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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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
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    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