UTCC survey finds workers' debt burden at highest level
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Workers are shouldering their highest debt burden in five years, due mainly to the rising cost of living and despite the increase in the daily minimum wage to Bt300 this year, according to a survey by the University of the Thai Chamber of Commerce.
The UTCC survey shows that the average working family’s debt burden has risen significantly and is approaching a dangerous level, with workers bringing in less than Bt15,000 a month needing to borrow more from loan sharks because of a lack of liquidity.
Based on the survey derived from 1,200 respondents, the UTCC found that the debt burden among workers had hit Bt188,774 per family this year, some 12 per cent higher than the average of Bt168,517 recorded last year.
Of the total debt value, 50.4 per cent was accounted for by loans from banks or other financial institutions, while 49.6 per cent was money borrowed from underground lenders.
The survey also found 64.6 per cent of respondents to have a debt problem, while about 70 per cent with a liability burden have had a problem repaying their debt during the past year.
Thanavath Phonvichai, director of the UTCC’s Economic and Business Forecasting Centre, yesterday said Thai workers now faced a more serious situation in regard to their spending and debt burden because their incomes could not cover the skyrocketing cost of living.
“The major concern for rising debt is that people are turning more to underground loans. They will soon face problems concerning their ability to pay back to loan sharks, and that will lead to many other problems, including financial status, and criminal and social problems,” he said.
To resolve the problem, the UTCC suggests the government should urgently address the rising cost of living and provide more liquidity for those whose monthly incomes are below Bt15,000.
The main reasons cited by workers for borrowing more are to meet their higher living costs, including rising school fees, and the desire to purchase permanent assets, in particular a house and car.
More respondents than in previous surveys also said that they had to borrow more in order to repay underground lenders, while they also found they had to draw on their savings.
Thanavath said this was a dangerous trend, as it meant workers would have less ability to repay their debt each year.
If the cost of living continued to increase to a level that exceeded consumer incomes, the debt problem would increase dramatically and cause problems for the whole country, he warned.
Consumers are also concerned about the country’s economic growth this year. The dual problem of higher debt and the rising cost of living has led to worries that economic expansion will be slower than previously expected, he said.
Thanavath added that respondents expected the economy to experience slower growth through to the fourth quarter, if there were no additional positive factors driving it forward.
In addition, the survey found that workers generally disagree with the government’s high-subsidy price for rice, while rice farmers want the project to continue.
Workers said the high pledging price had contributed to the higher cost of living, while also resulting in corruption and huge losses for the country as a whole.
