29.11.2022

The conflict in Ukraine and Thailand’s cost of living crisis

The country’s most vulnerable are stuck between a rock and a hard place.

“The driving was fine during the COVID pandemic. The roads were empty, the gasoline was cheap and there was a lot of work.” Kate has been a Lalamove driver in Bangkok for the past two years. “I left my previous job in a night restaurant because, as a driver, I could work from 10am to 6pm and I’d be able to go home a couple of times a day and check on my child.”

On 24 February 2022, Russia invaded Ukraine. To date, at least 38,000 people have died in the conflict, 14 million have been displaced and the war has cost US$350 billion in property damage. There’s no military or diplomatic solution in sight. The conflict’s economic fall-out is being felt all over the globe. Even by Kate.

“Since February, I have been working from 6am to 8pm to make the same money I made during the pandemic. With the longer hours, I can no longer check on my child and she is home alone all day.” There are several hundred thousand drivers like Kate working in Bangkok. Along with countless other workers, Kate has seen her income drop significantly in the past eight months. “I have to drive 60 km to make just THB285 (US$7.95). I make THB20,000 (US$558) a month. But out of that, I have to pay gasoline which is getting more and more expensive.”

The cost-of-living crisis has impacted Thailand’s most vulnerable workers in a myriad of ways. What can be done to help them was the topic of a public forum organized by the Friedrich-Ebert-Stiftung (FES) Thailand Office and the Thai Labor Museum Foundation (TLM) on 6 November in Bangkok, attended by trade unionists, academics and representatives of Thailand’s political parties.

 

Rising cost of living in Thailand

Since February, the cost of living for ordinary people everywhere has increased dramatically. Inflation, driven by rising food and energy prices, has risen sharply in the US and Europe. This trend is reflected in Thailand’s economic woes. Data from the Ministry of Commerce, presented by Dr Kiriya Kulkolkarn, from the Faculty of Economics at Thammasat University, shows that inflation remained stable between 1 and 3 per cent for the past decade. In February 2022, the rate had increased to 5 per cent. By August it stood at 7.9 per cent.

This has affected workers in concrete, measurable terms – Thais have less buying power and after two years of the COVID-related economic downturn, many citizens have had to take on debt, often to loan sharks who charge extortionate interest. People like Kate work harder and longer hours, but have less money to pay for basic food items which leads to malnutrition, especially among children. Some parents have had to take their children out of school, as they can no longer afford associated tuition fees.

With no end in sight for the conflict in Europe, Dr Kiriya warned of a coming ‘stagflation’. With inflation and prices for necessities likely to continue to rise in 2023, life will become ever less affordable for Thailand’s workforce and price hikes will spread to sectors beyond energy and food.

 

Government responses to the cost-of-living crisis

Governments around the world have responded to the cost-of-living crisis and introduced different measures to help society’s most vulnerable. Spain offered free train tickets and Germany introduced a €9 (US$9.35) train ticket, valid for a month on all regional and city trains. People left their cars at home, thereby reducing petrol consumption and saving many drivers significant expenditure. 7.5 per cent of Germany’s GDP was reinvested to reduce taxation on oil and gas and energy companies were pushed to hand over some of their profits.

Since May 2022, the Thai government has introduced a number of measures designed to help people navigate their increasingly challenging financial situations.

3.6 million citizens who hold state welfare cards have had their cooking gas subsidies increased from US$1.26 to US$2.79. 5,500 street vendors qualify for a US$2.79 per month reduction in cooking gas fees. Some 157,000 registered motorcycle taxi drivers receive a US$6.79 subsidy a month. The price for NGV is capped at US$0.44 per kg, while taxi drivers have been paying US$0.38 per kg. Households that use less than 300 units worth of electricity a month (May to July) have been eligible for a price reduction of 22 stang per unit. The price of diesel has also been capped, though this, as Dr Kiriya pointed out, primarily benefits wealthy people. Social security insurance payments have been reduced for both informal and formal sector workers. More recent measures include LPG gas price reduction for street vendors and people holding state welfare cards.

The government has asked petrol sellers not to raise their prices. Petrol companies have been asked to keep diesel at US$0.98 per litre and to reduce the price of petrol. Thailand’s PTT has been asked to funnel some of their natural gas extraction profits into a petroleum fund. The government is also asking the private and public sectors to save energy. But none of these measures are binding.

Mrs Poonsap S. Tulaphan of Homenet Thailand summed up the situation in stark terms. Thailand’s workers face the 4 Cs - four major challenges that are all connected - COVID, conflict, climate change and the cost of living. Mrs Poonsap pointed out that a bowl of noodles currently costs THB60 (US$1.67). But with many construction workers only earning around THB300 (US$8.37) a day, with street food vendors increasingly banished from public spaces and portions getting ever smaller, life gets ever harder. As food production is in the hands of a few huge companies, there’s little room for redress and ordinary people have no voice. She pointed out that many workers have had to sell their tools to make ends meet.

There is little social security, particularly for informal workers, who don’t get maternity leave or compensation if they can’t work. As everyone works longer hours for less food, there’s been a notable rise in domestic violence. For women like Kate, the Lalamove driver, day care centres are sorely lacking.

Price controls, job security, just laws, transition to clean energy, special measures for women, singles parents and other vulnerable members of society and the expansion of organizations that represent workers must be prioritized if ordinary peoples’ situations are to improve.

 

Food, clean energy and gender gap

Mrs Poonsap also pointed out that menial workers are particularly affected by the high pollution levels in Thailand’s urban areas. Trash collectors, motorcycle drivers and street food vendors are at the forefront of those struggling with high PM 2.5 levels.

Environmental concerns is a case in point. A Mr Chalerm Changthongmadan of the Association of Motorbike Taxi Drivers pointed out that most riders could not afford electrical motorbikes that currently retail for THB100,000 (US$2,789.83). These bikes are environment friendly. As they don’t accelerate as quickly as petrol driven bikes, they help decrease the accident rate. But there are no subsidies for riders to purchase these bikes. Solar panels are another flash point. They are taxed so highly that most people can’t afford them.

Dr Sustarum Thammaboosadee from the College of Interdisciplinary Studies at Thammasat University framed the cost-of-living crisis as a rich versus poor issue. He suggested that in the current climate, as the gap between the haves and the have-nots continues to widen, even the middle class is finding it hard to make ends meet. This in turn has led to a toxic masculinity crisis with men finding it hard to shoulder most responsibilities in a country where both government officials and companies are reluctant to recruit women because they assume that women are more likely to quit after childbirth. There’s a pervasive attitude amongst the country’s leadership that welfare makes people lazy and that if there’s free education people will not be eager to study. To work towards solving these fundamental issues, money needs to be put into education, transportation and a welfare policy that offers universal social security.

 

Fair minimum wage and social welfare to tackle the crisis

Dr Chutinat Chinudomporn of the Confederation of Medical Doctors rounded off the discussion, suggesting that the country’s minimum wage of THB354 (US$9.88) was simply no longer sufficient to survive and that the true cost of living was around THB700 (US$19.53). There’s a need to reform so that everyone gets enough subsidies to survive, including the elderly, those suffering physical and mental illnesses and the country’s migrant workers who have little wage security or representation. Even doctors and nurses work too many hours and while numerous establishments and institutions try to weaken workers’ representation, there’s an acute need to unionize further for all members of society.

Representatives from political parties offered a mixed bag of proposals to address the crisis. Following recent demonstrations by motorcycle riders, Democrat party representative and MP Dr Pisit Leeahtam asked the Ministry of Labour to register riders into the social security system. Dr Pisit also advocated solar cell access for all citizens but conceded that current prices excluded low-income citizens. Wiroj Lakana-adisorn, a former MP of the Move Forward Party, suggested Thais should not work more than 40 hours a week, have two days a week off and receive basic welfare. Thailand should stop buying energy from other countries and local energy companies needed to be confronted over their profits.

Dr Paopoom Rojanasakul, deputy secretary-general of the Pheu Thai Party, suggested that inefficiency in the public and private sector contributed to the crisis and that citizens had to pay fees for services and products that did not exist. Dr Paopoom proposed a debt moratorium in the agricultural sector as this would immediately benefit a large number of people.

All party representatives mentioned that reform of the minimum wage was essential, though there was little agreement on how this was to be achieved. With an election likely in 2023, participants agreed that Thailand’s future should be greener and that all Thai citizens should have access to social security and receive a fair minimum wage.

Tom Vater is an Asia based writer and editor, the author of 20 books, several documentaries. His feature articles have appeared in The Wall Street Journal, The Economist, The Daily Telegraph, The Guardian, Nikkei Asia etc.

The views expressed in this article are not necessarily those of FES.

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