The National Economic and Social Development Council (NESDC) warns that Thailand's ballooning household debt will become a serious problem if employment and the economy decelerate, says secretary-general Danucha Pichayanan.
During a press conference on the economic outlook for the first quarter of 2023, Mr Danucha said that as household debt would hinder the expansion of domestic consumption, debt restructuring needed to continue alongside financial and fiscal discipline at both the individual and corporate level.
In the fourth quarter of 2022, household debt was 15.09 trillion baht, up 3.5% from the same quarter of 2021, accounting for 86.9% of GDP.
Mr Danucha said most of the growth in household debt came from the purchase of real estate, which grew by 5.2% in the fourth quarter of last year. Personal loans have continued to grow at an increasing rate -- 20.8% over the last two quarters. Nevertheless, non-performing loans pertaining to household debt remain stable at 2.62%.
In the first quarter of 2023, the number of employed people was 39.6 million, an increase of 2.4% from the same quarter of last year, with average monthly wages of 15,118 baht in the public sector and 13,762 baht in the private sector, exclusive of other benefits.
The unemployment rate currently stands at 1.05%.
Mr Danucha also mentioned the general election victors' desire to raise the minimum wage. On the positive side, it would enable workers to earn more. On the negative side, it would increase the cost of production, which would eventually lead to higher product prices.
In addition, the domestic wage rate directly correlates with foreign direct investment. Foreign investors may shift their production bases from Thailand to other countries if the wage hike pledge is implemented.
"Personally, I think labour wages should not be set equally across the country as the cost of living differs in each area," Mr Danucha said.
In addition, the increase in salaries for those who have a bachelor's degree would pose a burden to public sector spending on government workers' salaries.
Regarding the new government's policy to create more of a welfare state, Mr Danucha said the provision of state welfare is limited in terms of income, which is different from other places such as Scandinavian countries, which collect high taxes to provide welfare for their people.
"In Thailand, our tax base is narrow with only around 11 million people filing a tax form, and fewer than 4 million actually paying tax," he said.
"If you want to provide welfare to the people you need to do it in a targeted way, while 'across the board' types of assistance would be detrimental to the country's fiscal status in the long term."
Mr Danucha said Thailand needed to restructure its tax system in order to have enough money for welfare provision and at the same time for investment to increase the country's competitiveness.