Signs amass indicating a fragile employment market

Thailand's job market appears to be weakening despite a relatively low unemployment rate, according to the SCB Economic Intelligence Center. The unemployment rate stands at 0.94% of the workforce, up slightly from the previous year. However, signs of an unfavourable labour market are evident, with the number of unemployed persons rising by 9.8% year-on-year to 397,000.

The unemployment rate for formal employees also increased, indicating mounting pressure in the job market. Youth unemployment, while declining slightly, remains high at 5.14%. Underemployment is another issue, as more workers are employed but working fewer than 35 hours per week. Working hours have also declined across both formal and self-employed workers, suggesting a broad-based weakening of labour demand.

Business closures have risen by 12.5% year-on-year, and real wages have deteriorated, with the real wage index falling to its lowest level since the pandemic. This indicates a decline in workers' purchasing power. The labour market is seen as structurally weak due to an ageing population and a mismatch between workers' skills and labour market demand.

Cyclical pressures, such as rising energy costs and weak domestic demand, are also contributing to labour market challenges. Despite the low unemployment rate, many workers remain stuck in informal employment or occupations with unstable incomes, lacking career advancement opportunities. The weak labour market directly impacts private consumption and households' debt-servicing capacity, as income recovery is sluggish.