of the labor force is composed of new similar to Japan and the Republic of Korea, where the impact of
migrants. In Thailand this is roughly a doubling in the share permanent migration is largest, followed by the impact of in-
of migrants to around 18 percent of the labor force. However, creased female labor force participation. The effect is reversed
in this scenario migrants are assumed to arrive more regularly in Indonesia, Malaysia, and the Philippines, where female labor
(every five years) and to remain in Thailand throughout their force participation rates are lower than in Thailand. Overall, the
lifetime. These migrants are assumed to have the same labor results show that increasing the supply of labor by increasing
force participation and mortality rates as locals. A simplifying labor force participation and migration can counteract some of
assumption is that migrants do not have children. 16 the effects of population aging. But no scenario can counteract
these effects fully. The results point to the need to combine
The simulations show that the labor force would expand strategies and consider how to increase labor productivity. The
under each scenario, but no single action could prevent the next section turns to this channel.
labor force from shrinking. The simulations show that the
Testing this assumption in Thailand shows that assuming that migrants have no children
16.
permanent migration scenario would result in the largest increase results in a small downward bias in scenario #4’s long-run impact on the size of the labor force.
in Thailand’s labor force by 2060 (figure 3.21). This is the result
Figure 3.21 Labor force projections to 2060 in Thailand under four scenarios
Source: Thailand Labor Force Survey 2016–18; UN 2019.
Aging and the Labor Market in Thailand 40
INCREASING PRODUCTIVITY proving health—and ultimately lengthening working lives—and by
reducing physical strain at work (ADB 2018b).
Aging affects productivity. Aging can affect productivity through
several channels. First, aging may affect productivity through the However, Thailand faces several challenges to increasing work-
accumulation of physical capital. This effect is described in part 2: er productivity. Structural change has stalled in Thailand, as the
aging may have a negative impact on economic growth due to the shift from lower-productivity sectors to higher-productivity ones
shrinking working-age population, but this effect may be offset by has stopped (World Bank 2016a). Labor productivity is particularly
higher saving rates and capital deepening, producing a so-called low in agriculture, the sector of employment for many older people
second demographic dividend (Mason and Kinugasa 2008). Aging in Thailand. Productivity growth also varies across regions, with
may also affect human capital by changing the incentives for in- lower growth outside of Bangkok and the Central region. Popu-
vesting in health and education, with the result that demographic lation aging also may lead to a less mobile population, reducing
changes are counterbalanced by behavioral adjustments (Lee and opportunities to reallocate labor across sectors and geographies
Mason 2010; Prettner, Bloom, and Strulik 2013). Finally, aging (Karahan and Rhee 2014). Indeed, internal migration rates have
may affect productivity through technological innovation and dif- declined in Thailand over time (UNFPA 2011). As shown in figure
fusion if characteristics like creativity and technological adoption 3.5, workers in Thailand lack the type of nonroutine cognitive and
are correlated with aging (Chomik and Piggot 2019). interpersonal skills associated with the new technologies that can
improve productivity in knowledge-driven economies. Still, Thai-
There is no strong evidence that older people are less produc- land’s low labor productivity relative to other upper-middle-in-
tive. Measuring productivity over a worker’s lifetime is method- come countries and the dispersion of labor productivity across
ologically challenging. Empirical evidence generally finds that the and within sectors suggest that there is substantial room for im-
age-productivity profile is an inverse U-shape, with productivity provement.
peaking around age 40 before declining somewhat. However, be-
yond methodological challenges, the relationship between age EXPLOITING OPPORTUNITIES
and productivity can depend on a large variety of factors, includ-
ing the nature of work undertaken, how (older) workers adapt to Population aging is creating a need for more care work. At pres-
technological changes, and whether an older person is working in ent, care for older people in Thailand is primarily undertaken infor-
a team, resulting in evidence that is generally inconclusive (Allen mally at home—typically by children, especially female children,
2019; Flochel et al. 2014). A selection of studies summarized in and spouses (Knodel and Chayovan 2011; World Bank 2018). In a
Chomik and Piggot (2019) reports a range of peak-productivity recent survey, only 2 percent of people 60 and older reported re-
ages from around 20 to around 55. One recent high-quality study ceiving care from a care center staff member or a health special-
of a large car manufacturer found that productivity in the plant ist (World Bank 2018). However, care responsibilities are shifting
studied does not decline to age 60 (Börsch-Supan and Weiss with economic and demographic changes like smaller households
2016). Evidence on the impact of aging on productivity in Thai- and longer life expectancies. The percentage of older people living
land is both limited and mixed (Saiyut et al. 2017; Suphannachart with a child has decreased significantly from 71 percent in 1995 to
2017). In sum, while the evidence is inconclusive, at the very least 52 percent in 2017 (Teerawichitchainan et al. 2019). As a result,
aging does not seem to have a negative effect on productivity in all not all care needs are being met. The same survey of older people
cases, and older workers bring positive attributes like experience found that about 16 percent of people 60 and older reported need-
(World Bank 2020). ing a caregiver versus 9 percent who actually had one, increasing
the demand for services outside the home (ADB 2018a; World
Technology plays an important role in mediating the impact of Bank 2018). Home-based care is also likely to play a role in elder
aging on productivity. Recent research suggests that population care services, despite being uncommon at present. A survey by
aging may have productivity-enhancing effects. Population aging the Economic Intelligence Center at Siam Commercial Bank found
seems to lead to greater automation (Abeliansky and Prettner that more than 90 percent of older people in Thailand would like
2017; Acemoglu and Restrepo 2018). Populations that are expe- to remain at home after retirement (Laosopapirom 2017). These
riencing more rapid aging develop automation technologies more trends are occurring at the same time as the population of old-
quickly. These technologies tend to substitute the jobs of mid- er people in Thailand is growing, increasing the demand for these
dle-age workers whom demographic changes are making scarc- services.
er. As noted in part 2, the adoption of robots seems to be a key
explanation for why a negative relationship between population The growing demand for care in the domestic market is comple-
aging and economic growth is not observed (Acemoglu and Re- mented by aging populations overseas who view Thailand as a
strepo 2017). This could mean that aging could actually improve potential destination for retirement and tourism. The growth in
productivity in industries in which automation is most feasible demand for care in Thailand coincides with Thailand’s popularity
(Acemoglu and Restrepo 2018). At the same time, technologies as a tourist destination for older people, as a destination for old-
have the potential to make older workers more productive by im- er people to retire, and as a destination for tourists to seek out
Aging and the Labor Market in Thailand 41
medical care (“medical tourism”). Thailand is a popular and grow- Care jobs have been a modest bright spot in Thailand’s recent-
ing tourism market for older tourists from abroad, accounting for ly weak labor market. Between 2014 and 2019, employment in
19 percent of tourists in 2015, up from 16 percent in 2009 (EIC Thailand declined overall, as did employment in care and noncare
2017). Popular destinations for older people include Bangkok, Chi- jobs. However, care jobs had a slightly better average annual rate
ang Mai, Hua Hin, Pattaya, and Phuket. People 50 and older can of job creation (average annual growth of -0.2 percent in care jobs
obtain a “retirement visa” (the Non-Immigrant OA-Long Stay Visa) versus -0.3 percent in noncare jobs) (figure 3.22).17 Employment
that allows them to remain in Thailand for a year and renew their in all types of care jobs except education experienced average an-
visa inside of Thailand. More than 70,000 people held such visas nual growth between 2014 and 2019. Table 3.1 shows the 10 care
in 2017, up from less than 30,000 in 2009 (Huguet, Chamratrithi- occupations (outside of education) that grew the fastest between
rong, and Richter 2011; Smith, Lim, and Harkins 2019). Many of 2014 and 2019. These care occupations include home-based per-
these retirees first experienced Thailand as a tourist destination. sonal care workers, other types of personal care workers in health
Thailand’s strength in medical tourism is seen as a comparative services, and specialist medical practitioners, all occupations that
advantage for attracting older tourists and retirees from abroad are associated with caring for older people.
(EIC 2017). Indeed, older people from abroad are seeking out Thai-
17.
See appendix F for a description of jobs that are considered to be care jobs.
land specifically for its care facilities (Hill 2020).
Figure 3.22 Average annual job growth in care and noncare jobs in Thailand, 2014–19
Source: Thailand Labor Force Survey 2014–19.
3.1 The 10 care occupations in Thailand with the fastest average annual growth, 2014–19
Source: Thailand Labor Force Survey 2014–19.
Aging and the Labor Market in Thailand 42
The growing demand for care services creates opportunities for percent made up of domestic workers and 1.5 percent of care
job creation, but meeting existing and future demand will need workers in noncare sectors. One recent study of 21 long-term care
to overcome several challenges. The growing demand for care facilities in Thailand found that institutions lacked essential staff
services creates many job opportunities, as the interpersonal nature such as nurses, physiotherapists, and occupational therapists
of care work is challenging to automate. However, shortages in (Sasat et al. 2013). According to older estimates of care needs,
care work arise throughout the world, as recruiting, deploying, and more than 225,000 workers would be needed to fill the existing
retaining qualified workers are challenging tasks (ILO 2018). These coverage gaps (Scheil-Adlung 2015). Thailand faces the additional
challenges include poor working conditions, demanding work, low challenge that the health workforce itself is aging (Sirisub et al.
pay, unpredictable hours, lack of job security, and lack of access to 2019). Finally, the skills necessary to fill shortages in care are not
social protection (ILO and OECD 2019). Based on the Internation- available. The study of long-term care facilities also found that
al Labour Organization’s methodology for defining care work, facility staff lacked appropriate training (Sasat et al. 2013).
Thailand has low levels of employment in care work relative to These factors will challenge efforts to take advantage of the
other countries around the globe and to other upper-middle-in- opportunities created by aging.
come countries (ILO 2018). In 2015 care workers in health and
social work represented about 1.3 percent of employment, with Part 4 of the report discusses policy options for mitigating
an additional 0.6 percent made up of domestic workers and 0.4 or reversing the potential negative consequences of aging.
percent of care workers in noncare sectors. This share compares In particular, it discusses how to boost labor supply and labor
to that of Japan, where care workers in health and social work productivity and how to take advantage of opportunities created
make up 5.2 percent of total employment, with an additional 0.3 by population aging.
Aging and the Labor Market in Thailand 43
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Aging and the Labor Market in Thailand 47
PART 4: existing approach to addressing population aging
and its implications. The third section offers
OPTIONS FOR POLICY specific policy recommendations responsive to
the channels of impact described in part 3.
REFORM
MAIN FINDINGS
Part 4 discusses policy recommendations to
A multipronged package of policies targeted throughout the
mitigate the negative and reinforce the positive
life cycle will be needed to address the impacts of population
impacts of population aging in Thailand. While a
aging on Thailand’s labor market. Population aging creates
multipronged package of policies is recommended,
complicated challenges for Thailand’s labor force. Addressing
priority should be given to developing the skills
these challenges will require more than policies targeted solely
demanded by Thailand’s evolving economy and to older people. Table 4.1 summarizes policy recommendations to
ensuring that older people are financially secure. counteract the negative impacts and reinforce the positive impacts
The first section summarizes the main findings. of population aging on the labor market in Thailand. Within this
The second section reviews the government’s package of policies, two areas should be given top priority.
Table 4.1 Summary of policy recommendations
Aging and the Labor Market in Thailand 49
First, ensuring that workers acquire new types of skills to of older people.18 The recommended policies include the
fill labor market needs created by population aging will be following:
a priority. These skills will require not only a good technical
understanding of emerging digital technologies, but also soft • Explore options for increasing the retirement age
skills like communication, critical thinking, and persuasion. If
the shift to remote work prompted by COVID-19 continues,
• Expand access to long-term care options for older people
many or even most workers will need to have the basic digi-
tal skills that allow them to interact effectively with coworkers
• Ensure income security for older people.
and clients both digitally and in person. This effort will require
Thailand to focus intently on improving the skills of its work-
force. Different strategies will be needed for different groups.
The understanding of how to teach older people has evolved
POLICY MAKING FOR OLDER PEOPLE IN
significantly in recent years, opening up new methods for re-
THAILAND
skilling and upskilling older people. Vocational training, short-
Policy makers in Thailand have recognized population ag-
term reskilling programs, and training linked to the receipt
ing as a strategic challenge for several decades. Thailand
of social assistance will be critical components of preparing
has incorporated aging into strategic planning documents
Thailand’s workforce for ongoing technological change. Thus
since the 1980s. Two National Plans for Older Persons have
section 3 offers several policy recommendations for improving
been developed, the first for 1982–2001 and the second for
skills development:
2002–21. These plans provided guidance on policies to sup-
port older people. The second plan included the promotion of
• Create upskilling and reskilling programs adapted to
work, occupational training, and job advice for older people
prime-age and older people in urban areas
and established a framework for monitoring and evaluation.
The Strategic Framework in the Preparation of Thai Society
• Explore alternative models of employer engagement in
for an Aging Society, developed in 2005, included strategies
skills development
related to lifelong learning, skills upgrading, and workforce
development (Fujioka and Thangphet 2009). The Labor De-
• Consider performance-based financing models for training velopment Plan 2007 mentioned employment and income
generation for older people via skills development tailored to
• Explore learner-centered approaches to training such as an individual’s needs and age. Two recent National Econom-
subsidies or vouchers ic and Social Development Plans recognized the challenges
and opportunities of population aging (Fujioka and Thangphet
• Strengthen employment services and link them to training 2009; Jitapunkul and Wivatvanit 2009). The Ninth National
Economic and Social Development Plan (2002–06) identified
• Provide training in care work, particularly to unemployed population aging as a trend and recognized the need to pro-
and other vulnerable workers. vide for the health and welfare of older people. The Tenth Na-
tional Development Plan (2007–11) identified population aging
Second, ensuring the financial security of older people will as a key national development issue and addressed the need
be a priority. Thailand has enacted significant policies re- to promote employment for all age groups, increase labor pro-
lated to older people in recent years, including expansion of ductivity, and encourage care for older people. The Eleventh
the Old Age Allowance and various efforts to facilitate longer National Economic and Social Development Plan (2012–16)
working lives. These policies should be coordinated with oth- gave a prominent place to the role of aging in Thailand’s de-
er policy areas, particularly pensions policy, to protect older velopment, as did the 20-Year National Strategy (2017–36)
people whose financial health is at risk. Many older people, (Teerawichitchainan et al. 2019). The Twelfth National Eco-
particularly in rural areas, have to continue working well into nomic and Social Development Plan (2017–21) recognized the
old age. The Old Age Allowance is universal, but insufficient potential challenges that population aging might create in the
to support the livelihoods of older people, who still face high labor market and promoted elder care services and employ-
barriers to employment. Section 3 offers several policy rec- ment and income-generating opportunities for older people.
ommendations focused on improving the financial security
18.
A separate report discusses pension reforms in Thailand in more detail.
Aging and the Labor Market in Thailand 50
This recognition is also reflected in legislation and institutions mented across the life cycle and not targeted solely at older people.
devoted to older people. The 2003 Act on Older Persons includ- Building the skills of new and existing workers, improving the human
ed measures to enforce the rights of older people, established capital of workers of all ages, and increasing labor productivity are all
tax benefits for children caring for their parents, created the identified as important objectives. Policies to support these objectives
Elderly Fund, and laid out the principle that “an older person will need to address the ability of older people to extend their working
shall be entitled to protection, promotion, and support in var- lives, but also the ability of women to deploy their human capital in
ious areas including appropriate occupation or occupational the labor market and the potential for migrants to fill labor shortages.
training” (Fujioka and Thangphet 2009). The act also created These policies will also need to increase productivity—in particular, by
the National Commission on the Elderly to make policy relat- improving the development and deployment of human capital. Based
ed to older persons (Teerawichitchainan et al. 2019). Several on the opportunities and challenges identified in part 3 of this report,
institutions oversee issues related to aging. The Department this section lays out recommendations for a package of policies to
of Older Persons in the Ministry of Social Development and Hu- address challenges and exploit opportunities in the labor market
man Security (MSDHS) is responsible for carrying out programs that are likely to arise as a result of population aging in Thailand.
to promote the welfare and rights of older people. The Ministry
of Labor is responsible for promoting employment among older
groups. The Ministry of Education and the Ministry of Culture Policy area #1: Extend the working lives of older people
are involved in creating educational opportunities for older peo-
ple. The National Commission on the Elderly serves an over- Thailand has taken actions to extend the working lives of older
sight role. Decentralization has meant that older people receive people by improving their human capital. To promote employ-
some services, including employment promotion and income ment, the Department of Skill Development in the Ministry of
generation services, at community centers operating at the Labor provides older people with occupational and skills training,
tambon (subdistrict) level (Fujioka and Thangphet 2009; Teer- including in information technology subjects like e-commerce. At
awichitchainan et al. 2019). the tambon level, nonformal and informal education centers run
by MSDHS provide informal education. The Act on Older Persons
created the Elderly Fund, administered by MSDHS, to protect,
POLICY RECOMMENDATIONS TO SUSTAIN support, and promote older people. The fund sponsors elder-related
GROWTH AMID POPULATION AGING projects and provides three-year personal (B 30,000 maximum)
and group (B 100,000 maximum) occupation support loans with
Policy will play a key role in determining the ultimate impact no interest. In fiscal 2019, 8,991 people received occupation support
of population aging on Thailand’s economic development. loans totaling B 225,195,000.
Despite the mechanical negative impacts on economic growth
implied by a shrinking working-age population, policy makers Thailand has also taken steps to activate the participation
have significant scope to counteract the negative effects and of older workers in the labor market. The retirement age for
reinforce the positive behavioral responses that will emerge as a government workers and workers at state-owned enterprises
result of declining fertility rates and longer working lives (Bloom, has been raised to 63. The 2017 Labor Protection Act clarifies
Canning, and Fink 2010). The potential role that government can that age 60 is the default retirement age for workers whose
play in such changes is a focus of the World Bank’s recent report contracts do not include a retirement policy. The government
on aging in the East Asia and Pacific region (World Bank 2015). also introduced tax measures to promote elderly employment.
In March 2017, the Thai government issued Royal Decree no.
As Thailand continues to develop into a knowledge-based, 639, which allows corporate income taxpayers to deduct from
globally integrated economy, a multipronged package of their income tax twice the amount of expenses incurred for
policies targeted across the life cycle will be necessary to employing people over 60 provided the expense is no more than
address population aging. Thailand’s most recent Twelfth B 15,000 per month, including contributions to a provident fund.
National Economic and Social Development Plan recognizes This Senior Employment Promotion Program capped the total
that addressing Thailand’s current challenges, including popula- number of senior employees hired by a company at 10 percent
tion aging, will require a package of policy actions that are imple- of the total number of employees in a given month. The Ministry
Aging and the Labor Market in Thailand 51
of Labor created employment service centers for elderly workers people are healthy will be important across urban and rural
and registration centers at provincial employment offices to areas and across skill levels.
provide older workers with labor market information and job
search support (DOP 2019). The centers provide information Flexible working arrangements and age-friendly workplaces
about paid jobs and volunteer opportunities. The Department can promote the hiring and retention of more highly educated
of Older Persons has sponsored efforts to understand business older workers in urban areas. Job flexibility has been found to
practices that empower older people. increase the willingness of older people to work. In the United
States, 60 percent of nonworking respondents to a survey on
These programs are fairly limited in size and scope. Uptake the working preferences of older people said that they would
of these programs is low (Fujioka and Thangphet 2009). Just return to work if given a flexible schedule and 20 percent said
10,000 older people have used the employment service centers that they would do so even taking a 20 percent reduction in
for elderly workers and registration centers. Around 8,000 pay (Ameriks et al. 2020). Other important considerations for
people have participated in the Department of Skill Develop- older people are the pace of work, amount of physical work, and
ment’s training program. The community-level training seems level of autonomy (Maestas and Jetsupphasuk 2019). Flexible
to be mostly for entertainment rather than for employment. working arrangements have typically been rare in Thailand, but
recent studies suggest that they hold promise for increasing
Policies to extend working lives could be targeted to older working lives (Anell and Hartmann 2007; Sadangharn 2017;
people in urban areas, who tend to retire earlier than their Sirisub et al. 2019). Firms have adapted to older workforces
rural peers. As shown in part 3, older people in rural areas work by adjusting working hours, permitting part-time employment
longer than older people in urban areas likely because they have and job sharing, and changing job responsibilities. Firms could
a greater need to earn income to make ends meet. These longer also adapt to older workplaces by changing working conditions.
working lives limit the scope for increasing participation in rural These adjustments are likely most relevant for more highly
areas, as do the more limited job opportunities in rural areas, educated workers in formal firms.
particularly in good jobs outside of agriculture. Older workers in
urban areas, in contrast, tend to leave the workforce earlier (as Existing government partnerships with the private sector
early as age 55). They are also more educated than their rural could promote these arrangements. Existing collaboration be-
peers, suggesting a possibility to take advantage of additional tween the Department of Older Persons and the private sector
accumulated human capital. There is more scope for policy to on business practices promoting elderly empowerment could
activate this group. Several types of policies could be con- stimulate efforts to encourage firms to adopt flexible working
sidered for different groups of older workers in urban areas. arrangements for older people and invest in age-friendly work-
Policies affecting working arrangements and workplaces, places (international spotlight 4.1). The benefits and cost-ef-
compensation schemes, and tax incentives could encourage fectiveness of such policies should be highlighted. For instance,
the employment of more highly educated urban workers in BMW’s investment in a package of health care, skills devel-
formal sector firms. As pension coverage expands, the incentives opment, workplace environment improvement, and part-time
associated with pensions will influence the employment decisions work eliminated the differences in productivity between older
of older workers, although still primarily among workers in urban and young staff (Loch et al. 2010) and required only a small
areas. Upskilling and reskilling policies could be targeted to investment.
older urban workers of all skills levels. Ensuring that older
International spotlight 4.1 Developing strategies to encourage the hiring of older workers
Government and nongovernment agencies in several countries around the world have developed “age management” strategies
to provide guidance and support to employers for hiring and retaining older workers (OECD 2019a). For instance, in Norway the
Center for Senior Policy advocates strategies to lengthen working lives, including disseminating good practices and training
staff at public employment services offices (Sonnet, Olsen, and Manfredi 2014). The Department of Older Persons could use
this engagement to undermine negative perceptions about the productivity of older people. Subsidies could also be offered to
incentivize the adoption of flexible arrangements and age-friendly workplaces, although take-up of these programs has been
limited. Korea, for example, has provided allowances for firms offering flexible work arrangements, shorter working hours,
and reemployment after retirement (World Bank 2015).
Aging and the Labor Market in Thailand 52
The influence of compensation schemes on the employment of earn more than younger workers with the same education. For ex-
older workers should be examined. Research from Organisation ample, both female and male older workers with a university edu-
for Economic Co-operation and Development (OECD) countries cation earn greater than 20 percent more than younger workers
suggests that compensation schemes that reward workers based with the same education, indicating that these workers may be
on age or service with a firm—seniority wage systems—can hin- compensated based on characteristics other than skill (at least as
der the employment of older workers, who become unaffordable proxied by education level).
(OECD 2019a). These practices are deeply ingrained in compen-
sation structures in some countries in the East Asia and Pacific More research is needed to understand the influence of com-
region, particularly in Japan and the Republic of Korea. In Thai- pensation structures on the employment of older workers
land, performance-related pay was introduced in the civil service in Thailand. If strong negative effects are found, policy could
in 2008 (World Bank 2014). The prevalence of performance-based seek to influence the transition away from seniority wage-set-
pay in the private sector is less clear. Older evidence suggests a ting schemes and toward performance-based schemes by ad-
shift toward performance-based compensation amid a relatively vocating and—using the civil service’s scheme as an example—
high prevalence of seniority-based pay (Rowley 1998). Some evi- demonstrating the benefits of this approach. Some countries
dence from the Labor Force Survey suggests that seniority-based have taken a more direct approach (international spotlight 4.2).
pay may still be used in Thailand. figure 41 shows that older workers
Figure 4.1 Percentage difference in average monthly wage income between workers age 40–49 and workers age 50–59 in
Thailand, 2019
Source: Thailand Labor Force Survey 2019.
International spotlight 4.2 Encouraging performance-based compensation
Japan has provided subsidies to assist small and medium enterprises to adopt performance into wage-setting and human
resource practices (OECD 2019a). Korea introduced the “wage-peak system” in 2005, which publicized performance-based
compensation for different sectors and provided allowances in exchange for its adoption (World Bank 2016a). Singapore has
also provided incentives for such a transition.
Aging and the Labor Market in Thailand 53
The effectiveness of Thailand’s tax incentives for employment and not a significant concern at present. However, coverage under
of older people should be evaluated. Like Japan, Korea, and the Social Security Fund for formal private sector workers
Singapore,19 Thailand provides incentives to firms hiring older has been increasing, suggesting that the disincentive effects
workers. Evidence of the effectiveness of these incentives is not must be taken into account going forward. As coverage expands,
available. However, based on international evidence, the impact of policy makers could consider increasing the retirement age both
wage subsidies to support the hiring and retention of older people to mitigate these disincentive effects and to adjust Thailand’s
is questionable. Recent evidence finds that significant subsidies retirement age to reflect its longer, healthier older ages (international
are needed to induce substantial employment effects and thus spotlight 4.3). As figure 2.2 in part 2 shows, life expectancy has in-
are unlikely to be cost-effective (Boockmann 2015). Other concerns creased significantly in Thailand in recent years and is expected to
are deadweight loss (subsidies are provided for hiring workers who increase further by 2060.
would have been hired anyway) and reinforcement of stigmas and
negative attitudes toward older workers (OECD 2006). Evaluating Upskilling and reskilling for older people of all skill levels in
the effectiveness of Thailand’s incentives is important for urban areas can play a role in extending working lives. Dig-
understanding whether these funds could be better directed to itization, automation, and Industry 4.0 are changing the skills
other employment promotion efforts. that are in demand in the labor market in Thailand. As described
in part 3, there is evidence that these changes are age-biased—
Raising the retirement age could minimize the disincentives that is, older workers (particularly those in the prime ages) are
to work as pension coverage expands. Thailand has undertaken less likely to work in the growing occupations that use the new
efforts to raise the retirement age of public sector workers and skills that are in demand. There is evidence, though, that train-
workers at state-owned enterprises. The 2017 Labor Protection ing programs can reduce (though not eliminate) the age bias of
Act also includes provisions that seek to discourage early retirement. technological and organizational change (Behaghel, Caroli, and
More efforts will be needed as pension coverage expands. As Roger 2014).
shown in part 3 of this report, Thailand’s contributory pensions
have some disincentive effects on older people’s labor force For example, Singapore’s Special Employment Credit Scheme provides a subsidy to employ-
19.
ers for up to 8 percent of the wages of workers over the age of 50, supplementing grants
participation. Coverage of contributory pensions is limited, that promote firm-based initiatives to recruit, retain, or reemploy older workers (World Bank
meaning that these disincentive effects are not widely relevant 2016a).
International spotlight 4.3 Linking returns and age to labor force participation
Age or longevity indexing—that is, tying the retirement age to life expectancy at retirement age—could better link retirement
age to potential labor force participation while also ensuring that longer lifespans do not stress the financial sustainability of
benefits (Piggott and Sane 2009). Denmark, Greece, and Italy have or soon will have such a link between pensions and life
expectancy (OECD 2011).
Establishing effective and trusted implementation arrangements for undertaking this indexing is important to its success.
Japan incorporates flexibility into its approach to delaying retirement. Japan’s Act on Stabilization of Employment of
Elderly Persons 2012 requires employers to do one of three things: raise their mandatory retirement age to 65, introduce
a continued employment system to allow those employees who wish to work until age 65 to do so, or abolish their internal
mandatory retirement age. The system for continuous employment provides an alternative contract to an employee after
the “retirement age.” Singapore has focused primarily on the reemployment of older workers. Korea has taken various
approaches over time, including relying on monitoring of firm-specific retirement ages and ultimately mandating a minimum
retirement age of 60.
Aging and the Labor Market in Thailand 54
Effective upskilling and reskilling for older people in Thai- tunities for women as a priority in recent strategic planning
land will require increasing the attractiveness of these documents. The Twelfth National Economic and Social Devel-
programs and broadening the age group targeted by these opment Plan (2017–21) emphasized the importance of creat-
policies. Thailand has created several training programs tar- ing economic and social opportunities for women. The 2015
geting older people, but they have been relatively small scale, Gender Equality Act laid out compensation for gender-based
have suffered from limited take-up, and have tended to target discrimination and created a Committee on the Promotion of
workers 60 and older (for example, the Occupation Training Gender Equality to make policies, procedures, and programs
Program for the Elderly). This situation is consistent with the (UNFPA 2019). In 2019, the Labor Protection Act (no. 7) in-
fact that older workers tend to be less likely to participate in creased maternity leave from 90 to 98 days, including week-
training, a global trend that may be especially severe in the ends and holidays. In 2019, Thailand also increased the child
East Asia and Pacific region (World Bank 2015). In China, for allowance paid to workers who have up to three children and
example, a 1 percent increase in age was found to correspond are enrolled in the Social Security Fund from B 300 to B 600
to a 27 to 35 percent reduction in the probability of participat- per month.
ing in training (Mishra and Smyth 2012). Australia and Europe
have responded to these challenges by subsidizing training for The Department of Women's Affairs and Family Develop-
older workers. Several wealthier countries in the East Asia and ment in MSDHS provides skills training to two groups of vul-
Pacific region have taken similar steps (World Bank 2015). Ko- nerable women. The Center for Women and Family Develop-
rea, for example, subsidizes the costs of vocational training ment provides vocational training to help women lacking social
for workers over age 40 (up to ₩ 1 million per year). Thailand opportunities to acquire professional skills in eight provinces.
could consider similar subsidies to encourage older workers to Two types of vocational training are provided: (1) center-based
participate in training programs. Additionally, as described in vocational training with job support services after success-
greater detail in the discussion on lifelong learning, upskilling ful program completion and (2) community-based vocation-
and reskilling programs for older workers should target work- al group training to promote women's community enterprise.
ers before the age of 60, as prime-age workers are facing the The center-based training has resulted in the employment
greatest possibility of job loss due to automation and could of more than 15,000 people each year. The program has also
benefit from such programs before they reach older ages. produced more than 140 groups of entrepreneurs each year.
In addition, protection and occupation development centers
Extending working lives will also require ensuring that older provide support for the victims of human trafficking. Located
people are healthy. As shown in part 3, health is an important in four provinces, these centers offer women skills training in
determinant of labor force participation among older people craftsmanship and services.
in Thailand. While older people are generally healthier than in
the past, maintaining and strengthening these improvements Improving the accessibility, affordability, and quality of
will be challenging in the context of Thailand’s epidemiological care options could promote employment by relieving wom-
transition. Noncommunicable diseases (NCDs) are the leading en of the extra burden of care they often shoulder. Making
cause of death in Thailand and major contributors to disability child care more accessible and lowering its cost can increase
among older people, likely leading many to work fewer hours maternal employment (international spotlight 4.4). A study of
or to drop out of the labor force altogether (Yiengprugsawan, OECD countries found that the provision of formal child care
Healy, and Kendig 2016). At the same time, NCDs are increas- services is more important for boosting female labor force
ingly common in the younger population, which means that participation than other policies (Thévenon 2013). In Indo-
they will affect the labor force participation of older groups in nesia, Halim, Johnson, and Perova (2019) found that access
the future (and are likely affecting labor force behavior now) to public preschool increases the likelihood that mothers of
(World Bank 2019b). A focus on preventing disease by encour- age-eligible children will be employed. Research also suggests
aging healthy lifestyles throughout the life cycle is key to en- that reductions in child care provisions and subsidies were
suring that people are sufficiently healthy to continue working partially responsible for declines in female labor force partic-
later in life. ipation in urban areas of Mongolia (World Bank 2013; World
Bank and ADB 2005) and China (Chi and Li 2008; Du and Dong
2010; Maurer-Fazio et al. 2011). Improving the access of older
Policy area #2: Increase female labor force participation people to quality long-term care options could have a similar
effect. Complementing both of these policies could be efforts
Thailand has recently taken steps to improve female labor to promote flexible forms of work that permit female and male
force participation. Thailand has identified expanding oppor- caregivers to balance work inside and outside of the home.
Aging and the Labor Market in Thailand 55
International spotlight 4.4 Improving accessibility, affordability, and quality of care to promote women’s employment
There is evidence that making child care more accessible can change women’s incentives such that both labor force participation
and fertility increase, a phenomenon observed in several countries around the world, including Japan and Korea (Hwang, Park, and
Shin 2018; Kinoshita and Guo 2015). Several countries in the East Asia and Pacific region subsidize child care to reduce the costs
that mothers face when pursuing employment. For instance, Singapore subsidizes enrollment in child care centers for children
under age seven whose mothers are working (World Bank 2015). Malaysia offers tax deductions to employers that supply child
care centers or pay child care allowances to their employees and provides tax relief to workers who enroll their children in a nursery
or preschool.
Improving old-age income security also has the potential to women’s employment. Men working in the private sector in Thailand
increase female labor force participation. Within countries, are not entitled to paternity leave, in contrast to their counterparts in
coresidence rates typically decline as household income rises, eight countries in the East Asia and Pacific region (World Bank Group
suggesting that high coresidence rates are often the result of 2019).20 Public sector workers have access to 15 days of leave (Liao
the elderly being unable to afford living alone (Evans and Palacios and Paweenawat 2019). Indeed, paternity leave is becoming more
2015). A consequence of this arrangement is that working-age common in the region, although these policies remain limited in scale
family members—frequently women—may drop out of the labor (international spotlight 4.5).
force at younger ages in order to take on caregiving responsi-
bilities. Age-based social assistance programs can directly ad- Training programs can improve women’s labor market outcomes.
dress poverty among older people, reducing their reliance on Overall, increasing access to training, providing labor market in-
informal family care and financial support (Evans and Palacios formation, and providing job search and career guidance support
2015). While impressive for its wide coverage, the small benefit and mentoring can help to improve the labor market outcomes
level of the Old Age Allowance is unlikely to affect old-age pov- of women. However, women face barriers to using both formal
erty (World Bank 2016b). Its impact on caregiving responsibil- and informal training to improve their labor market outcomes
ities is also likely to be minimal. The possible positive impacts (Beegle, Matulevich, and Carolina 2020). These barriers include
of Thailand’s social pension on female labor force participation lack of child care, barriers to mobility, and disproportionate en-
strengthen the arguments for evaluating its generosity in more rollment in female-dominated training that perpetuates occupa-
detail. tional segregation. These barriers can undermine the benefits of
training programs. Thus training programs have to be tailored to
More generous parental leave policies could support female labor the barriers that women face. Such tailoring means considering
force participation. Although increased recently, maternity leave is operational features such as the availability of child care options
relatively short in Thailand—98 days or 14 weeks. This is the same and the accessibility and safety of training locations; incorporat-
as in China and Japan, but shorter than in Singapore (16 weeks), ing components addressing information, aspirations, and norms;
Vietnam (26 weeks), and the average in OECD countries (18 weeks). and providing assistance to overcome financial constraints, which
Maternal leave policies can increase female employment. An analysis often limit the participation in or the benefits of training programs
of maternity leave policies in a cross section of countries found that for women. Encouragement to train in nontraditional occupations
each additional week of paid maternity leave is associated with a 3.6 and built-in mechanisms to prevent, respond to, and report cases
percent rise in the share of workers employed in a given firm who are of sexual harassment and abuse are all necessary.
women, an impact that grows when the leave is funded by the gov-
ernment rather than the employer (Amin and Islam 2019). Increas- China, Indonesia, the Lao People’s Democratic Republic, Myanmar, the Philippines, Samoa,
20.
Timor-Leste, and Vietnam all offer paternity leave.
ing men’s role in child care is also an important means of supporting
International spotlight 4.5 Engaging fathers in child care to boost women’s employment
Fathers in the Philippines and Vietnam are allowed up to 14 days of paid leave, while public servants in Indonesia are allowed one
month (Baird, Hill, and Gulesserian 2019). As in other parts of the world, take-up of paternity leave policies is often low. In 2015 in
Japan, for example, only 2 percent of fathers took advantage of policies allowing them to take one year of leave to care for their
children (Heilman et al. 2017).
Aging and the Labor Market in Thailand 56
Legal changes and communications to influence gender recent years (once in 2014 and again in 2017), announcements
norms are also important. While the Gender Equality Act related to the enforcement of migration laws led to the sudden
was a step forward, the law does not promote and protect large-scale departure of migrants. In both cases, labor shortages
equal opportunity and gender equality (World Bank 2016a). quickly emerged, leading to policy reversals and registration
Stronger communication about gender norms, discrimination, and campaigns. The unpredictable nature of policy has made it
harassment is also necessary. Such communication could difficult for employers to plan for and respond to economic
include publicizing female and male role models who share care needs. Informal migration to Thailand remains significant despite the
responsibilities, promoting public discussion of norms and availability of the legal MOU channel. Migrants often prefer informal
values related to gender and the labor market among labor routes because formal routes are more costly and time-consuming.
market stakeholders, and widely advertising the availability A survey of migration to Malaysia and Thailand found that
of government and nongovernment support for persons ex- informal migration channels are on average US$616 cheaper
periencing discrimination or harassment (World Bank 2019a). and 71 days faster than formal ones (ILO and IOM 2017). The
Enforcement of existing laws against discrimination and harass- higher costs and longer duration of formal migration result from
ment is also key. the significant administrative procedures involved in the process
(Testaverde et al. 2017). Other challenges include weaknesses
in labor protections for migrants and lack of access to social
Policy area #3: Use migration strategically to fill labor protection and financial services (Grimwade and Neumann
market gaps 2019). Recent improvements include revisions to the Royal
Ordinance on the Management of Foreign Workers Employment,
Migration to Thailand occurs through three main channels. which eliminated recruitment fees for migrants, improved the
Thailand has signed memorandums of understanding (MOUs) regulation of private recruitment agencies, and formed a tripartite
with Cambodia, the Lao People’s Democratic Republic, Myanmar, committee on migration policy (Harkins 2019).
and Vietnam that provide a legal route for low-skill workers from
these countries to migrate to Thailand.21 The MOUs govern the Thailand could improve the ability of its migration system to
entire migration process, including admissions, employment, and fill gaps in the labor force by developing and implementing a
return home. The steps involved require significant documenta- predictable migration policy. Thailand could make its migration
tion and administrative procedures in Thailand and in migrants’ policy more predictable by developing a national migration plan or
countries of origin (Testaverde, Moroz, and Dutta 2020). This mi- strategy that sets out short- and long-term goals for migration.
gration channel has become increasingly popular in recent years: Such a plan would provide guidance to employers and other
in 2017 nearly 600,000 migrants entered Thailand under MOUs labor market stakeholders about the path of migration policy
compared to just over 200,000 in 2014 (Smith, Lim, and Harkins (Testaverde et al. 2017). Such guidance would help employers
2019). Migrants can also enter Thailand informally without to plan for future workforce development needs. The strategy
obtaining the required documents. This is the most common could acknowledge the potential negative effects of migration
form of migration to Thailand. A recent survey of migration and define plans to mitigate them.
to Malaysia and Thailand found that 73 percent of migrants
from Cambodia, Lao PDR, Myanmar, and Vietnam used irregular Thailand could also consider allowing migration of longer
channels (ILO and IOM 2017). Thailand has periodically opened duration. Permitting longer-term migration would not only
the so-called nationality verification (NV) process to regularize increase predictability but also allow migrants who gain
the status of these informal migrants (Grimwade and Neumann experience in Thailand’s labor market to continue using this
2019). In 2017, approximately 2.1 million migrants underwent the experience in Thailand. In Korea, the productivity of migrants has
NV process (Smith, Lim, and Harkins 2019). Finally, Thailand has been shown to increase from 50 percent of a local’s productivity in
a formal process for admitting high-skill workers. In 2017, around the first year of employment to 80 percent in the second year
140,000 professional and skilled migrants were working in Thai- and 100 percent in the third (Chung, Choi, and Lee 2015). Em-
land, primarily from China, Japan, and the Philippines (Smith, Lim, ployment terms could be used to differentiate migrants by skill
and Harkins 2019). and productivity. Singapore, for instance, has developed a tiered
system of temporary migration that allows some migrants to
Migration policy in Thailand suffers from several weaknesses, remain in the country for longer periods. Korea allows low-skill
although improvements have been made in recent years. workers to update their employment pass to a semiskilled pass
Thailand has struggled to formulate a long-term strategy for that does not limit the employment period.
migration and instead has undertaken periodic crackdowns
21.
The MOU with Vietnam has not been implemented.
on informal migrants and regularizations of their status as a
de facto policy (Moroz 2017; Testaverde et al. 2017). Twice in
Aging and the Labor Market in Thailand 57
These same productivity gains might occur if formal migration employment passes, which is currently complex. These changes could
were a more attractive option. Incorporating additional migrants be complemented by efforts to develop a qualifications recognition
into the formal migration system would mean greater protection system and to publicize the MRAs and align domestic policy with their
and job stability for migrants and could potentially lead to greater goals, which could help to facilitate high-skill migration (Papademe-
investments in training by employers and more learning-on-the-job triou et al. 2015). Indeed, the recognition of qualifications has been
by migrants, resulting in more productive workers. Reducing the shown to be associated with increased high-skill migration, although
administrative procedures involved in the formal MOU process is the relationship is not causal (Czaika and Parsons 2017). In Thailand,
an important first step toward disincentivizing informal migration. the tourism MRA holds particular promise, providing an opportunity
for migrants from Myanmar and the Philippines to migrate to Thailand
The migration system could also be adjusted to be more (Batalova, Shymonyak, and Sugiyarto 2017). Thailand could consider
responsive to labor market demand. Allowing more flexibility coupling these changes with incentives that promote the immigra-
for migrant workers to change employers could improve tion of high-skill workers. Malaysia’s Residence Pass-Talent (RP-T)
matches between workers and firms. Migrant workers in program provides an example. The RP-T allows high-skill expatriates
Thailand are currently quite restricted in their ability to to live and work in Malaysia for 10 years, allows them to change em-
change employers, which means that they cannot fill needs ployers, and offers employment passes to their spouses. Encouraging
in other parts of the economy if their employer does not need student migration could further complement this package. Thailand
them and cannot switch employers if they are mistreated. is an emerging destination for international students and is ASEAN’s
Korea’s Employment Permit System allows migrant workers third-largest destination after Malaysia and Singapore (ADBI, ILO, and
to switch jobs up to three times. The renewal process for OECD 2014). As host countries have more information about their
employment passes could also be expedited because renewal knowledge, abilities, and qualifications, these students could be a
is a sign of continued demand. This process could be facilitated source of high-skill labor during and after their education (Testaverde
through a trusted employer program that allows firms without et al. 2017).22
migration infractions to go through fewer steps for renewal.
Thailand could also activate its diaspora abroad. In 2010, more than
The high-skill migration system could also be improved to fill 615,000 Thai migrants were living abroad, around a quarter of whom
knowledge gaps and stimulate innovation. High-skill migration can are highly educated (ADBI, ILO, and OECD 2014). About one-quarter
fill skill gaps that arise as Thailand transitions to a knowledge-driven work in highly skilled occupations and two-thirds work in mid-skill oc-
economy. High-skill migration generally has a positive impact on in- cupations. In 2012, tens of thousands of students from Thailand were
novation and skills and potentially increases productivity (Peri 2014). attending school abroad. This population represents a significant
High-skill migration has been increasing in Thailand in recent years opportunity both for filling gaps at home if return migration can be
(OECD and ILO 2017). However, Thailand is not using this channel to incentivized and for transferring capital and knowledge if members
its full potential. Indeed, Thailand scores behind Singapore, Malaysia, of the diaspora remain abroad. Return migrants can bring with them
China, Indonesia, and Korea on the capacity to attract talent as mea- savings accumulated abroad that can facilitate business creation and
sured in the World Economic Forum’s 2017–18 global competitiveness self-employment (McCormick and Wahba 2001; Wahba and Zenou
index. Thailand’s admissions process for high-skill workers is complex 2012). Overseas migrants can make transferring knowledge, ideas,
and involves multiple visas and work permits (Moroz 2017). High-skill and capital cheaper and have been shown to increase bilateral trade,
workers are also excluded from working in 39 high-skill occupations. stimulate foreign domestic investment flows, and facilitate the diffu-
Thailand’s rules regarding high-skill migration have also weakened sion of technology (Testaverde et al. 2017). Thailand could explore sev-
the effectiveness of measures by the Association of Southeast Asian eral policies to improve this so-called “brain circulation.” These policies
Nations (ASEAN) Economic Community to promote the mobility of could build on Thailand’s good-practice Reverse Brain Drain project run
high-skill labor. For instance, the occupational restrictions include by the Ministry of Science, Technology, and Environment, which has
three occupations (engineering, accounting, and architecture) for created opportunities for sharing knowledge between Thais overseas
which mutual recognition arrangements (MRAs) have been developed. and Thais at home. These efforts could include the creation of return
Knowledge of the MRAs is also limited. A study of firms listed on the migration policies that help to incentivize return through tax, citizen-
Thai stock exchange found that 60 percent had no understanding or ship, and residency benefits (Dickerson and Özden 2017). Although
knowledge of the MRA on accounting (Pichayasupakoon 2014). Addi- the evidence of effectiveness is limited, a recent impact evaluation
tionally, Thailand does not have a system for recognizing foreign pro- of TalentCorp Malaysia’s Returning Expert Programme found that the
fessional qualifications (Ducanes 2013). incentives created by the program increased the probability of return
by 40 percent for program applicants with an existing job offer (Del
Thailand could consider a complementary set of measures to en- Carpio et al. 2016). The impact on government finances was limited.
courage high-skill migration. High-skill migrants are concerned with
the ease of migration and compare the costs and benefits of skilled Kruanak and Ruangkanjanases (2014) show that adjustment to life and study, social support,
22.
and career perceptions are predictors of undergraduate and graduate students’ intention to
and other migration paths (Testaverde et al. 2017). These measures remain in Thailand after completing their studies.
include streamlining the process of renewing immigration and
Aging and the Labor Market in Thailand 58
Policy area #4: Invest in lifelong learning to increase their implications for policy (World Bank 2010). The following
productivity recommendations focus on improvements that can be made
to Thailand’s technical and vocational education and training
Improvements in human capital have the potential to (TVET) system and to nonformal training programs to con-
offset the impacts of population aging. As described in part tinue building human capital throughout the life cycle. These
2, population aging can have behavioral effects beyond its recommendations focus on how these programs can meet new
predicted negative impacts. For instance, lower fertility demands related to digitization, automation, and Industry 4.0.
may result in higher investments in education and health
that compensate for the impacts of population aging on Thailand sees vocational education and training as a tool to
economic growth (Prettner, Bloom, and Strulik 2013). This fill skills gaps. In recent years, the government has emphasized
relationship is confirmed in simulations showing that low improving the TVET system through its Dual Education System.
fertility induces human capital accumulation, which can However, employers still frequently cite skills gaps as an obstacle
raise per capita consumption (Lee and Mason 2010). to doing business. Skills gaps have been particularly apparent
in occupations that require workers with technical and vocational
Tapping into these beneficial offsetting effects of human education (Song and Tang 2016). Despite efforts to increase the
capital accumulation will require shifting to a model of number of TVET graduates, the share of TVET workers among
learning that occurs throughout the life cycle. Technological Thailand’s employed population has grown slowly—from 7 per-
developments are changing the human capital that is valued cent in 2006 to 10 percent in 2019. TVET graduates actually
in workplaces in Thailand and across the East Asia and Pacif- declined as a share of employed upper-secondary and tertiary
ic region. Recent research from the United States shows that graduates during this period. Recent assessments of Thailand’s
rapid technological change has quickly generated new require- TVET system have identified several weaknesses, including
ments in science, technology, engineering, and math (STEM) lack of coordination across ministries and agencies involved in
jobs (Deming and Noray 2018). The implication is that gradu- TVET; poor-quality instruction, particularly in math, technology,
ates with high-skill vocational preparation may transition easily and information and communication technology (ICT); lack of
into the labor market, but often find that the skills they learned strong linkages with the private sector; lack of accountability
have become obsolete. This is confirmed in cross-country re- mechanisms for monitoring and evaluating results; and poor
search finding that vocational education facilitates the tran- perceptions of TVET despite past evidence of higher returns
sition from school to work but can actually reduce a worker’s (ILO 2016, 2019; Moenjak and Worswick 2003; World Bank
adaptability to technological changes later in life (Hanushek et 2012).
al. 2017). The changing skills requirements associated with new
technological developments mean that the skills that the cur- Thailand will need to develop a TVET system that is driven
rent workforce learned in traditional schooling will likely need by demand and oriented toward results. The TVET system
to be updated throughout their working lives through upskilling will need to be updated to meet the human resource needs of a
and reskilling. As a result, the settings in which learning is rec- knowledge-based economy so that Thailand can take advantage
ognized will have to be broadened to include formal, nonformal, of the new opportunities created by Thailand 4.0 and the Eastern
and informal settings alike. Economic Corridor. Updating the TVET system will require
several adjustments to ensure that training is demand-driven
The concept of lifelong learning is not new in Thailand, but and results-oriented.
the components of the lifelong learning system could be im-
proved to meet the needs of the changing world of work. The First, linkages with the private sector will need to be
2017 Constitution emphasizes the importance of lifelong learning, strengthened. Employers can be engaged in skills development
and the Twelfth National Economic and Social Development in three main ways: they can provide training directly, they can
Plan lays out how skills can be developed throughout the life shape the governance and management of training, and they
cycle (UNFPA 2019). Still, progress remains to be made in im- can fund training (World Bank 2020a). Each type of employer
proving access to and quality of education throughout people’s engagement manifests in many ways, and approaches can vary
lives in Thailand. The need to strengthen primary and secondary across sectors and firms. In each case, though, the government
education, particularly through improvements in the quality will need to build trust in industry so that their actions are
of education, is covered in the World Bank’s recent Thailand valued and identify win-win areas in which both the private
Economic Monitor: Inequality, Opportunity, and Human Capital sector and the government can benefit (international spotlight
(World Bank 2019b). A previous World Bank report outlines 4.6).
some of the challenges facing higher education in Thailand and
Aging and the Labor Market in Thailand 59
International spotlight 4.6 Improving linkages with the private sector
A recent analysis of employer engagement in skills development defines three categories of engagement, with several types in
each category (World Bank 2020b).
First, employers can provide training. In this case, employers are involved directly and actively in providing training. For example,
small and medium enterprises in Moldova frequently assign a more senior employee to mentor new employees in technical areas,
internal regulations, and health and safety. Google’s “Whisper Course” sends e-mails to new managers with simple suggestions for
interacting with staff. Some companies provide leave for training as part of their benefits package.
Second, employers can shape and define the governance and management of the skills development system. For example, in
Chile, the Mining Skills Council regularly collects survey data from mining companies and their suppliers, such as information
about the labor force and upcoming large investment projects. The council also analyzes and disseminates data (for example,
it produces forecasts of skills shortages that are then used to design and determine the provision of training and retraining
programs, increase technical and vocational education and training (TVET) capacity, improve qualification and accreditation
frameworks, and improve the labor market information system covering the mining sector. In Senegal, TVET institutions have
boards of directors chaired by a representative of the private sector. Microsoft’s Professional Certifications involve training and
examinations that can be done online. The certifications are globally recognized as indicators of mastery and are used in hiring
and promotion decisions.
Third, employers can fund training by providing third parties with resources to procure, provide, or improve training. For example,
in Malaysia, the Human Resources Development Fund imposes a 1 percent payroll levy on firms to finance training. The levy funds
an account specific to each employer that the employer can then use to train its employees. In South Africa, the National Skills
Fund (NSF) is funded by a portion of the country’s training payroll levy on formal sector enterprises. The NSF supports projects
that form part of the National Skills Development Strategy, which includes equity targets. In Nigeria, Samsung provides
equipment and training-of-trainers to ensure that the training meets its needs.
Second, Thailand could explore a transition to performance-based skills that match labor market needs. Ultimately, the system should
financing that creates accountability and a culture of results. move from one that finances inputs to one that finances outcomes
Doing this would incentivize the production of TVET graduates with (international spotlight 4.7).
International spotlight 4.7 Developing a mechanism for performance-based financing
In Australia, the Employment Services System (ESS) uses a contestable training market to place job seekers into work (World
Bank 2020b). The ESS uses tenders, awards, and sanctions based on comparative performance and outcomes-based payments
to create incentives for a focus on results. The system’s Star Rating System is a key component of this contestable training
market, providing a tool to enforce performance-based accountability, which is also assured through registration, audits, and
sanctions. The Star Rating System monitors the employment outcomes of job seekers, including hard-to-place job seekers, 26
weeks after graduation.
In Malaysia the Human Resources Development Fund also uses a Star Rating System to monitor its training providers. While the
indicators are oriented primarily to inputs and processes, the system is a step in the direction of providing transparency about
training providers.
Aging and the Labor Market in Thailand 60
Third, a strong labor market information system is a critical improve the capabilities of workers or potential workers can take
backbone of these reforms. This system would collect relevant many forms, including traditional vocational training courses and
information about supply and demand, analyze this informa- self-employment and entrepreneurship training. These programs
tion, and tailor it for dissemination to a variety of labor market have had mixed success; the most effective have had lower costs,
stakeholders. A strong labor market information system under- been targeted to specific groups, and adapted training to labor
lies the monitoring and evaluation that is necessary for perfor- market demands (Betcherman and Moroz 2018). In the United
mance-based financing to work (international spotlight 4.8). States, a training program that was targeted to unemployed people
in sectors in demand increased income after two years (Hendra et
Thailand will need to deploy upskilling and reskilling programs al. 2016). Combining training with additional services such as job
particularly for prime-age workers. Skills training programs can search assistance, financial support, and program design that
help people to update their skills or learn new skills throughout accounts for specific barriers such as those facing young women
their working lives in response to changes in the skills demand- can also increase effectiveness (Kluve et al. 2019; Stöterau 2019).
ed by employers. As shown in part 3, prime-age workers are es- Upskilling and reskilling could be incorporated into the short
pecially vulnerable to automation, which will necessitate training training courses provided as part of several of Thailand’s social
programs that can help them to reskill and upskill. Programs that protection programs.
International spotlight 4.8 Creating strong systems to provide labor market information
WorkNet began in Korea in 1998 as a publicly managed job search portal but has evolved to become a full-service labor market
information portal that provides job matching, career and skills guidance, government support, and labor market information and
analysis services (World Bank 2020b). WorkNet offers (1) job matching based on information on job seekers; (2) career guidance
linked to information systems on education, training, and government programs; (3) government support including help with job
placement, identification of suitable employment programs, and assistance with counseling activities related to career guidance;
and (4) analysis of labor market trends integrated with national statistics and other databases for research and policy input.
WorkNet has several areas of strength, including (1) data collection from multiple sources for both job vacancies and job seekers; (2)
rigorous validation of job postings based on a four-step process; (3) prioritization of the user experience; (4) aggressive marketing;
(5) interoperability with other employment-related systems; (6) links between its labor market information collection and analysis
function and its job matching, career and skills guidance, and government support functions; (7) investment in the appropriate
level of human resources; and (8) deployment of reliable information technology infrastructure with strong data management and
security. WorkNet has also invested in leveraging new advancements in big data and artificial intelligence to improve the services
it provides; for example, it uses artificial intelligence to improve job matching and customizes employment information (for example,
training, certifications, employers) to each job seeker.
In Colombia, the Sistema Nacional de Información de la Educación Superior (SNIES, National System for Information on Higher
Education) is an information system with an online web portal that provides comprehensive information about higher
education. The portal provides information about higher education institutions and academic programs such as location,
students, fees, and instructors. The system also links to the Labor Observatory for Education, a portal that contains specific
information on graduates such as offers of employment, graduate profiles, and average income. SNIES targets higher education
institutions, higher education students, higher education managers and teachers, professional counselors, high school students,
parents, entrepreneurs and employers, researchers, and government and nongovernment organizations. The portal seeks to
facilitate management, planning, and decision making; help higher education institutions to improve their processes based on
the identification of best practices; assist with the self-regulation of the sector; simplify the information reporting process;
and serve as a frame of reference.
Aging and the Labor Market in Thailand 61
Two examples are notable. First, vocational training has been the-job training is relevant to fewer and fewer workers. In this
made available to welfare cardholders to promote employment context, learners are likely to need to take greater control of
and reduce poverty. Courses are divided into two categories: (1) their own skills development and to benefit from learner-cen-
fast-track handyman training (community handymen), a 60-hour tered approaches to training. Many different instruments can be
training course available to cardholders nationwide, and (2) voca- used to support learner-centered lifelong learning, including indi-
tional training of three different lengths (18-hour, 30-hour, and vidual learning accounts that may or may not be tax advantaged
60-hour courses). According to the NESDC’s 2018 poverty and and individual subsidies or vouchers. Singapore has perhaps the
inequality report, more than 3 million welfare cardholders partici- most notable learner-centered approach to lifelong learning (in-
pated in the government-provided career training in 2018 (NESDC ternational spotlight 4.9).
2018). A follow-up survey in 2018 revealed that 80 percent of re-
spondents received a higher income. Second, the National Village Learner-focused approaches to training also involve innovations in
and Urban Community Fund (1-Million Baht Village Fund) is a fund delivery that can help adults to learn flexibly. As the costs of tech-
for village and urban community members who lack access to finan- nology fall, e-learning approaches are becoming increasingly viable al-
cial institutions. The program offers vocational training and funds ternatives for individuals and employers, including smaller ones. These
for infrastructure development projects such as building commu- approaches allow for flexibility, customizability, and real-time assess-
nity barns, agricultural warehouses, and water storage facilities. A ment. The training can also be cheaper and faster. Employers bene-
loan fund for degree studies, organized in collaboration with univer- fit from being able to customize their training across locations while
sity partners, provides successful graduates with immediate work saving on travel and trainer costs, and workers benefit from being able
opportunities. These measures aim to create career opportunities to access low-cost training inside and outside of the workplace.
and raise household income at the village level. In 2018, there were Simulation, augmented reality, and virtual reality technology create
79,595 village funds covering 13 million members. opportunities for more engaging, more effective training. Gaming is
also being incorporated into workplace training because of its
Learning, financing, and delivering training programs will emphasis on interactive learning and decision making (without
need to focus on meeting the needs of adult learners. The rapid real-world consequences). Thailand has begun to explore the potential
pace of change in skills requirements coupled with the growth to deploy these innovations with the Thailand Cyber University project,
of free-lancing and self-employment mean that human capital which is a portal for online learning.
development provided by large, stable organizations through on-
International spotlight 4.9 Singapore’s SkillsFuture Credit
The SkillsFuture Singapore Agency encourages workers to attend accredited skills courses using financial incentives including
the SkillsFuture Credit, which provides S$500 to all workers above age 25 for skills development and lifelong learning (World
Bank 2020b). The S$500 training voucher does not expire. A top-up of S$500 was recently provided to Singaporeans who are
25 and older by December 31, 2020. The top-up expires at the end of 2025. An additional top-up (over the first one) of S$500 is
provided to every Singapore citizen between the ages of 40 and 60 to improve their access to career transition programs. This
top-up expires at the end of 2025. There were 146,000 participants in 2018, representing 4 percent of the labor force. Singapore’s
overall skills development approach prioritizes lifelong learning over the provision of industry-specific skills. While this approach
to individual training is promising, good design and implementation are keys to success (OECD 2019b).
Aging and the Labor Market in Thailand 62
Training programs need to recognize that adult learners face dif- To be effective, upskilling and reskilling systems need to be
ferent challenges than children and youth learners. Challenges to informed by labor market information and linked to employ-
adult learners include reduced neurological plasticity and increased ment services. Adapting training to labor market demand is a
entrenchment, which make adult brains less adept at noticing and critical factor of successful programs. As described in the con-
learning from certain types of information, such as written letters or text of formal TVET, a labor market information system that
characters (Bendini, Levin, and Oral-Savonitto 2019). However, these can reveal skills needs and provide this information to training
challenges can be addressed by adapting learning strategies to the institutions, students, and other labor market stakeholders is
needs of adults—for example, repeating new information across a key element of adapting training programs in this way. A par-
multiple sessions (spaced learning) or in different contexts (multi- ticularly promising approach to revealing and communicating
modal learning). Adult learners also respond well to lessons that are labor market demand is the creation of occupational or skills
engaging, relevant to their lives, and based on their personal learn- shortage lists. These lists typically collect new and gather ex-
ing goals as well as lessons that include rewards and positive feed- isting information on the labor market, use this information to
back. Reviews have found that adult literacy programs are most identify occupational and skills gaps, and then communicate
likely to succeed when they target emerging literacy skills, these gaps to the training and educational institutions that can
while more research is needed on why programs targeting help to fill them (international spotlight 4.11). Job matching and
higher literacy levels struggle to succeed. Mexico’s NEUROALFA placement services can build on the foundation of labor market
reading program is a notable exception. The program used an information to guide beneficiaries of training programs to jobs
understanding of adult neurology to design a curriculum that that are in demand. These services can be particularly import-
adjusted its teaching method as adult learners progressed and ant for helping less-skilled workers to find better jobs. Less-
succeeded in advancing students beyond emerging literacy to skilled workers frequently rely on friends and family during job
full reading comprehension. Research on training programs tar- search. Research on Thailand has shown that relying on social
geted to older people also has found that programs should networks reduces the duration of job search but also funnels
value and use experience, recognize the diversity of the older internal migrants into agricultural jobs (Swee 2017). Advances
people being trained, and prioritize the use, not just the acqui- in the collection and processing of data and the spread of dig-
sition, of skills (Field and Canning 2014). In addition, programs ital technologies have led to advances in the ability to collect
for older people need to recognize that many older people have up-to-date, detailed labor market information and to deliver
low levels of education and may need to acquire foundational employment services to hard-to-reach populations (interna-
skills (international spotlight 4.10). tional spotlight 4.12).
International spotlight 4.10 New approaches to building skills in adults
Several countries in the East Asia and Pacific region have implemented adult literacy programs that are consistent with best prac-
tices for teaching adult learners (Bendini, Levin, and Oral-Savonitto 2019). For example, in Vietnam community learning centers
offered literacy and “postliteracy” classes as part of a national literacy campaign targeting women and ethnic minorities. Teach-
ers in these programs were trained in adult learning methods, and clear goals were set for different learning levels. Furthermore,
assessments were made of the needs of local communities and the aspirations of individual participants; classes were offered in
both Vietnamese (Kinh) and ethnic minority languages.
In Cambodia, Oxfam supplied pink phones to rural women who attended adult literacy programs, in part to give them an opportunity
to practice their literacy skills through text messaging outside of the classroom.
Aging and the Labor Market in Thailand 63
International spotlight 4.11 Using Critical Occupations Lists to identify demand
The government of Malaysia formed a Critical Skills Monitoring Committee to create a Critical Occupations List (COL) that would
identify occupations that are skilled, in shortage, and strategic (CSC 2019). The COL is created through a “top-down” approach
that uses objective evidence to determine whether an occupation is sought-after by employers. This evidence is then combined
with evidence from a “bottom-up” approach that uses subjective evidence from labor market stakeholders such as employers
and industry associations to build the evidence based on occupational shortages and provide context about occupations and why
shortages have emerged. Engagement with industry is key for success of the “bottom-up” approach, which involves a large-scale,
but not representative, survey of employers and in-depth consultations with employers and industry associations. Indonesia has
recently created a similar COL.
International spotlight 4.12 Improving labor market information and employment services with technology
Real-time labor market information complements data collected from traditional sources. Traditional labor market
information (LMI) is collected through government-administered censuses and surveys. This information tends to be reliable
and representative, but it often lacks detail and is produced only infrequently. Real-time labor market information, in contrast,
is collected from many sources, including online job postings, résumés posted online, Twitter feeds, and Google searches.
Real-time LMI is generated constantly and typically produces detailed data about job openings and worker skills. The constant
updating and detail of real-time LMI thus complements the reliability and representativeness of traditional LMI.
Many countries in the East Asia and Pacific region and throughout the world use real-time labor market information to improve their
insight into the labor market. Australia and New Zealand have created vacancy indexes based on online job advertisements to
monitor demand in hundreds of occupations. Malaysia has incorporated real-time labor market information into its Critical
Occupations List (COL), which identifies occupations that are in demand in the labor market. Online job postings data are
incorporated into the COL to indicate demand but also to provide detailed insights into the skills required for each occupation in high
demand. In Singapore SkillsFuture Singapore uses a wide range of labor market information, including online job postings, to identify
key skills needed and to inform training programs for lifelong learning.
Technology is increasingly being incorporated into employment services, particularly as concerns about skills mismatches
grow. The changing demand for skills associated in part with new and more quickly evolving technologies is accompanied by
a more challenging search environment for job seekers, who need to understand how demand is changing. Emerging tools are
using technology to improve the delivery and the quality of information provided to job seekers. A field-in-the-lab experiment
in the United Kingdom provided a web-based tool that displayed relevant alternative occupations and associated jobs to job
seekers at computer facilities (Belot, Kircher, and Muller 2019). The tool expanded the jobs considered and increased the
number of job interviews, particularly for participants who had been unemployed for a few months. In Peru, text messages that
informed job seekers about job opportunities matching their profiles had a positive impact on employment (Dammert, Galdo,
and Galdo 2015).
Aging and the Labor Market in Thailand 64
Policy area #5: Leverage opportunities created by population the early 2000s, the government has also promoted
aging medical tourism through the Center of Excellent Health Care of
Asia initiative and tax exemptions for investments in health
Thailand could also leverage opportunities created by population facilities for medical tourists (Noree, Hanefeld, and Smith 2016).
aging by investing in its care workforce. As described in part Investments being made in the domestic market for older local
3, the aging of Thailand’s population will create additional people could also be promoted for older people from abroad.
opportunities for care work. But filling these opportunities may Indeed, “medical cities” targeted to both Thai and foreign retirees
be challenging given the typically difficult conditions of jobs that have already been created (Setboonsarng and Thepgumpanat
provide care services. Raising the skill level of care providers 2018). Tourism opportunities for older people could be linked to
through formal and nonformal training could be a first step in care and wellness activities, stimulating demand for care work for
professionalizing care. Such training could target low-skill, short-term stays and potentially for longer-duration stays given
unemployed workers, given the availability of employment the potential to attract older people back to Thailand for
opportunities after training—for instance, home-based care retirement (EIC 2017). Improving the availability and skill level
is one of the fastest-growing care occupations. Investments of the workforce of caregivers would help Thailand to improve its
in ICT could improve working conditions and be coupled with attractiveness as a destination for older people from abroad.
training in digital skills to allow care workers to complement Foreign language skills would be particularly important for care
new technologies (ILO and OECD 2019). Efforts to expand social workers serving this population.
protection coverage could focus on care jobs. Specialized skills
will also be increasingly in demand as NCDs such as Alzheimer’s, Other opportunities in the so-called silver economy will also create
dementia, and Parkinson’s are becoming more prevalent. These opportunities in Thailand. As older people live longer, they will
diseases require skilled care workers. Finally, the migration have additional opportunities to consume. For example, demand
of care workers could be facilitated to meet the growing demand for senior housing and care facilities will increase. The Thailand
for certain types of work that cannot be filled domestically. This Board of Investment identifies growth opportunities in medical
effort may require changing regulations that make it difficult for devices, medical food and food supplements, smart devices to
overseas care workers to work in Thailand, such as the require- facilitate “aging at home,” telemedicine, and real estate, among
ment for nurses to be proficient in the Thai language (Natali, others (Thailand Board of Investment 2019). Investments in
McDougall, and Stubbington 2014). these areas will generate additional employment opportunities
as a result of Thailand’s aging population. Assessments of the
These efforts could be linked to the promotion of Thailand as types of skills in demand in these potential growth sectors will
a destination for older tourists, retirees, and medical tourists. be important to ensure that a qualified workforce is in place to
Since the late 1980s, the government has promoted Thailand as meet the demand as it arises.
a destination for retirees from abroad (Niyomsilpa 2020). Since
Aging and the Labor Market in Thailand 65
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Migration Working Paper 145, OECD, Paris.
UNFPA (United Nations Population Fund). 2019. “Population and Development for a Sustainable Future in Thailand:
25 Years after the ICPD.” UNFPA, Bangkok.
Aging and the Labor Market in Thailand 69
Wahba, Jackline, and Yves Zenou. 2012. “Out of Sight, Out of Mind: Migration, Entrepreneurship, and Social Capital.”
Regional Science and Urban Economics 42 (5): 890–903.
World Bank. 2010. Towards a Competitive Higher Education System in a Global Economy. Bangkok: World Bank.
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World Bank. 2013. “Mongolia: Gender Disparities in Labor Markets and Policy Suggestions.” Policy Note 77508,
World Bank, Washington, DC.
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World Bank. 2015. Live Long and Prosper: Aging in East Asia and Pacific. Washington, DC: World Bank.
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Diagnostic. Washington, DC: World Bank.
World Bank. 2016b. Thailand Economic Monitor: Aging Society and Economy. Bangkok: World Bank.
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Aging and the Labor Market in Thailand 70
APPENDIX A data intensiveness of the PHE approach means that it cannot be
used for Thailand (Preston and Stokes 2012). Simulations are run
DECOMPOSITION OF
using the DemProj module in the Spectrum Model from Avenir
Health.23 All projections use demographic data from the United
THE DEMOGRAPHIC Nations World Population Prospects Revision 2017 (UN 2017).
The scenarios compare actual population aging to what would
DETERMINANTS OF have occurred if fertility, mortality, and migration had remained
constant. The results of counterfactual population projections
AGING IN THAILAND have the unattractive property of being sensitive to the year
chosen to start the simulations (Murphy 2016, 2017). To show
robustness, projections are undertaken for three different start
years (1970, 1975, and 1980). Projections are also undertaken
The demographic determinants of aging in Thailand are assessed
using three different measures of population aging: share of the
using counterfactual projections of population. This involves com-
population 65 and older (figure A.1), average age (figure A.2), and
paring actual outcomes with results when controlling for fertility,
old-age dependency ratio (figure A.3).
mortality, and migration. Although alternative methods are avail-
able, such as the Preston, Himes, and Eggars (PHE) method, the 22.
See https://www.avenirhealth.org/software-spectrum.php.
Figure A.1 Share of population 65+ in Thailand under different demographic scenarios, 1970, 1975, and 1980
Source: UN 2019.
Aging and the Labor Market in Thailand 71
Figure A.2 Average age of population in Thailand under different demographic scenarios, 1970, 1975, and 1980
Source: UN 2019.
Figure A.3 Elderly dependency ratio in Thailand under different demographic scenarios, 1970, 1975, and 1980
Source: UN 2019.
Aging and the Labor Market in Thailand 72
REFERENCES
Murphy, Michael. 2016. “Demographic Determinants of Population Ageing in European Countries.” Paper for
Joint Eurostat/United Nations Economic Commission for Europe Work Session on Demographic Projections,
Geneva, April 18–20, 2016.
Murphy, Michael. 2017. “Demographic Determinants of Population Aging in Europe since 1850.” Population and
Development Review 43 (2): 257–83.
Preston, Samuel H., and Andrew Stokes. 2012. “Sources of Population Aging in More and Less Developed Countries.”
Population and Development Review 38 (2): 221–36.
UN (United Nations). 2017. World Population Prospects 2017. New York: UN.
UN (United Nations). 2019. World Population Prospects 2019. New York: UN.
Aging and the Labor Market in Thailand 73
APPENDIX B Traditional principal component analysis (PCA) is conducted on
the Pearson correlation matrix of the variables. All variables are as-
CREATING THE JOB
sumed to be continuous and normally distributed. If the variables
are discrete, the Pearson correlation matrix likely underestimates
QUALITY INDEX the correlation between the variables biasing the subsequent PCA.
All of our variables of interest are indicators that represent a di-
mension of an individual’s job quality. Thus we conduct the PCA on
a polychoric correlation matrix. Polychoric correlation techniques
We follow Del Carpio, Gruen, and Levin (2017) to create an index of find the correlation between the latent variables that produce
job quality. We select seven indicators of job quality: being under- the observed indicators. The results from the PCA can be found
employed, being self-employed, working in a second job, working in table B.1. Eigenvalues represent the variances of the principal
in the informal sector, being overqualified, being hurt at work, and components; therefore, it is common practice to use only compo-
having issues at work (for example, feeling unsafe or being over- nents with variances greater than unity. In our case, only the first
worked). These measures are all directly available from the 2019 component meets this selection criteria. Table B.2 shows how this
Labor Force Survey except for being overqualified. To determine component correlates with each variable. It is noteworthy that it
how qualified a worker is for an occupation, we find the median is positively correlated with all of the variables we assume to be
years of education attained by workers in an occupation-sector indicators of lower-quality jobs. To make the index easier to in-
cell and code workers as overqualified if they have more education terpret, we standardize the first component over each year and
than this median value. We also test using the 75th percentile and multiply by -1. Therefore, an index value of 1 indicates having a job
find similar results. that is 1 standard deviation above the mean job quality in a year.
Figure B.1 presents the jobs quality index.
Table B.1 Results of principal component analysis Table B.2 Correlation of selected components of principal
component analysis with each job quality indicator
Source: Thailand Labor Force Survey 2019. Source: Thailand Labor Force Survey 2019.
Aging and the Labor Market in Thailand 74
Table B.1 Results of principal component analysis Table B.2 Correlation of selected components of principal
component analysis with each job quality indicator
Source: Thailand Labor Force Survey 2019. Source: Thailand Labor Force Survey 2019.
Figure B.1 Job quality index for Thailand, by age, 2016–19
Source: Thailand Labor Force Survey 2016–19.
REFERENCE
Del Carpio, Ximena, Carola Gruen, and Victoria Levin. 2017. “Measuring the Quality of Jobs in Turkey.” World Bank, Washington, DC.
Aging and the Labor Market in Thailand 75
APPENDIX C (C.1)
THE DETERMINANTS where is a vector containing the following characteristics
OF LABOR FORCE for individual , in household , located in province
squared (as a proxy for years of completed education), a dummy
: age, age
PARTICIPATION for marital status, and health status indicators. The following
household-level variables are included in : coverage by private
AMONG OLDER pension, coverage by government pension and/or government
disability assistance, number of children (less than 15 years old)
PEOPLE in the household, and daily per capita consumption (logged).24 To
control for unobserved characteristics at the province level, we
include province-level fixed effects that isolate variation between
A linear probability model with province-level fixed effects is used households within a province. To investigate any heterogeneous
to study the determinants of labor force participation in Thailand. effects over urban/rural and male/female dimensions, we estimate
In order to control for pension coverage and other income-related the model over four subsamples, which are listed above each column
covariates, we use data from the 2017 round of Thailand’s House- in table C.1. As our goal is to investigate the labor supply decisions
hold Socioeconomic Survey. As discussed in Giles, Wang, and Cai of older people, we follow the previous literature and restrict our
(2012), education, health, pension coverage, and various house- sample of interest to household members age 45 or older. The
hold-level covariates play influential roles in explaining the labor coefficients reported in the table are marginal effects.
supply decisions of older people. Following Giles, Wang, and Cai
Any relationship between labor force participation and household consumption in this noncausal
24.
(2012), we estimate the following model to investigate the mar- analysis most likely runs in both directions and would be difficult to disentangle into clear casual
ginal effects of each of these attributes: channels. However, omitting consumption would likely introduce bias into the main variable of in-
terest: access to pensions. Regardless, when reestimating all models omitting consumption, the
results are not affected.
Table C.1 Regression results of determinants of labor force participation in Thailand
Source: Thailand Socioeconomic Survey 2017.
Note: Robust standard errors are in parentheses. Errors are clustered by province.
*** p<.01 ** p<.05 * p<.1
Aging and the Labor Market in Thailand 76
Consistent with previous literature, pension coverage is associat- Poor health and care obligations also affect labor force partic-
ed with a decline in labor force participation. The estimated coef- ipation. We use responses to three individual-level questions
ficients imply that access to a private pension has an outsized ef- to investigate the effects of health on labor supply decisions.
fect on labor supply. For example, on average, receipt of a private Estimated coefficients on two of the three dummies repre-
contributory pension decreases the probability of participating in senting these questions imply that if respondents can go out
the labor force by 33 percent, while access to a government-spon- without assistance and do not have any disabilities, they are
sored pension decreases participation by only 3.6 percent. This is more likely to participate in the labor market. An interesting
driven by the fact that private pensions dwarf government pen- heterogeneous effect is that the presence of children in the
sions in terms of financial support provided. However, the mar-
25
household has a disproportionally negative effect on female
ginal effects are somewhat misleading, as the coverage of private labor supply. Additionally, an increase in children decreases
pensions is low in Thailand. In the full sample, only 5 percent of the the labor supply of women more in rural areas than in urban
population has access to a private pension. Conversely, govern- areas.
ment pensions have much more universal coverage, at 67 percent
In the full sample, the median amount of annual government and private pensions is B 12,000
25.
of the sample. Thus, in aggregate, a small number of labor supply
and B 288,000, respectively.
decisions are ultimately changed due to private pension coverage.
REFERENCE
Giles, John, Dewen Wang, and Wei Cai. 2012. “The Labor Supply and Retirement Behavior of China’s Older Workers and Elderly
in Comparative Perspective.” IZA Discussion Paper 6088, IZA, Bonn.
Aging and the Labor Market in Thailand 77
APPENDIX D We are most interested in how the intensity of these five categories
of tasks vary by age. To show that some occupations attract younger
THE ROUTINE INTENSITY,
workers more than others, we follow the methodology proposed in
Autor and Dorn (2009) and create a routine task index (RTI):
AGE STRUCTURE, AND
AUTOMATABILITY OF (D.1)
OCCUPATIONS where is the summation of occupation ’s routine manual and
routine cognitive task scores and is the summation of occupa-
tion ’s nonroutine manual and nonroutine cognitive task scores.
In their seminal paper, Autor, Levy, and Murnane (2003) hypothesize The index is then standardized to have a mean of 0 and a standard
that occupations requiring routine, programmable skills would be deviation of 1 in 2001. Therefore, any coefficient in front of RTI can
at risk of being automated. Conversely occupations that use non- be understood as the effect of a job increasing 1 standard devia-
routine cognitive, analytical, and interpersonal skills would be “safe” tion in the distribution of the routine task index.
from automation. Acemoglu and Autor (2011) build on this work by
identifying 16 task-skill measures from the United States O*NET The results show that the labor force in occupations favoring
database of occupational characteristics and then use them to con- routine over nonroutine skills is getting older due to younger
struct five categories of routine and nonroutine tasks: nonroutine workers disproportionately entering occupations favoring non-
cognitive analytical tasks, nonroutine cognitive interpersonal tasks, routine skills. Table D.1 shows that a 1 standard deviation in-
and nonroutine manual physical tasks, which are less susceptible to crease in the RTI score of an occupation increases the average
automation, and routine cognitive and routine manual tasks, which age of that occupation by 1.14 years from 2001 to 2019. This
are more susceptible to automation. increase in average age can be attributed to a decrease in the
attractiveness of these occupations to younger workers enter-
We replicate this methodology for Thailand by applying task in- ing the labor force. This claim is supported by the fact that an
tensity scores from O*NET to Thailand’s labor force structure. We increase in RTI in 2001 decreases the share of younger workers
translate the United States Department of Labor’s Standard Oc- entering that occupation in 2019 compared to 2001, but in-
cupational Classification (SOC) codes to the International Standard creases the share of prime-age and older workers entering
Classification of Occupations (ISCO) occupational coding scheme that occupation. Young workers who entered more routine
used in Thailand’s Labor Force Survey. Crosswalks provided by jobs in 2001 are now aging into their prime years, thus explaining
Wojciech Hardy from the Institute for Structural Research and the increase in the share of prime-age workers found in these
Faculty of Economics, University of Warsaw26 are used to merge occupations (table D.1). As an example, the three occupations
SOC-10 measures to ISCO-08 codes. Where multiple SOC-10 oc- with the highest RTI scores—woodworking-machine tool setters
cupations map to a single ISCO-08 occupation, a simple average and operators (ISCO-08 7523), hand launderers and pressers
is taken to obtain a single score. Where multiple ISCO-08 occu- (9121), and printers (7322)—experienced increases in average
pations map to a single SOC-10 occupation, the task score for the age of 3.46, 6.07, and 6.85 years, respectively, between 2001
single SOC-10 occupation is mapped to all corresponding ISCO-08 and 2019. This substantial increase in average age is driven by
occupations. To ensure that a shift in survey sampling undertak- younger workers not entering these occupations. These results
en between 2013 and 2014 is not driving our results, we also run are robust to controlling for contemporaneous changes in occu-
all models presented in this section using end dates that vary from pations’ shares of employment (second row of table D.1).
2010 to 2019. We find that none of the coefficients of interest
change qualitatively, suggesting that our estimates are not a result 26.
See https://ibs.org.pl/en/resources/occupation-classifications-crosswalks-from-onet-soc-to-isco/.
of the change in survey design.
Aging and the Labor Market in Thailand 78
Table D.1 Regression results of age structure and routine intensity of occupations in Thailand, 2001–19
Source: Thailand Labor Force Survey 2001 and 2019.
Note: Robust standard errors are in parentheses.
*** p<.01 ** p<.05
We also investigate the automatability of occupations using Frey probability of automation. The results are qualitatively the same.
and Osborne (2017), who construct the probability of automation
for 702 detailed occupations in the United States. They argue that By using data from O*NET, this methodology relies on the as-
the calculated probabilities are a better measure of automation sumption that occupations in Thailand use the same set of tasks
in the future than the task intensities defined in Autor, Levy, and as occupations in the United States because the task intensities
Murnane (2003) because tasks that were previously seen as non- from the United States (that is, from O*NET) are applied to occu-
routine—and therefore not automatable—have been made autom- pations in Thailand. There is some evidence that the skills needed
atable by recent advances in big data and machine learning algo- in occupations are different in low-income countries than in the
rithms. While these measures are more forward looking, we also run United States. However, this evidence is for poorer countries than
the same regressions above but replace an occupation’s RTI with its Thailand (Dicarlo et al. 2016).
REFERENCES
Acemoglu, Daron, and David Autor. 2011. “Skills, Tasks, and Technologies: Implications for Employment and Earnings.”
In Handbook of Labor Economics. Vol. 4B, edited by Orley Ashenfelter and David Card, 1043–171. Amsterdam:
North-Holland.
Autor, David, and David Dorn. 2009. “This Job Is ‘Getting Old’: Measuring Changes in Job Opportunities Using Occupational Age
Structure.” American Economic Review: Papers and Proceedings 99 (2): 45–51.
Autor, David, Frank Levy, and Richard J. Murnane. 2003. “The Skill Content of Recent Technological Change: An Empirical
Exploration.” Quarterly Journal of Economics 118 (4): 1279–333.
Dicarlo, Emanuele, Salvatore Lo Bello, Sebastian Monroy-Taborda, Ana Maria Oviedo, Maria Laura Sanchez-Puerta,
and Indhira Santos. 2016. “The Skill Content of Occupations across Low and Middle Income Countries:
Evidence from Harmonized Data.” Discussion Paper 10244, IZA, Bonn.
Frey, Carl Benedikt, and Michael A. Osborne. 2017. “The Future of Employment: How Susceptible Are Jobs to Computerisation?”
Technological Forecasting and Social Change 114 (January): 254–80.
Aging and the Labor Market in Thailand 79
APPENDIX E Asia and Pacific region. Countries with labor force participation
rates above this target are left unchanged. For context, table
SIMULATIONS OF
E.1 shows the simulated increases in labor force participation
rates by age group and gender in Thailand.
THAILAND’S LABOR INCREASING THE FEMALE LABOR FORCE
FORCE UNDER DIFFERENT PARTICIPATION RATE
SCENARIOS OF LABOR There is a large gender gap in Thailand. Policies could help to
close this gap by encouraging more women to enter and remain
FORCE PARTICIPATION in the labor force, thereby counteracting some of the negative
effects of population aging on labor supply. To simulate this, we
AND INTERNATIONAL allow the labor force participation curve of women to converge
to the labor force participation curve of men in all countries. To
MIGRATION put this in context, the smallest prime-age (40-44) gender gap
in upper-middle-income countries in the East Asia and Pacific
region is 10 percent. We allow convergence to occur in a linear
To illustrate the effectiveness of three main classes of policy fashion from 2020 to 2060.
response to a decrease in labor supply due to an aging pop-
ulation, we construct a series of simulations. To increase the EXPANDING TEMPORARY MIGRATION
comparability across policies, we show simulated effects not
only for Thailand but also for comparator countries in the East As international migrants tend to be younger and to work at
Asia and Pacific region. Data for Thailand are from the Labor higher rates than locals, they can provide a positive shock to
Force Survey 2016–18. Data for all other countries are from the labor supply. To simulate the effect, we shock the domestic
International Labour Organization (ILO). Four scenarios are un- labor supply with temporary migrants ages 25-34 who arrive
dertaken: increasing the old-age labor force participation rate, every 10 years, have no children, adopt identical mortality
increasing the female labor force participation rate, expanding rates as natives, and then leave after 10 years. We assume
temporary migration, and expanding permanent migration. that after the shocks occur, 20 percent of the labor supply
in the 25-34 age group is made up of new migrants. We as-
INCREASING THE OLD-AGE LABOR FORCE sume that these migrants entered the country to work and
PARTICIPATION RATE therefore have labor force participation rates of 100 percent
during their stay. This implies that the fraction of the labor
One way to dampen the effects of population aging on the labor supply that is migrant workers is allowed to fluctuate in the
supply is to delay retirement to shift the drop-off in labor force years between shocks depending on the change in the labor
participation at age 55 to a later age. To simulate this effect, force participation behavior of locals as they age: migrants
we assume that the labor force participation rates of male and die at the same rate as locals, so if the labor force partici-
female age groups 55 to 59, 60 to 64, and 65+ converge linear- pation of locals is higher in the next period, the fraction of
ly to 2060 to the 95th percentile of the corresponding labor migrants will be lower than 20 percent.
force participation rate in high-income countries in the East
Table E.1 Increases in labor force participation rates under scenario #1, by age and gender
Source: Thailand Labor Force Survey 2016–18; UN 2017.
Aging and the Labor Market in Thailand 80
EXPANDING PERMANENT MIGRATION with some suggestive evidence about this secondary shock is
presented next.
Permanent migration could represent a positive shock to labor
supply in the same way as temporary migration, but would do ROBUSTNESS CHECKS OF PERMANENT
so over a longer period and with migrants who age. To simulate MIGRATION ASSUMPTIONS
this, we shock the domestic labor supply. The medium variant
of the United Nations World Population Prospects (UN WPP) To show the impact of this assumption, Table E.2 shows the
2019 includes projected international migrants by 10-year shock and the resulting labor force for a cohort that ages one
age groups in 5-year periods. Unlike in the temporary scenar- period where X, I, s, and l represent the local population, pro-
io, the assumed shocks persist through the whole lifetime of jected international migration, survival rate from period to pe-
the migrants. To simulate this permanent “churn” of migrants, riod, and the labor force participation rate, respectively. Period
we multiply the labor force by sex and for the appropriate age 1 and period 2 rows represent the population at age group 1 and
group by a constant fraction to get a shock that constitutes 2, respectively.
10 percent of the labor force. This simulation can fail if the
growth rate in international migration varies dramatically from This results in an “extra” in every period. The growth
year to year. To simplify the simulation, these migrants are as- rate in the migration shock from period 1 to period 2 is written
sumed not to have children but to age at the same rate as the as follows:
local population. This implies that any increases in labor supply
caused by this shock should be seen as a lower bound, as it is
likely that migrants would have children that would eventually (E.1)
supply a secondary youth shock to the labor force. A discussion
Table E.2 Increases in labor force participation rates under scenario #1
Note: UN WPP = United Nations World Population Prospects.
Aging and the Labor Market in Thailand 81
In order for our simulations to be consistent with the experiment not be compared to the other simulations in this section. We run
of a permanent shock that decays with the mortality of the three simulations on Thailand. To begin, we run the Demproj mod-
current population, we need the projected migrant shock in the next ule with the preloaded UN WPP 2017 data for Thailand and com-
period-age group to be a small fraction of the current population. pute baseline projections of the labor force using the average labor
This assumption is most likely satisfied. For example, using United force participation rates from the 2016–18 Thailand Labor Force
Nations data on net migration and the local population, we can Survey. We then simulate a one-time permanent migration shock
roughly calculate the second term in the equation. Dividing the that constitutes 20 percent of the 2020 labor force and assume
number of migrants age 30–34 in 2019 by the sum of migrants that migrants adopt identical mortality and labor force participa-
age 25–29 in 2018 and the local population age 25–29 produces tion rates as locals, but have no children. Finally, we simulate the
a figure of 0.6 percent.27 This addition to the growth rate makes same permanent migrant shock, but now migrants not only adopt
our simulated labor force larger than the labor force if the migrant the mortality and labor force participation behavior of locals, but
shock had been simulated such that the migrant population declines they also adopt the same fertility rates. Figure E.1 shows the per-
at the same rate as the local population. cent change in total labor force from the baseline labor force in
2020 (that is, the baseline labor force in 2020 is set to 100). As the
To test the effect of migrants having children on the future la- figure shows, as the migrant stock with no children ages out of the
bor force, we use software provided by Avenir Health. The Spec- labor force, the labor force returns to the baseline. The migrant
trum software allows users to modify the initial population used stock with children supports a larger labor force, which begins to
in projecting future population by gender and age. The software emerge in 2060.
comes preloaded with the UN WPP 2017 revision, while the rest
of the simulations use the 2019 revision. Given that the under- The age groups 30–34 and 25–29 were selected because they produce the largest growth rate,
27.
providing somewhat of an upper bound on the error.
lying data are different, these robustness simulations should
Figure E.1 Robustness simulation of expanded permanent migration with migrants adopting the fertility patterns of locals
Source: UN 2017.
REFERENCE
UN (United Nations). 2017. World Population Prospects 2017. New York: UN.
Aging and the Labor Market in Thailand 82
APPENDIX F worker’s occupation to define whether the worker is employed
in care work. Facing data constraints to working with data from
DEFINING CARE JOBS
multiple countries, the ILO uses a combination of occupation and
sector to define care jobs. Focusing on occupation alone allows us
to focus specifically on whether an occupation involves care-type
responsibilities and avoids including individuals working in care
sectors but not in care occupations. The ILO’s definition of care
The International Labour Organization (ILO) defines a methodolo-
work is fairly broad, encompassing both health and education. We
gy for identifying care jobs based on its definition of care work as
disaggregate these types of services to provide a more detailed
“activities and relations involved in meeting the physical, psycho-
view of the care sector. Table F.1 shows the occupations that are
logical, and emotional needs of adults and children, old and young,
defined as care jobs.
frail and able-bodied” (ILO 2018, 6). With access to more detailed
occupational data, we adjust this methodology to rely only on a
Table F.1 Care jobs
Aging and the Labor Market in Thailand 83
REFERENCE
ILO (International Labour Organization). 2018. Care Work and Care Jobs for the Future of Decent Work. Geneva: ILO.
Aging and the Labor Market in Thailand 84