Thailand’s labour market faces three shocks as war, AI and EV shift bite

Thailand’s labour market is entering a more fragile phase, with the National Economic and Social Development Council warning that workers face three major pressures: the conflict in the Middle East, rapid advances in artificial intelligence, and the shift towards electric vehicles.

Danucha Pichayanan, secretary-general of the NESDC, said while overall employment was likely to improve on the back of expansion in agriculture and services, the latest figures also showed warning signs, particularly a rise in unemployment in the previous quarter.

In the first quarter of 2026, Thailand had 41.2 million employed people, up 4.6% from a year earlier. However, the unemployment rate rose to 0.94%, or around 390,000 people, compared with 0.88% in the same period last year and 0.70% in the previous quarter.

The NESDC said a key concern was that most of the unemployed were people who had previously held jobs. Long-term unemployment, defined as being out of work for more than one year, rose by 27%.

The number of quasi-unemployed workers also increased by 3%, particularly among non-agricultural workers. Hidden unemployment has continued to rise, especially in the agricultural sector and among workers with lower levels of education. In 2025, this group increased by 17.8%.

Middle East conflict could hit jobs and incomes

The NESDC said the conflict in the Middle East must be closely monitored because of its potential impact on employment and workers’ incomes, particularly through higher energy and operating costs for businesses.

Many workers are already under pressure from the high cost of living, while a large share remains in the agricultural sector. The agency said Thailand should accelerate efforts to raise productivity and create supplementary occupations so workers can increase both their working hours and income.

Average working hours remained broadly stable at 40.9 hours per week. In the private sector, average working hours stood at 43.9 hours per week, while 6.1 million workers worked overtime of 50 hours per week or more.

Average wages fell to 16,145 baht per person per month, down 0.6% from the same period last year. Wages for self-employed workers dropped 2.5% to 16,852 baht per person per month, while wages for formal employees rose slightly by 0.7% to 15,675 baht.

After adjusting for inflation in the first quarter, real wages for formal employees increased by 1.25%, while those for self-employed workers fell by 1.93%.

AI disruption affects 8.7 million workers

Danucha said future unemployment risks were increasingly linked to technological change, especially artificial intelligence.

AI has moved quickly beyond its earlier limits into the era of generative AI, which can produce new responses on its own, and is now shifting towards agentic AI, which can plan, act and improve tasks across a full work process.

An assessment of occupations exposed to generative AI found that, in the fourth quarter of 2025, 8.7 million workers were affected, accounting for 21.8% of the total labour force.

Of these, 2.2 million workers were in the “task replacement” group, meaning their jobs faced a higher risk of being replaced. Most in this group had a bachelor’s degree or higher, at 55.8%, with an average monthly income of 27,820 baht and an average age of 36.5. Many worked in Bangkok and surrounding provinces.

Jobs most exposed to replacement include repetitive and rule-based roles, such as clerks, accounting staff and programmers.

A further 6.5 million workers were in the “task augmentation” group, where AI is more likely to support rather than replace work. Most of these workers had below bachelor’s degree education, at 72.7%, with an average monthly income of 21,506 baht and an average age of 42.3.

Their core tasks still depend heavily on human skills such as communication, negotiation and management, meaning AI is more likely to enhance efficiency than fully replace the role.

Even so, the NESDC said AI was creating structural risks in the labour market, including lower employment and fewer job opportunities for new graduates, especially in roles involving repetitive work or basic data analysis.

The agency also warned of “downshifting”, where workers move from higher-skilled jobs into lower-skilled work because lower-skilled roles are less exposed to AI disruption.

Routine jobs face a shrinking role

The NESDC said the advance of agentic AI and physical AI would reduce the role of jobs involving fixed procedures, repetitive logic, physical labour and practical operational skills.

Thailand must prepare for the impact by promoting broader AI adoption, developing data infrastructure and computing systems, and shifting the role of high-skilled workers towards becoming “AI managers”.

The agency also called for the development of laws and digital governance frameworks to cover labour protection and accountability in cases where AI causes damage, saying these measures would be important for future job security.

EV transition puts 110,000 auto workers at risk

The NESDC also highlighted employment risks linked to the electric vehicle industry, as EV growth in Thailand continues to accelerate.

Between 2026 and 2028, new EV registrations are expected to reach 125,000 units per year, growing by 3.8% annually.

At the same time, the government is targeting EV production of at least 30% of total vehicle production by 2030 and 50% by 2035. This means production of internal combustion engine vehicles is expected to continue declining.

The transition could affect auto-parts manufacturers, especially Tier 1 suppliers that deliver directly to vehicle assemblers and Tier 2 suppliers that depend on the production of combustion-engine vehicles.

The NESDC noted that an EV uses around 20 parts, compared with about 2,000 parts in a combustion-engine vehicle.

It expects that in 2025 and 2026, around 110,000 workers, or 16.3% of the automotive industry workforce, could be at risk of having to move into other industries. This is due to Thailand’s persistently low vehicle production and the inability of some parts manufacturers to adapt quickly enough to the EV transition.

The agency said relevant authorities should introduce measures to support both businesses and workers, including helping factories shift production towards new industries such as EV parts or medical devices.

Bad household debt rises to 1.31 trillion baht

The NESDC also reported that household debt in the fourth quarter of 2025 rose by 0.05% to 16.44 trillion baht. As a result, the household debt-to-GDP ratio increased to 86.7% from the previous quarter.

Loan quality continued to deteriorate. Data from the National Credit Bureau showed that non-performing loans, or loans overdue by more than 90 days, reached 1.31 trillion baht, accounting for 9.59% of total loans. This was up from 9.45% in the previous quarter, driven mainly by housing loans and personal loans.

Special mention loans, or loans overdue by 31 to 90 days, stood at 480 billion baht, or 3.51% of total loans, up from 3.09% in the previous quarter.

The NESDC said three issues required close attention.

The first was the spending behaviour of younger consumers under the age of 25, who tend to buy goods and services based on online reviews or trends. Outstanding credit-card debt in this group rose by 13.5%, while personal loans increased by 11.5% in 2025, the fastest growth among all age groups.

The agency recommended that financial literacy be strengthened from primary school level.

Virtual banks and finfluencers come under scrutiny

The second issue was the launch of virtual banks, which the NESDC said must be monitored because of the risk that they could encourage additional borrowing.

The agency cited China’s experience, where online credit systems made it easier for some borrowers to fall into debt cycles. It also pointed to the Philippines, where digital banks have recorded a higher share of non-performing loans than traditional banks.

The third issue was the influence of finfluencers on household financial behaviour in the digital age. Some may share incomplete or inaccurate information.

The NESDC proposed that finfluencer content be regulated by requiring registration with the Securities and Exchange Commission and the holding of a proper licence.

On consumer protection, the NESDC said complaints rose by 16.2% in the first quarter of 2026. It identified three major issues requiring close monitoring.

The first was the vulnerability of funeral welfare funds, some of which face liquidity shortages, fraud or sudden closure, affecting large numbers of members.

The second was new forms of online scams, including fraud involving collectible cartoon cards. In some cases, scammers use AI-generated images to trick consumers into placing pre-orders before disappearing with the money. The agency also cited cases of fraudsters luring people into investing in fake gold trading on online platforms.

The third issue was the continuing spread of pirated goods in both general markets and online platforms.

Thailand faces shortage of elderly care homes

Worawan Plikhamin, deputy secretary-general of the NESDC, also presented a special article titled “Elderly homes: The challenge at the end of life”, warning that Thailand’s transition into a super-aged society would greatly increase demand for elderly accommodation.

Thailand currently has only 96 elderly residential care facilities nationwide, with capacity for almost 16,000 people. The NESDC said this was far from enough to meet demand.

The scale of the shortage is reflected at the Ban Bang Khae Social Welfare Development Centre for Older Persons, where 6,000 people are on the waiting list, while the centre can accommodate only 250 residents. The waiting time is as long as 15 years.

The NESDC proposed structural solutions, including tax incentives and low-interest loans for the private sector to develop more diverse forms of elderly accommodation.

It also recommended that unused buildings or facilities be converted into elderly care centres, supported by housing and care systems that are connected with local communities.

The agency said social enterprises should be encouraged to work with local authorities to provide additional services, allowing older people to live sustainably and with quality of life in familiar surroundings.