Gap between rich, poor fuels our woes

For decades, poverty and inequality have been chronic problems which have derailed Thailand’s economic growth and fuelled political conflicts and unrest. These problems remain even though about a trillion baht has been collectively spent by many governments to address them. What have we missed or done wrong?

The use of financial measures, funded by annual budget allocations and borrowings, to reduce the poverty rate and narrow the inequality gap have been adopted by this and many previous governments.

This year, the government has approved a budget of 41 billion baht to be spent on the state welfare and subsidy scheme for the poor.

The registrants are classified into three groups. The first is a group of 2.9 million unemployed people. The second comprises 7.3 million people who live below the poverty line (whose annual income stands at 30,000 baht or lower). And the last group comprises 4 million people whose annual earnings are more than 30,000 baht but do not exceed 100,000 baht.

From 1988 to 2015, Thailand’s average annual economic growth stood at 3.8% resulting in an estimated surge in incomes of Thais by nine times, from monthly income per capita of 1,066 baht to 9,363 baht. This means the number of people earning salaries below the poverty line is estimated to have fallen from 34.1 million people (65.2% of the population in 1998), to 4.9 million (7.2% of the population in 2015).

However, if we take into account the current cost of living, the number of poor people must be higher than 4.9 million. The figure must be more than 10 million, especially given that the number of registrants with the Finance Ministry for the government’s welfare and subsidy scheme this year stands at 14.17 million.

Even though the poverty rate may have been reduced, the income gap in Thailand has increased. A study by the Fiscal Policy Office reveals that in 2015 the richest 10% of the population on earns 22.1 times the average income of the poorest 10%. The gap has widened as the ratio is increased from 20.9 times in 2000.

Wealth has also remained concentrated in land ownership. Land held by the country’s wealthiest 10% has reached 878 times that owned by the poorest 10%.

The gap in personal savings is also alarming. For example, just 0.1% of all bank savings accounts in the country covers 49% of the total deposit amount and each of them has a balance of more than 10 million baht.

There is also a big difference in education opportunities. The rich’s ability to attain a bachelor’s degree is 17.4 times higher than the poor’s. Inequality is also evident when it comes to access to public health. The ratio of doctors to patients in the Bangkok is 716, while the ratio in the northeastern region, where the poverty rate is higher, is 3,207.

Why does inequality exist at this scale? What have we missed in our efforts to tackle poverty and reduce income inequality?

So much public investment has been spent to solve the problem — a total of more than one trillion baht.

Many governments have invested in rice-pledging schemes aiming to uplift the quality of life of farmers.

Such as effort was particularly evident during the Yingluck Shinawatra government whose rice-pledging scheme offered paddy prices for farmers at a rate almost 50% higher than the market price.

The Yingluck government spent more than 800 billion baht to buy over 55 million tonnes of paddy from farmers. As a result, the scheme brought about losses totalling more than 500 billion baht.

Despite the huge investment, farmers’ quality of life remains pretty indifferent nowadays. They still bear the brunt of high production costs. Meanwhile, the market price for rice is still low.

The latest increase in the minimum wage to 300 baht per day has not helped the poor much as it has consequently brought about a rapid increase in cost of living.

The Abhisit Vejjajiva government also initiated programmes to help the poor. For example, it offered a one-off cash handout of 2,000 baht each to 9.7 million members of the Social Security Fund whose monthly incomes were lower than 15,000 baht.

Hundreds of billions of baht have also been spent on farmer support measures and schemes every year. For example, the current government spent approximately 300 billion baht in 2015 on several initiatives.

These include a one-off payment to farmers, each of whom was given 1,000 baht per one rai of farm land, and 1,000-baht-per-rai compensation for rubber farmers. Other schemes were the 60-billion-baht project to tackle drought, and the cash handout scheme for the poor — a 1,500-baht handout for each of those whose annual income is over 30,000 baht but not exceeding 100,000 baht and a 3,000-baht handout for people who earn less than 30,000 baht a year.

Additionally, the current government plans to spend more than 40 billion baht to implement welfare programmes for lowincome earners by October.

Was it also our own mistake for choosing MPs who promised short-term plans to woo votes but never implemented long-term strategies? Or was it our own mistake for preferring short-term gains to long-term benefits which would materialise much later?

What have we missed during the past 30 years?

Benefits from economic development have not been equally allocated — the rich have become richer widening the inequality gap.

What will this and future governments do to narrow the income and opportunity gaps? It does not mean that everybody needs to have the same level of wealth. But it means the gap between the rich and the poor must become smaller.