Thailand Faces Rising Household Debt and Employment Challenges
Government calls for reforms to address increasing bad debt and rising unemployment rates.
The National Economic and Social Development Council (NESDC) in Thailand has called for urgent measures to address the rising levels of household debt in the nation.
During a briefing on the social situation for the first quarter of 2025, NESDC Secretary-General Danucha Pichayanan highlighted the need for improved conditions for debt restructuring to prevent special mention (SM) loans from deteriorating into non-performing loans (NPLs).
In the fourth quarter of 2024, total household debt reached 16.4 trillion baht, a modest increase of 0.2% compared to the same period the previous year.
This slower growth can be attributed to tighter lending standards from commercial banks, which resulted in a reduction in the household debt-to-GDP ratio to 88.4%, down from 88.9% in the third quarter.
The quality of household credit has shown signs of decline, as the value of personal loans overdue by more than 90 days, classified as NPLs, amounted to 1.22 trillion baht, representing 8.94% of total credit.
This is a slight increase from 8.78% in the preceding quarter.
Additionally, loans categorized as SM loans, which are overdue by 30 to 90 days, rose to 4.17% of total household debt by the end of 2024, increasing from 3.52% the previous quarter.
The total value of SM loans currently stands at 568 billion baht.
Mr. Danucha pointed out that the Bank of Thailand's "You Fight, We Help" debt relief program is intended to assist borrowers in preventing their debts from being classified as NPLs.
However, he emphasized that greater public communication is required to encourage participation in the program.
Furthermore, he noted that the terms of the program should be enhanced to aid borrowers who are facing early repayment difficulties.
Changing consumption habits among Thai citizens also emerged as a critical issue, with a survey indicating that approximately one in three Thais prefer to invest in luxury goods and premium services, thus making them more susceptible to cycles of debt.
The NESDC has suggested that cooperatives should join the Credit Bureau to help individuals address their debt problems and improve access to fair credit.
In terms of employment, the unemployment rate in Thailand for the first quarter of 2025 was reported at 0.88% of the total labor force, translating to around 360,000 unemployed individuals, a decrease from 1.01% during the same quarter of the previous year.
However, the number of "quasi-unemployed" individuals—those working fewer than 20 hours per week in agriculture, or fewer than 24 hours in non-agriculture—rose significantly by 14.6% from the previous year, amounting to over 4.3 million people.
This surge is primarily attributed to the ongoing economic downturn that has adversely impacted small and medium-sized enterprises (SMEs), leading to the closure of about 24,000 SMEs in 2024.
Mr. Danucha specified three key areas that require close attention.
The first involves promoting innovation and technology within SMEs; despite their need for modernization and competitiveness, a report from the World Bank indicates that Thai businesses are less frequent users of innovative practices compared to their regional peers.
The second issue pertains to ensuring severance protections for workers during layoffs.
The Labor Protection Act mandates severance pay based on years of service, yet many workers, especially those employed in foreign-owned businesses, report that they have not received adequate compensation.
The third area concerns the high unemployment risk faced by recent graduates.
Surveys show that over 89% of executives are hesitant to employ new graduates, citing a lack of experience, skills, and professionalism.
In response, companies are increasingly opting for freelancers or retirees, leaving many graduate positions unfilled.
This scenario underscores the urgent need for graduates to enhance their skills and the education sector to rethink its methodologies to better equip students for the workforce.
During a briefing on the social situation for the first quarter of 2025, NESDC Secretary-General Danucha Pichayanan highlighted the need for improved conditions for debt restructuring to prevent special mention (SM) loans from deteriorating into non-performing loans (NPLs).
In the fourth quarter of 2024, total household debt reached 16.4 trillion baht, a modest increase of 0.2% compared to the same period the previous year.
This slower growth can be attributed to tighter lending standards from commercial banks, which resulted in a reduction in the household debt-to-GDP ratio to 88.4%, down from 88.9% in the third quarter.
The quality of household credit has shown signs of decline, as the value of personal loans overdue by more than 90 days, classified as NPLs, amounted to 1.22 trillion baht, representing 8.94% of total credit.
This is a slight increase from 8.78% in the preceding quarter.
Additionally, loans categorized as SM loans, which are overdue by 30 to 90 days, rose to 4.17% of total household debt by the end of 2024, increasing from 3.52% the previous quarter.
The total value of SM loans currently stands at 568 billion baht.
Mr. Danucha pointed out that the Bank of Thailand's "You Fight, We Help" debt relief program is intended to assist borrowers in preventing their debts from being classified as NPLs.
However, he emphasized that greater public communication is required to encourage participation in the program.
Furthermore, he noted that the terms of the program should be enhanced to aid borrowers who are facing early repayment difficulties.
Changing consumption habits among Thai citizens also emerged as a critical issue, with a survey indicating that approximately one in three Thais prefer to invest in luxury goods and premium services, thus making them more susceptible to cycles of debt.
The NESDC has suggested that cooperatives should join the Credit Bureau to help individuals address their debt problems and improve access to fair credit.
In terms of employment, the unemployment rate in Thailand for the first quarter of 2025 was reported at 0.88% of the total labor force, translating to around 360,000 unemployed individuals, a decrease from 1.01% during the same quarter of the previous year.
However, the number of "quasi-unemployed" individuals—those working fewer than 20 hours per week in agriculture, or fewer than 24 hours in non-agriculture—rose significantly by 14.6% from the previous year, amounting to over 4.3 million people.
This surge is primarily attributed to the ongoing economic downturn that has adversely impacted small and medium-sized enterprises (SMEs), leading to the closure of about 24,000 SMEs in 2024.
Mr. Danucha specified three key areas that require close attention.
The first involves promoting innovation and technology within SMEs; despite their need for modernization and competitiveness, a report from the World Bank indicates that Thai businesses are less frequent users of innovative practices compared to their regional peers.
The second issue pertains to ensuring severance protections for workers during layoffs.
The Labor Protection Act mandates severance pay based on years of service, yet many workers, especially those employed in foreign-owned businesses, report that they have not received adequate compensation.
The third area concerns the high unemployment risk faced by recent graduates.
Surveys show that over 89% of executives are hesitant to employ new graduates, citing a lack of experience, skills, and professionalism.
In response, companies are increasingly opting for freelancers or retirees, leaving many graduate positions unfilled.
This scenario underscores the urgent need for graduates to enhance their skills and the education sector to rethink its methodologies to better equip students for the workforce.
