World Bank report offers Thailand a primer on tackling inequality, poverty

The report, titled "Bridging the Gap: Inequality and Jobs in Thailand”, aims to provide a movement landscape of the country's income and employment inequality. It attempts to answer three questions: how did poverty and inequality change over the last two decades and what drove these changes? What causes persistent inequality? And, how did the COVID-19 crisis affect poverty and inequality trends?

World Bank's country manager for Thailand, Fabrizio Zarcone, said the data would aid in the development of Thailand's strategic policies and practical measures to reduce inequality and poverty.

He noted that the report revealed inequity in Thailand began very early in life, with unequal opportunities for human development that persist throughout the life cycle and across generations.

"In the short term, policies are required to address learning losses and rising food prices, which could both widen human capital gap. We must ensure that policies can provide vulnerable groups with enough support to increase their resilience as challenges from rising inflation and climate events mount," he said.

High inequality slows economic growth and undermines poverty reduction efforts, he added.

Zarcone explained that while the report examines patterns of poverty and inequality in Thailand and how the pandemic affected their trends, it pays special attention to inequalities in the labour market.

According to the findings, Thailand has made significant progress in closing the wealth and poverty gaps since the early 2000s, but progress has slowed since 2015.

Thailand had the highest level of income-based inequality in the East Asia and Pacific region in 2021, with a Gini coefficient of 43.3%. The concentration of income in the wealthiest households is particularly high: in 2021, the richest 10% of Thais held more than half of the country's income and wealth.

The World Bank also revealed that disparities in educational opportunities and skills, low farm incomes, an ageing population, and rising household debt all pose challenges to Thailand's efforts to reduce inequality.

Although Covid-19’s effect on poverty and inequality was relatively mild, the pandemic may have exacerbated the existing gap in learning outcomes and household debt challenges.

Meanwhile, Thailand’s rising cost of living and shrinking working-age population share are additional factors complicating efforts to reduce inequality.

The study's lead author, World Bank poverty economist Nadia Belhaj Hassine Belghith, noted that income disparities between regions and communities within regions were contributing to overall inequality in Thailand.

In 2020, the average income in Bangkok, which has the highest regional GDP per capita in the country, was more than 6.5 times that of the Northeast region, which has the lowest. Bangkok's concentration of economic growth has exacerbated regional disparities in Thailand, emphasising the importance of balanced regional development.

"I think there are several issues that Thailand needs to handle. I think the most urgent one is really the special disparities," she said. The access to quality education is another serious issue that Thailand should focus on.

Belghith pointed out that the largest drivers of income inequality in Thailand are educational gaps and occupational differences.

Attendance is nearly universal at lower levels of education but begins to decline by upper secondary school. Approximately 8% of 15-17-year-old girls do not attend school, while 17% of boys do.

According to the report, the difficulties of distance learning during the pandemic were borne primarily by students from poorer households in Thailand.

The pandemic is estimated to have increased the learning gap — the difference between expected and learning-adjusted years of school — from 3.7 to 4 years, exacerbating the country's already poor learning outcomes, particularly among low-income families.

Under the aforementioned scenario, Thailand's Human Capital Index — a World Bank metric of the contribution of health and education to individual and country productivity — is expected to fall from 0.61 in 2020 to 0.55 in 2022.

Covid-19 exacerbated household debt problems, contributing to the wealth disparity, she added. Between 2019 and 2021, the overall rate of indebted households in Thailand increased from 45.2% to 51.5% as households borrowed to compensate for income losses.

"Thailand can use the pandemic crisis to promote necessary reforms and create a more equal and inclusive society. The country, in particular, needs to assist schools in assessing student learning and provide learning recovery programmes. By strengthening social protection programmes and providing well-targeted assistance, existing transfers will be able to benefit poorer households more effectively," she explained.

Danucha Pichayanan, secretary-general of the National Economic and Social Development Council (NESDC), expressed appreciation for the World Bank data.

He pointed out that the findings assist government agencies in sharpening and integrating practical policies to address Thailand's current inequality and poverty.

"The NESDC also conducts annual inequity and poverty surveys in order to create the country's basic database to alleviate poverty and inequity. Other aspects of the World Bank report would help Thailand create effective poverty and inequality solutions," he noted.