Speaking during a briefing on the social situation for the first quarter of 2025, Danucha Pichayanan, secretary-general of the NESDC, said that in the fourth quarter of 2024, household debt totalled B16.4 trillion, showing a modest 0.2% growth compared to the same period last year.
The slower expansion was largely due to tighter lending standards, particularly from commercial banks. As a result, the household debt-to-GDP ratio decreased to 88.4%, down from 88.9% in the previous quarter, reports the Bangkok Post.
The quality of household credit also declined. The value of personal loans overdue for more than 90 days (classified as NPLs) in the Credit Bureau database amounted to B1.22trn, accounting for 8.94% of total credit, a slight increase from 8.78% in the previous quarter.
However, household debt classified as SM loans in the fourth quarter of 2024 increased to 4.17% of total household debt, up from 3.52% in the third quarter.
An SM loan is debt that is overdue by 30 to 90 days and is not yet classified as an NPL. Debt becomes an NPL when payments are overdue by more than 90 days. The value of SM loans currently stands at B568 billion.
Mr Danucha noted that the Bank of Thailand’s ‘You Fight, We Help’ debt relief programme is aimed at preventing debt from deteriorating into NPLs. However, more public communication is needed to encourage struggling borrowers to join the programme, he said.
Additionally, the terms should be improved to help borrowers showing early signs of repayment difficulties resolve their issues before the debt becomes classified as an NPL.
Mr Danucha said one issue that needed to be addressed in tackling household debt was Thais’ tendency to consume luxuriously, which can easily lead to excessive debt. A survey by Mahidol University found that one in three Thais prefer to spend their money on luxury goods and premium services, increasing their susceptibility to debt cycles.
A second issue is the push for cooperatives to join the Credit Bureau ‒ the move is seen as a way to help individuals escape debt problems and increase their access to fair credit.
UNEMPLOYMENT AND LABOUR ISSUES
Thailand’s unemployment rate in the first quarter of 2025 stood at 0.88% of the total labour force, or about 360,000 people, down from 1.01% in the corresponding period last year.
However, the number of “quasi-unemployed” rose significantly in the first quarter of this year, up by 14.6% from the previous year, reaching over 4.3 million people.
The quasi-unemployed are defined as people working fewer than 20 hours per week in the agricultural sector, and fewer than 24 hours per week in the non-agricultural sector.
Mr Danucha said job losses were mainly due to the economic downturn, which had severely affected small and medium-sized enterprises (SMEs). In 2024, around 24,000 SMEs closed down.
ISSUES WARRANTING CLOSE MONITORING
According to Mr Danucha, the three key issues requiring monitoring and attention are:
1) Promoting innovation and technology among SMEs: a World Bank report indicates that Thai businesses utilise innovation in their operations less frequently than their regional counterparts. This affects their competitiveness and can lead to business closures. Therefore, SMEs should be encouraged to access funding to increase their opportunities to adopt innovation and technology.
2) Ensuring severance protection for workers in the case of layoffs: the Labor Protection Act (1998) stipulates that employers must pay severance based on years of service when employees are terminated without misconduct. However, many workers, particularly those employed by foreign-owned establishments, have not received the compensation they are entitled to. Therefore, clear measures should be studied and implemented to ensure employees receive proper compensation.
3) High risk of unemployment among new graduates: surveys show over 89% of executives are reluctant to hire new graduates, perceiving them as lacking experience, skills, and possessing poor professional etiquette. As a result, companies are opting for freelancers or retired staff as replacements, or simply leaving positions unfilled. Therefore, new graduates must proactively develop both their skills and professional attitudes, while the education sector needs to urgently adapt its teaching methods to better prepare students for the workforce.