Unraveling the Structural Paradox of Thailand’s Labor Market

In Thailand, a seemingly low unemployment rate conceals underlying structural problems, including a shrinking workforce and difficulties faced by young workers. Comprehensive and urgent reforms are essential to ensure long-term stability.

Key Points

• Unemployment at record low: Thailand’s unemployment rate fell to 0.81% in late 2025, the lowest in 11 years. However, this masks deeper structural weaknesses.
• Labor force shrinkage: The decline is driven by more people leaving the workforce (30.2 million in 2025, up 2.23% since 2020), especially retirees, caregivers, and those opting out for personal reasons.
• Dependency ratio rising: With an aging population, the burden on working-age Thais is increasing. By 2024, 100 workers supported ~59 dependents (children + elderly).
• Youth employment challenges: Jobs for workers aged 15–24 contracted by 3.4% YoY in 2025. Full-time and overtime opportunities fell sharply, pushing many graduates into informal work (freelancing, delivery, online sales).
• High informal sector share: Over 52% of workers remain in informal jobs, lacking income stability, benefits, and legal protections.
• External pressures: Global trade tensions and Middle East conflicts raise production and transport costs, squeezing Thai businesses. Around 2.6 million workers (6.5%) are at high risk of reduced hours or layoffs in vulnerable industries (agriculture, construction materials, chemicals, plastics)

As we celebrate low unemployment rates globally, we must recognize the complexities within the labor market. Thailand’s unemployment decreased to 0.81% by the end of 2025, a rate that appears to showcase economic strength. However, the truth is different—Thailand’s economic growth is slowing, and household incomes have dropped, raising concerns about the labor market’s genuine stability.

SCB EIC identifies three critical structural vulnerabilities in Thailand’s labor market: a declining labor force, challenges for new graduates entering the workforce, and external factors negatively impacting employment. Consequently, the number of people outside the labor force has risen, indicating a troubling trend where unemployment figures may not accurately reflect worker experiences.

Looking ahead, Thailand must address these structural issues, including skill enhancement, support for an aging society, and improving job access for younger workers. Without urgent action, the labor market may face growing challenges that lead to long-term crises rather than temporary illusions of stability.

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