An estimated of 8.3 million Thais, namely employees in the tourism and service sectors, will lose employment or income because of the COVID-19 outbreak, according to a new World Bank report on Tuesday.
The number of the economically insecure, or those living below US$5.5 per day, is projected to double from 4.7 million people in the first quarter to 9.7 million people in the second quarter of 2020, said the World Bank.
Workers in the manufacturing and service sectors will be most affected, where the number of economically insecure individuals from these two groups will rise by three-fold from 6 per cent to 20 per cent.
The bank recommends for the Thai government to extend its social protection coverage to ensure that no gaps remain for the elderly and migrant workers.
The report also recommends continuing cash transfers for the most vulnerable groups while linking it with training workshops or other state support that could create income-generating opportunities.
“For vulnerable firms, the nature of support will need to shift from emergency relief to more support for productive firms that are still standing,” said Kiatipong Ariyapruchya, World Bank’s Senior Economist for Thailand.
“This includes redirecting fiscal support from emergency measures to temporary job creation programs by easing firm participation in public procurement and public works,” he said.
It will take more than two years for the Thai economy to return to the same output levels before the outbreak, according to the World Bank.
They now expect the country’s GDP to shrink by 5 per cent. The Bank of Thailand (BOT) now expects the economy to go into a recession of 8.3 per cent.
The World Bank said Thailand has been “successful” in containing the outbreak over the last three months, but the economic impact has been “severe”.
They added that tourism and export were hit the hardest with prediction that exports will contract by 6.3 per cent, compared to the BOT’s projection of 10.3 per cent contraction in export value.
In the second half of 2020, Thailand’s economic recovery will be “gradual and uncertain” and the economy is projected expand by 4.1 percent in 2021 and by 3.6 percent in 2022.
The represents a “slow recovery” to pre-outbreak GDP output levels by mid-2022.
The downside risks to the recovery include weaker global growth, weak tourism, and continuing trade and supply chain disruptions, they added.
“As the recovery phase begins, a key challenge will be on how to help the people unemployed reconnect with the labor market,” said Birgit Hansl, World Bank Country Manager for Thailand.
“Active labor market measures, such as wage-subsidies targeted to individuals in the most vulnerable sectors, and for on-the-job training to promote reemployment should be explored,” he said.