Thailand Economy

My previous post about the Health Care system in Thailand raises the question of 'How can they do it'?

I am not an economist but I do have thoughts (as you can imagine) about it. Thailand recently hiked their minimum wage to 300 baht a day. I will do the math for you. That is $10 a day. Yes, day, not hour and a day is often 12 hours, not 8.

Here is a chart that displays the wages for high school, college, and university grads.

As you can see, the wages are much, much lower than in North America. When doing the conversion, simply divide by 30 to get US$.

It begs the question, how do Thais survive? You can have a delicious meal for 40 baht on the street. Most Thais live in a one room apartment at a rate of $5,000 baht a month. There are usually at least 2 staying in the apartment. One must remember I am describing lo-so Thais not hi-so. There is not much of a middle class and lo-so make up probably 90% of the population which is largely agrarian in nature.

Now for the kicker ... Thailand has approximately 0% unemployment! Everybody that is able bodied and sound of mind has some kind of job and income. How does this happen? well, for one reason, there is no welfare system so if you wish to eat, you work. The second reason, is there are no unions that jack up the wage rates for jobs that do not rate a salary higher than the free market would grant.

It also means that you will see 4 Thais doing the job that one farang would do in North America. There is little automation. You will always have a parking lot attendant rather than an automated pay system. In North America we automate and lay off an employee to save costs of doing business.

Thailand produces most of the world's pickup trucks, computer hard drives, motorcycles (Ducati, Triumph, Honda, etc.). These companies locate in Thailand because labour costs are low. Where did these jobs come from? North America and Japan. Labour unions priced their workers out of the global marketplace. Government social assistance programs make work optional for those unemployed. This all leads to very high taxes in developed countries.

Most Thai workers do not pay income tax. Instead, the vat (value added tax) brings in most of the government revenue. Remember there is no social assistance programs, unemployment insurance, or free health care (past a certain point) to pay for.

The bad news is that cars, trucks, and motorcycles (despite being made in Thailand) are twice as expensive as they are in North America due to the vat.

It's a very interesting country especially from a farang perspective. More later ...