Study examines main factors in income inequality
Inclusiveness, equality and fairness are the three areas Thailand should ponder if it wants to address the widening income gap, according to a paper to be presented at the Bank of Thailand Symposium.
Authored by Korbsak Phutrakul, an executive vice president of Bangkok Bank, the paper on “Growth with Inequality: challenges and solutions” concludes that Thailand has not yet achieved a satisfactory result in wealth distribution despite stark economic growth.
In the past three decades, Thailand’s economic growth has raised per-capita income dramatically. The number of households with annual real-term income (income after inflation) of Bt20,000 or more grew from 4,000 in 1988 to 230,000 in 2011.
Despite the improvement, growth has been concentrated in Bangkok and other manufacturing centres. Income inequality is high, as the income gap of the haves and have-nots is 25.1 times against the average of 4.3 times in developed countries.
By inclusiveness, poor households should have the chance to grow their income faster than the households on top of the income pyramid. By equality, everyone should be entitled to equal opportunity regardless of place of living and parents’ status. By fairness, they should be allowed to compete freely, Korbsak said. “In the three areas, Thailand scores half of the full points.”
Thailand hits a high score when it comes to income distribution. About 90 per cent of households stay in the middle of the income pyramid, while those at the bottom saw faster income growth than those on top. Geographical disadvantage has been blurred as rural areas become more urbanised.
Thailand has to improve equality in education and access to funding. Poorer test scores of students in the provinces showed unequal opportunity in education. Without bank branches, rural people have no saving tools.
As the poorest 5 per cent of households are still denied access to national wealth, the first 1 per cent can snatch the biggest benefits from economic growth. The number of households with poor senior members is on the rise.
Thailand has to rebalance economic policies to focus more on inclusive growth. This will narrow the widening class gap.
This can be done in three ways – offering more opportunities to rural people, preventing the rich from snatching an excessive share, and building basic welfare to help the underprivileged.
“The strategy will work systematically in addressing our weak points and lessening inequality in income distribution. This will lead to healthy growth and true success in economic development.”
This is one of six papers to be presented at the annual symposium, which is held tomorrow and Friday.
