Consumer debt revs up
Highest rate in 8 years as poor scrape by
Thai household debts rose to the highest rate in eight years because of debts accrued from previous years, according to the latest survey by the University of the Thai Chamber of Commerce (UTCC).
Thanavath Phonvichai, UTCC’s vicepresident for research, said the survey of Thai labourers earning less than 15,000 baht a month found that 97% of 1,258 respondents were indebted, with an average of 131,479 baht per household, up 10.4% from 119,061 baht the previous year.
He attributed the rise to debts accumulated over the past three years and falling prices for key farm products such as rubber, rice and oil palm.
Higher expenses and interest rates on loans while income remained stagnant also contributed to rising debt, Mr Thanavath said.
He said the higher level is no cause for concern because the new debts were mainly to buy durable goods such as cars, motorcycles and housing units.
“It’s also satisfying that the portion of organised loans increased significantly, thanks to the government’s continued efforts to tackle the problem of loan sharks,” Mr Thanavath said.
Organised loans made up 46.4% of household debt, the highest in four years and up 39.4% year-on-year.
The survey said the overall repayment burden for respondents dropped to an average of 5,080.48 baht a month, down from 8,114.31 baht a month year-on-year.
Mr Thanavath said the debt default rate among Thai labourers remained high, with 78.6% of respondents saying they defaulted on repayment as stagnant income did not keep pace with higher
expenses and product prices.
The report urged the government to raise the daily minimum wage to 410 baht within three years, keep controls on product prices and help the poor with living costs.
Mr Thanavath suggested the government rev up its efforts to improve public welfare, notably for labourers and the elderly. Thailand has become an ageing society as it tries to switch its economy to the 4.0 scheme.
“We’re afraid social problems and crime may crop up in the future if labourers and the elderly are ignored by the government,” he said.
In late November, t he cabinet approved a daily minimum wage rise of
five, eight or 10 baht in many provinces. The new wages became effective from Jan 1 this year.
With the cabinet’s decision, seven provinces saw the daily minimum wage rise from 300 baht to 310. They are Bangkok, Nakhon Pathom, Nonthaburi, Pathum Thani, Samut Prakan, Samut Sakhon and Phuket.
Another 13 provinces had their daily minimum wage raised to 308 baht: Khon Kaen, Nakhon Ratchasima, Prachin Buri, Chon Buri, Rayong, Surat Thani, Songkhla, Chiang Mai, Saraburi, Chachoengsao, Krabi, Phangnga and Ayutthaya.
The minimum wage stays the same in Sing Buri, Chumphon, Nakhon Sri Thammarat, Trang, Ranong, Narathiwat, Pattani and Yala provinces. The remaining 49 provinces had their daily minimum wage increased to 305 baht.
This was the first time in four years that wages were hiked after the rise to 300 baht under the Yingluck Shinawatra government.
For the eight provinces where wages were unchanged, the government said they host a handful of factories and there was no demand for them to raise wages.
The increase lifted Thai wages by an average of 1.7% thus far.