Thailand’s Shrinking Talent Pool: How You Can Reduce the Risk to Your Business
The nation is standing on the precipice of a demographic transformation that poses unprecedented challenges. The birth rate is plummeting at an alarming rate, while projections paint a grim picture of a population dwindling by 50% within decades.
The nation is on track to becoming a super-aged society by 2029; and 2023 was the first time in Thai history that the number of retirees (60-64) was larger than those entering the workforce (20–24).
Thailand’s Total Fertility Rate (TFR) has been below the replacement level of about 2.1 children per woman since 1993. And in 2022, Thailand’s TFR was as low as 1.16 in nearly every province.
This trend continued to worsen in 2023 when only 485,085 children were born — the lowest number in 70 years.
According to Public Health Minister Cholnan Srikaew, within this century, Thailand will reach a desperate state where there are about 18 million senior citizens, 14 million working-age adults and only 1 million individuals aged 0-14.
Therefore, the question needs to be asked: who is going to fund this ageing population with fewer people paying taxes to support the elderly?
Japan provides an interesting reference point with a similarly ageing society (1.26 births per woman; 10% of the population over 80). However, Japan experienced decades of economic prosperity before slowing birth rates tilted the nation’s demographics towards its grey-haired citizens. Additionally, the nation has long provided a robust welfare system, including universal healthcare and pension support for the elderly.
By comparison, Thailand is still considered a developing country by most metrics, including income levels, infrastructure, and human development indices.
As the elderly population increases in Thailand, the strain on financial resources will only intensify, creating a looming crisis that necessitates immediate action.
While the ageing population of Thailand presents serious long-term concerns, we don’t need to look decades into the future to recognize the labour crisis unfolding before our eyes.
It is already true today that finding skilled employees in the white collar sector is a challenge for many companies.
Thailand’s Board of Investment in 2022 found a shortage of skilled labour, particularly in the machinery and automotive industries as well as the electrical and electronics industry, accounting for up to 12,000 positions.
The Digital Council of Thailand has set a target of ensuring that 70% of the population has basic to expert-level digital skills by 2025. Today the number is 28%.
Additionally, research from Kasikorn Bank claims that labour shortages are only going to get worse, especially in labour-intensive industries. They highlight for special concern the agricultural and service sectors, such as hotels and restaurants, and construction businesses.
What’s more, Thailand is stuck in a middle income trap, seemingly unable to further advance and move into the high-income category. Countries caught in this trap find it challenging to sustain the high growth rates that characterised their earlier development, usually due to a failure to enact necessary structural reforms.
This is an alarming situation to be in, when Thailand’s wage rates are already higher than those of its local rivals. High labour costs combined with poor productivity and inefficient processes create a recipe for disaster.
Educational reform is often spoken of by governments of all types, yet is rarely acted upon. Nonetheless, a push towards a higher level of nationwide technical skills through vocational training and traditional education is a must if Thailand is to remain competitive and break out of the middle income trap.
At the same time, the pull towards low-skilled labour is strong, with a dozen staff seemingly on-site at every convenience store and car park.
Already grappling with a skills shortage, Thailand's economic landscape faces the daunting prospect of further depletion due to the nation’s low birth rates.
In the face of this crisis, augmentation of the human workforce with technological solutions makes more sense than ever. Rather than have a dozen employees doing routine work, picture a fleet of autonomous systems efficiently overseeing convenience stores, managing parking lots, and handling routine tasks, liberating human resources for more strategic and complex roles.
As outlined in earlier chapters, the clarion call for business transformation resonates now more than ever. Companies must embrace technology as a catalyst for change, especially in sectors grappling with a shrinking workforce. The ageing society demands a paradigm shift, with businesses at the forefront of ushering in this transformation to ensure economic resilience.
As with educational reform, immigration reform does not seem likely in the near future. In that context, technology provides Thailand with its best chance of long-term success. Automated systems and artificial intelligence can bridge the widening gap in the labour market, injecting efficiency, reducing costs, and mitigating the strain on resources.
The need for rapid engagement in technological adoption is no longer just a choice but a survival strategy for businesses navigating this demographic storm.
Thailand's journey through the Silver Tsunami provides both challenges and opportunities. As the population ages, businesses will have no choice but to find alternative ways of operating. Businesses that start to take action on transformation in 2024 will be able to navigate the increasing pinch of the skills shortage, while creating the catalyst for a new era of innovation and efficiency.
Chris Cracknell is the Chairman at Grant Thornton. He joined Grant Thornton in 2016 after 39 years in industry driving international growth as a CEO and Board Director. Chris has a deep understanding of diverse sectors, especially in Thailand and Asia, as well as a commitment to sustainable business practices. His experience spans outsourcing, healthcare, and education, among others. At Grant Thornton, Chris focuses on guiding businesses through technological and strategic transformations, ensuring they adapt and thrive in changing economic landscapes, particularly in response to demographic shifts like Thailand's ageing population.
This article is part of an ongoing series entitled The Essential Guide to Business Transformation in 2024
To read the next article in the series, click here
To download full report, please submit form below.
Grant Thornton uses cookies to monitor the performance of this website and improve user experience
To find out more about cookies, what they are and how we use them, please see our privacy notice, which also provides information on how to delete cookies from your hard drive.
