The Policy Applications of NTA in Thailand

The Policy Applications of NTA in Thailand NTA Team Office of the National Economic and Social Development Board Regional Meeting on National Transfer Accounts in Asia, 3 Dec. 215 1

1 Thai NTA: Background and Results 2 Uses of NTA in Thailand 3 Lesson Learned and Future Plan of NTA in Thailand 2

Background of NTA in Thailand NTA Regional Project supported by UNFPA and IDRC 22-3 NTA for 6 & 9 by TDRI Assoc. Prof. Mattana Pananiramai Assist. Prof. Nongnuch Soonthornchavakarn 26 27-11 NTA of Thailand was compiled for the first time by Assoc. Prof. Mattana Pananiramai Dr. Amonthep Chawala Mr. Santichai In-orn 212 Sub-committee on Implementation of Population Policy and Plan agreed that NTA should be complied continuously & sustainably NESDB compiled NTA 211 with supports from UNFPA 213 Problems NTA requires substantial data from household surveys, NI and population projection, so as knowledge about these data High turnover of researchers, which caused inconsistencies between series 3

NTA Thailand under NESDB NESDB Formulating a 5-year economic and social development plan National Accounts Social Database & Indicator Giving policy recommendations and advice to the cabinet Monitoring and evaluating National Plans and other related policies Population Projection NTA 4

Data & Method Aggregate Control NI 213 (NESDB) Age Profiles Population SES 213 (NSO) Health and Welfare Survey 213 (NSO) Education Statistics 213 (MOE) Population Projections 21-24 (NESDB) Method Simply follows the NTA Manual (213) 5

Results: Life Cycle Deficit Consumption and Labour Income, per capita value (THB), year 213 18, 16, 14, surplus Thai population had an income surplus during the ages of 25-59. 12, 1, 8, 6, 4, 2, deficit deficit The rest age groups (-24 and 6+), on the other hand, had consumption expenditure higher than their labor income and incurred a deficit. 5 1 15 2 25 3 35 4 45 5 55 6 65 7 75 8 85 9 95 Consumption Labor Income 6

Labour Income Annual Per-capita Labour Income (THB), year 213 18 16 14 12 1 Labor income is highest at age 35, with average income of THB 166,41 per person per year. Then, the labor income gradually decline until reaching zero at the age of 9 8 6 4 2 5 1 15 2 25 3 35 4 45 5 55 6 65 7 75 8 85 9 95 Employees Self-employed Compensation of employees accounts for larger share of labor income when population is in early working ages. However, self-employed labor income has increasingly become the main source of labor income when population gets older. 7

Consumption Consumption by type, per capita value (THB), year 213 16 14 12 1 8 6 Most of the consumption expenses are paid by private sectors. Public consumption is large on education for children and health services for elderly. 4 2 5 1 15 2 25 3 35 4 45 5 55 6 65 7 75 8 85 9 95 Public Education Private Education Public Other Private Other Public Health Private Health Similarly, out of pocket education expense is made during childhood and out of pocket health care expense increases after retirement. 8

NTA by Income Quintiles 4, 35, Income per capita, 213 4, 35, Consumption per capita, 213 3, 3, 25, 25, 2, 2, 15, 15, 1, 1, 5, 5, 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 YL Q1 Q2 Q3 Q4 Q5 C Q1 Q2 Q3 Q4 Q5 Large income difference in Thailand, particularly between the richest income group (Q5) and the rest (Q1-Q4) On consumption, similar degree of difference across income groups. Figure also suggests that only those in the top 3 income groups can afford to go to universities. This implies that there s still inequality in access to tertiary education in Thailand. 9

Sources for Consumption Shares of each income sources to finance consumption, 213 2, 15, 1, 5, -5, -4 5-14 15-24 25-59 6+ labor income asset-based reallocation public transfers private transfers Children s consumption (-14) is financed entirely by transfers, particularly private transfers. Income sources used to finance teenager s consumption (15-24) are mixed. Yet, private transfer remains a dominant income source. Unsurprisingly, working-age s consumption (25-59) is mainly financed by labor income. The surplus is reallocated to the other age groups. For the elderly group, 5% of consumption expense is mainly financed by asset based reallocation, and around 3% by labor income. 1

1 Thai NTA: Background and Results 2 Uses of NTA in Thailand 3 Lesson Learned and Future Plan of NTA in Thailand 11

Demographic Situation in Thailand the Recent Past Trillions Baht 1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 21 26 6 5 4 3 Real GDP 16,955 Baht 2 1 GDP per capita 1,438 Baht Sharp changes in age structure with large workingage population from mid- 198s has caused the Thai economy to grow rapidly. 12

Demographic Situation in Thailand the Near Future Fertility Rate Age Structure 15.8 66.1 18.1 215 24 1.62 6+ 15-59 -14 32.1 55.1 12.8 1.3 6+ 15-59 -14 Singapore Brazil Thailand Sri Lanka China Japan UK SPEED of AGEING Number of years for population age 65+ to increase from 7% to 14% 19 21 22 23 26 26 45 Thailand is ageing much faster than developed countries Support Ratio USA Sweden 69 85 France 115 4.2 : 1 1.7 : 1 2 4 6 8 1 12 13

Policy Advocacy: How can we prepare for rapid ageing process? Increase the surplus of working age group to support the higher deficit from an increasing size of dependent elderly. o Increase labour productivity. o Increase labour participation by encouraging elderly to work longer and promoting youth employment. Promote healthy behaviours to lessen health care cost especially from dependent elderly. 5 1 15 2 25 3 35 4 45 5 55 6 65 7 75 8 85 9 95 2, 15, 1, Ensure income security after retirement. 5, -5, -4 5-14 15-24 25-59 6+ labor income asset-based reallocation public transfers private transfers 14

Uses of NTA in Thai Policy Matters NTA provides empirical evidence on the pattern of income and consumption of Thai people across ages as well as on how currently-implemented policies support the consumption of population. NTA results for Thailand has been presented as part of the current situation of Thailand in the NESDB s annual conference in 214 Human Development for the Future of Thailand 15

Uses of NTA in Thai Policy Matters Results of NTA and the simulation on how changes in population structure would affect patterns of income and consumption in the future were incorporated in the drafting of Population Plan during the Twelfth National Economic and Social Development Plan (217-221) LCD projection for the year 24 16

Uses of NTA in Thai Policy Matters Aggregate Labour Income & Consumption (Mil. Baht) 18 16 14 12 1 Both extending retirement age and increasing productivity will likely help raise aggregate labour income of the Thailand. 8 6 4 2 5 1 15 2 25 3 35 4 45 5 55 6 65 7 75 8 85 9 95 C YL YL1 YL2 YL3 YL = base case YL1 = raise retirement age YL2 = productivity increases 3% per annum YL3 = raise retirement age with 3% per annum productivity increase 17

Uses of NTA in Thai Policy Matters Public and private consumption for children in early ages has been used as empirical support for government s decision whether to implement the Child Support Grant 1 8 6 4 2-4 5-14 15-24 25-59 6+ Public Consumption Expenditure Private Consumption Expenditure 18

1 Thai NTA: Background and Results 2 Uses of NTA in Thailand 3 Lesson Learned and Future Plan of NTA in Thailand 19

Success Factors of the Thai NTA Experts - In-depth knowledge of NTA and population issues - Dr.Sarawut, Dr.Mattana, Dr.Amonthep NTA Thailand UNFPA-Thailand UNFPA-APRO - Knowledge- and skill enhancement - Financial supports for NTA activities NESDB data, staff, current compilation, policy-applications 2

Thailand s Next Steps More in-depth analysis of NTA More policy applications Public expenditure for children were mainly on compulsory level After age 24, education consumption dropped markedly Public expenditure was lowest for working ages Elderly financed most of their consumption from asset income Start investing on early childhood Promote life-long learning Invest more on productivity Consider establishing old-age security system Building NTA network in Thailand Promote public awareness of NTA 21

Thank you www.nesdb.go.th 22

Results: Aggregate Consumption and Labour Income 2, Per capita values 1,2, Population structure 15, 1,, 1, 8, 6, 5, 4, 1 2 3 4 5 6 7 8 9 Consumption Labor Income 2, 1 2 3 4 5 6 7 8 9 Aggregate Consumption and Labor Income (Mil.Baht) Year 213 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, surplus deficit deficit 5 1 15 2 25 3 35 4 45 5 55 6 65 7 75 8 85 9 95 Consumption Labor Income 23

Purposes Concerned Parties Materials Activities in 215-216 Jun Jul Aug Nov Dec 216 NTA Dialogue NTA Team Meeting NTA Conference NTA Training To raise awareness with counterparts To find prospective participants of NTA training To prepare NTA team for the NTA training To help revise manual and NTA Report To release NTA results and report To raise awareness and understanding with key users To expand NTA network in Thailand To distribute NTA knowledge Revised and Updated NTA Report Thai NTA Manual Info-Graphic UNFPA counterparts, NESDB, TDRI, IPSR, CPS NTA team (NESDB) UN agencies, Line ministries, educational institutions, research institutions, relevant private organizations NESDB, HelpAge, BOT, MOF, MOPH, TDRI, relevant private sectors 24