Thailand's advance towards an ageing population will cause future problems associated with fiscal expenditures, labour shortages and capital market development. Urgent measures are needed to tackle these challenges, says an academic.
An ageing society would reduce the government's tax revenue and raise public sector spending to aid the elderly population, said Piyachart Phiromswad, the assistant head of the PhD programme at Chulalongkorn University's Sasin Graduate Institute of Business Administration.
Since Thailand's economic development has been built on labour-intensive industries, a shortage in human resources and skilled labour will take a toll on GDP growth going forward, he said.
"The development context of the capital market in the future could be changed because elder investors would invest less in equities and this would have an impact on market development and the amount of trades," said Mr Piyachart.
Thailand entered the ageing society phase in 2002 and the country's demography will be classified as an aged society in 2022, according to United Nations' definitions.
It is estimated that Southeast Asia's second-largest economy will enter the stage of a super-aged society by 2031, considered a short time span for such a rise in elderly citizens.
The UN classifies ageing societies into three categories based on the percentage of elders aged over 65 in the country's population. An ageing society consists of 7% of the population over 65, an aged society 14%, and a super-aged society 20%.
Thailand's population is also considered to be on a fast-ageing track, making it harder for the country to adapt in time to the demographic changes, hurting its future GDP growth, said Mr Piyachart.
Mr Piyachart proposed measures to mitigate the effects on society such as raising the retirement age, providing flexible working periods for retirees, enhancing preparation for savings schemes at an early age, and ensuring that financial training and provident funds are offered by private organisations.
Since less tax revenue will be generated in the future as a larger percentage of the population is retired, the government should consider implementing its fiscal expenditures in a sustainable manner, reducing unnecessary spending and eliminating corrupt practices, said Mr Piyachart.
Establishing the National Savings Fund (NSF) is essential to enhance domestic savings, but there should be other funds or policies geared towards bolstering savings because the NSF alone is inadequate, he said.
The NSF collected 164 million baht from about 180,000 members on its inaugural day on Aug 18. NSF subscribers are required to contribute at least 50 baht a month with a maximum per year of 13,200 baht.
However, Thailand remains a developing country without highly skilled human resources or advanced infrastructure, making incorporating technology into daily work, one solution for Japan and Europe as they face the same problem, an obstacle, said Mr Piyachart. Technological advancement is a long-term development goal for Thailand, he said.