Macroeconomics/Q2 employment

Chatrudee Theparat

The labor market situation in the second quarter of 2024 has slowed down due to a continuous decline in employment in the agricultural sector, non-agricultural sectors have expanded in all sectors.

Meanwhile, working hours and wages have remained relatively stable, and the unemployment rate has slightly increased to 1.07 %.

Danucha Pichayanan, secretary general to the National Economic and Social Development Council (NESDC), said labor force in the second quarter of 2024 amounted to 39.5 million people, down from the same period in 2023 by 0.4 %. This decline was due to a decrease in employment in the agricultural sector by 5 %.

The decline caused by drought in some areas and some employees were waiting for jobs. However, the non-agricultural sectors expanded by 1.5 % that showed labours from agricultural sectors to move to work in non-agricultural sectors.

The transportation and storage sector showed improvement, expanding by 9 %, followed by the hotel and restaurant sector, which continued to grow positively at 4.9 %. This growth was driven by the tourism boom during the Songkran festival.

The manufacturing sector also improved due to the recovery in exports, while the construction sector slowed down due to a decline in demand for housing. Working hours have remained relatively stable compared to the same period last year, with the overall and private sectors averaging 42.8 and 46.6 hours per week, respectively.

Meanwhile, overtime work has increased by 2.5 %. The number of underemployed and marginally employed persons has decreased by 19.8 % and 8.7 %, respectively.

The unemployment rate has increased slightly to 1.07 %, representing 430,000 unemployed individuals.

Mr Danucga said key issues that the government should monitor in the future include:

1. The adaptation of the workforce to acquire skills aligned with future labor market demands. The World Economic Forum (WEF) predicts that by 2027, over 42 % of jobs in the business sector will be automated. A survey conducted by Microsoft Thailand in collaboration with LinkedIn found that over 74 % of Thai executives are reluctant to hire employees lacking AI skills.

2. The impact of SMEs' liquidity shortages and increasing economic risks on employment. SMEs are a significant source of employment, but they are currently facing liquidity issues. Non-performing loans (NPLs) as a percentage of total loans reached 7.2 % in the fourth quarter of 2023, nearly doubling. Moreover, the cost index for micro and medium-sized businesses has increased, which could lead to job cuts.

3. The impact of floods on agricultural production and farmers' income. Recent floods have damaged 308,238 rai of agricultural land. With a forecast of 60 - 80 % of the country experiencing thunderstorms between mid-July and September 2024, the agricultural sector is at risk of further damage. This could negatively impact farmers' income, increase production costs, and affect their ability to repay debts.