More people become self-employed

Reporting on Thailand's social conditions in the third quarter, Suwannee Kamman, deputy secretary-general of the NESDB, the government think-tank, said yesterday that the global financial crisis and intense competition from China had put many people out of work, so many of them created their own businesses, particularly as traders and in the hotel and restaurant sectors.

The same effect was seen in other countries in the region.

People in the textile, furniture and cheap electrical home-appliance sectors were hit hard, as the industries were adversely affected by intense completion from other emerging countries, which could produce these products at lower cost. The global economic crisis had worsened the situation, Suwannee said.

Many workers had to leave export sectors to enter service businesses, which largely depend on domestic consumption. Moreover, newly graduated students also prefer to work at home due to the flexible work conditions.

While there are people who can make big money from their own businesses, many others earn very little and are currently not protected by the social security system, she said. Only about 8 to 9 million workers are covered. Most of the 23 million to 24 million farmers and other self-employed people are excluded.

 On the bright side, Suwannee said overall employment had improved in the third quarter due to the gradual economic recovery. The unemployment rate was 1.2 per cent of the total work force, improving from 2.4 per cent in January.

 The NESDB also is concerned about rising household debt, particularly the rise in informal loans. Suwannee said a recent survey of people indebted with "express cash" services by non-bank institutions and informal sources showed that 33.5 per cent of respondents were obligated to express cash services and 20.3 per cent were to loans from other sources. Low-income earners showed a higher proportion of debts from the informal sources than high-income earners.

 The main reason underpinned increasing reliance on express cash is the easy and fast approval process.

 Major borrowing purposes were for their daily expenses, education, working capital and for debt settlement.

 "The point of concern was the borrowing for instalment payment and debt settlement and students who borrow money to settle debts incurred from gambling and to spend on night entertainment," Suwannee said.

 The average loan burden under express cash services was Bt35,090 per head. Most borrowers were able to pay back loans, but 25.8 per cent of them had to borrow again to repay, landing them in a vicious circle of indebtedness.

 According to a survey by the National Statistics Office, during the first six months of the year, 61.8 per cent of households were in debt and the average debt per household was Bt214,684, up by 8.5 per cent from the same period the year before.