UN Common Country Assessment
Thailand,
1997-1998

 

Chapter 1 : Poverty and Inequality

Contents

Introduction

The incidence of poverty and growing inequality

Institutionalisation of Poverty

Agriculture and the Poor

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Introduction

Poverty is the underlying factor behind the implementation of the vast majority of United Nations development programmes. It also underlies the majority of the issues identified in this CCA. Thus, in many ways the issues identified in this first chapter act as the introduction to all the other issues. When reviewing the other issues in other chapters, readers should keep in mind the basic patterns, causes and consequences of poverty identified in this chapter.

Three concerns are outlined in this chapter on poverty and inequality. First, the measurement of poverty and the distribution of income that will provide the basis for the identification of the principal patterns and trends in poverty in Thailand. Second, the causes of poverty and the difficulties in its eradication are outlined in the section on the institutionalisation of poverty. Third, it must never be forgotten that despite the rapid and essentially urban-based economic growth, Thailand is still fundamentally an agricultural society. Not the traditional agricultural society and economy of old but one fundamentally transformed by the forces of commercialism and off-farm activities. Nevertheless, the village still provides the basic needs and ultimate social safety net for a substantial proportion of Thailandís population. Its further sustainable development must not be neglected in the face of perhaps more dramatic and appealing urban development.

The Incidence of Poverty and Growing Inequality

Declining incidence of poverty but growing income inequality

Thailandís rapid economic growth helps to explain the reduction in the incidence of poverty in the early 1990s. However, the economic growth experienced in Thailand, particularly in the late 1980s to early 1990s, did not reduce poverty as much as expected given the income inequality. While economic growth had a trickle down effect on poverty, the rich gained more than the poor and those in urban areas prospered more than those in rural areas. The current economic crisis could potentially further aggravate the growing inequality, since the burden of the crisis is heavier on the poor and lower middle class than on the rich. It will almost certainly also reverse the downward trend in poverty incidence, depth and severity.

It is clear that poverty in Thailand declined, although depending on how poverty is defined, the incidence of poverty varies. According to poverty estimates based on the World Bank poverty lines, poverty declined from 22% in 1988 to 9.6% in 1994. According to the World Bank Poverty line estimates, Thailand had already achieved one of the Eighth National Development Plan (1997-2001) goals to reduce poverty to less than 10% by 2001.

While the overall poverty fell, income distribution in Thailand become more skewed. A World Bank study revealed that the Gini coefficient for Thailand rose from 0.485 to 0.536 during 1988-1992. The share of income received by the top quintile (20%) of the population was 15 times the share of the bottom quintile, up from 12 times in 1988. Similarly, the top decile (10%) of the population received almost 28 times the income share of the poorest decile, up from 21 times. The sharp decrease in poverty despite the increase in inequality shows how strong was the effect of income growth. In other words, had inequality not risen, the reduction in poverty during 1988-1992 would have been greater.

Upon examination of various sources of income, the same study found that individual wages and salaries had become less unequal. At the same time, the share of wages and salaries to total income increased from 34 to over 40 per cent. However, better-off households were able to take more advantage of growing formal sector employment opportunities. That is, the source of inequality was the increase in the number of income earners in better-off households rather than the increase in individual wages. It may also be concluded that, among sources of income, the more critical sources of inequality were income from property and entrepreneurship.

Poverty Profiles

A recent NESDB study on poverty profiles for Thailand, 1997, carried out with assistance from ADB, was based on the five latest nation-wide Socio-Economic Surveys that are constructed in Thailand by the National Statistical Office every two years, covering all private households residing permanently in municipal areas, sanitary districts and villages. The study provides the most thorough analysis of poverty in Thailand. It is part of an ongoing effort of the NESDB to monitor poverty in Thailand. The study showed that in 1994 and 1996, 16.3% and 11.4%, respectively, of Thailandís population were identified as poor or did not enjoy the minimum basic necessities of life. These new poverty lines give higher estimates of the total poverty in Thailand than those based on the World Bank Poverty lines above.

Whatever poverty lines are used, poverty in Thailand is still primarily a rural phenomenon. The Northeast is still the region with the largest incidence of poverty, i.e. 19.4% as against 11.4 % for the Whole Kingdom in 1996 although there has been downward trends in poverty in all regions during 1988-1996. The poverty profiles reveal the nature and characteristics of the poor with regard to household size, age, educational level and occupation of household head. They show that poverty increased monotonically with the household size. The percentage of poor among households were distributed somewhat equally among 30 to 59 age groups, the incidence of poverty rising with the heads of household aged 70 or higher. It is evident that heads of the poor households have much lower levels of education than have those of non-poor households. The poverty estimates reveal that poverty is highest among agricultural households (18.8%).

These profiles can be used as effective tools to evaluate and monitor poverty at the national, regional and household levels. Because large pockets of severe poverty still exist despite the beneficial effects of economic growth, a more targeted approach is needed to speed up the process of poverty alleviation. With the information on poverty profiles, a more accurate targeting of the poor could be designed to achieve a more effective programme of poverty alleviation.

Human Poverty

UNDPís Human Development Report 1997 introduced a new Human Poverty Index (HPI) which is a composite index incorporating three elements of poverty deprivation: probability of death at an early age; lack of knowledge (education); and lack of access to health, safe water and adequate nutrition. The report laid the groundwork for a broad discussion of the concept of poverty to reflect multi-dimensional distinctions between human poverty and income poverty. Thailand HPI rank of 11th from the top in a ranking of 77 developing countries reflects the overall improvements in health, education and living standards that have been made in the last thirty years.

Womenís Deprivation

The situation of Thai women in society may appear to be better than in many Asian countries; the Gender-related Development Index ranks the position of Thai women at 40th out of 174 countries, whereas the Gender Empowerment Measure ranks Thailand in 60th place. However, a lot still needs to be done to improve the plight of Thai women, especially those with lower levels of educational attainment. Net enrolment ratio of females at the primary level as a percentage of males in 1995 was approximately 70 per cent. Women workers receive lower wages, earn less income and work longer hours. As unpaid family workers, their contributions to the family and society tend to be undervalued, even by themselves.

Poverty and the Crisis

NESDB, with assistance from ADB, has recently made an attempt to measure the impact of the crisis on various groups of people classified according to certain socio-economic and demographic characteristics, namely sex, age, education, geographical region, migrant status and areas. It is generally believed that the crisis has affected urban areas more severely than rural areas. The study concluded that the crisis has had a significant impact on unemployment in both rural and urban areas, but that the impact in urban areas has been the most severe. The crisis has contributed significantly to a reduction in real income in all areas. However, the magnitude of the reduction is much higher in municipal areas and sanitary districts compared to that in villages.

It was found that overall the crisis has had a significant adverse impact on unemployment as well as on real income across all regions. Since the Northeast has been the poorest region, the crisis would have impacted peopleís living conditions most severely there. In the Northeast, it was found that the crisis had contributed to a reduction of real income by 25% and to an increase in the unemployment rate of 4.8%.

Among occupational groups, the crisis had significantly increased the unemployment rate among low-income earners, namely clerical, transport and communications, process workers and labourers, and service and recreational workers. The crisis has not affected significantly the unemployment rate among professional and technical workers although their income had declined significantly. The age groups 16-18 years and 19-24 years had been among the most severely affected by the crisis, the unemployment rate of these two age groups in the crisis period having risen to 11.8% and 10.8%, respectively. The crisis had also significantly increased the unemployment rate among people with secondary and elementary education, while people with university education had suffered the greatest declines in their real income.

Because of strong adverse impact of the crisis on rural income and employment, it is likely that the general downward trends in the incidence of poverty would be reversed in 1998 when economic contraction is forecast at a record 8%. Some estimates place the incidence of poverty at the end of 1998 at 20 per cent which would essentially have wiped out the gains of the previous years.

Institutionalisation of Poverty

They were always poor

In discussing poverty in Thailand, it is usual to point out the wide, and widening, income gap between the urban (especially Bangkok) and the rural populations. Regional disparity, especially the relative poverty of the Northeast, is often mentioned. This is not a new phenomenon, however, but can be traced back long into the past. The current situation of the rural farming communities, which comprise the majority of the Thai population, is not a decline from a position of equality, but is a continuation of an earlier set of socio-economic relationships. There have been tremendous changes, and significant advances, but the essential dichotomy of social position and resultant attitudes remains as a significant barrier to real social development. Clearly, most of the decisions that influenced the lives and livelihood of the rural poor were, for the most part, not made by the poor themselves but by politicians, bureaucrats, technocrats and the urban rich. Although the communities were weak relative to the power of elite groups they none the less had access to strong and supportive local cultures. Land was abundant, as was a rich environment from which to obtain food, housing, medicines and other basic necessities. There was little necessity for cash. Basic moral education was provided through the village temples and livelihood skills were passed down over the generations.

A different type of poverty

Over the last century a number of influences have combined to change radically the nature of the rural communities. Building a modern nation state from the various ethnic and linguistic groups that reside within the borders of contemporary Thailand has been successfully achieved, but often at the cost of weakening and marginalising the local folk cultures. At the present time cash has become the principal measure and the requirement to obtain access to land and other resources, to establish houses, to obtain education and health care, food, and even marriage partners.

A key feature of the current rural economy is the need to access cash or cash loans to produce for either subsistence or sale. The new agricultural technologies are high risk and have directly led to severe levels of debt throughout the rural areas. Many farmers have not been able to deal with their debt problems, resulting in the loss of their farmland. Their response has been either to seek new, and generally poorer, land in the forest and border areas, or to migrate with thousands of other unskilled workers to the towns.

For marginal and poor farmers the dominant agricultural technology has led to indebtedness and the loss of land. For those who continue to farm their lands, there has been a growing dependence on off-farm income to subsidise the farming operations and to provide cash for consumption, educational and health requirements. The massive labour migration of recent years is at least partly in response to the fact that current agricultural technologies cannot provide for the needs of the rural poor. The social impacts of this process include the fragmentation of communities and households with a resultant further weakening of supportive local cultures. In some cases, desperate, unskilled, marginal households have little alternative than to allow children to seek money through prostitution. For many this will lead to further burdens as HIV positive children return to the communities.

On the positive side successive governments have funded the creation of an impressive rural infrastructure. Road networks, schools and health facilities and water supplies are in place although for many these remain unrealised potential. Few of the rural poor proceed beyond primary school.

A clear trend has been the declining share of wealth among the poorest of the poor despite the recent (until the crisis at least) reduction in the overall incidence of poverty described in the previous chapter. This exacerbation of the condition of the poorest is likely to get worse as the effects of the crisis unfold. An evaluation of government anti-poverty programmes in Thailand by the World Bank indicated that poorest were rarely targeted and that the amounts actually allocated for such programmes represented a very small proportion of total budgets. Fundamental to the success of programmes to break the vicious circle of poverty will be the establishment of grass-root institutions that will allow the participation of the poor in structures that can lead to their empowerment. The Forum of the Poor represents one such institution, and the people-centred strategies of the Eighth National Development Plan attempt to formalise many such appropriate strategies. The forum of the poor, regardless of its lack of formal legitimacy, has made the voice of the poor heard at critical levels of government. It has managed to exert pressure on the government to pay more attention to many of the fundamental problems confronting the poor, including land rights and the indebtedness. Much of the success of the Eighth Plan will be judged upon the extent to which its more formal "people-centred" strategies can indeed address these problems.

Among the rural poor, who is better prepared to overcome poverty?

Field visits involving discussions with poor farmers and other secondary and anecdotal information would indicate that among poor communities some are much better prepared than others to overcome the economic and cultural constraints of poverty. That is, to transcend the institutional aspects of poverty itself. Some characteristics of the high potential communities include:

Agriculture and the Poor

Background

The agricultural sector in Thailand still employs some 60% of the work force although agricultureís share of GDP has now declined to only 12%. Ministry of Agriculture statistics indicate that in the early 1960s the average income of someone working in the agriculture sector was one sixth of that in other sectors. In the 1990s the disparity had doubled to one twelfth of that of other sectors. The situation is most severe in the Northeast region where household income is less than one third of that earned in the greater Bangkok area.

The traditional major crops of rice and rubber have been subject to price fluctuation and decline while the cost of agricultural inputs has increased along with other demands for cash expenditure. Irrigation provides water security to less than 20 % of the total agricultural land. Much of the agricultural land is of poor quality, especially in the Northeast. As a result yields of most crops remain low, especially for rice and other cash crops such as cassava. In many areas population pressure has resulted in land fragmentation and led to encroachment of fragile forested areas in the mountainous and border regions. A dependence on government promoted high yielding varieties, which demand high levels of fertiliser and pesticide use is impacting on the local agricultural environments and increasing risk for farmers. The use of high cost production techniques in a context of uncertain rains and uncontrollable flood can lead to regular crop failure and consequent indebtedness.

Data and Analysis

For marginal and poor farmers, the dominant agricultural technology has led to indebtedness and the loss of land. Without appropriate assistance from the State and supportive community based networks, the negative impacts of this process have been burdened by individual households. For those who continue to farm their lands, there has been a growing dependence on off-farm income to subsidise the farming operations, and to provide cash for consumption, educational and health requirements. The increasing labour migrations of recent years is an indication of the need for more sustainable agriculture to provide for the rural poor. The increasing fragmentation of communities and households has led to weakening of supportive local cultures. The economic crisis has removed the ability of poor farmers to subsidise their livelihood activities and other basic needs through off-farm income generating activities. This has also had an impact on the de facto social safety-net of the rural poor.

An alternative development has been the increasing emphasis on sustainable agriculture. This approach is based on diversified production aimed firstly at satisfying household consumption needs, only after which any surplus will be sold for cash income. Taking many forms, the integrated or sustainable approach stresses low-cost and non-toxic inputs, and also recognises farmer to farmer learning and exchange as crucial to achieving sustainable results. The new approach has found support among farmers associations, civil society groups, and government agencies. His Majesty the King is a strong supporter of self-sufficient agriculture and is a proponent of the "new theory" approach which seeks sustainable and sufficient agricultural livelihood through allocating use of the household agricultural land to a combination of rice production, horticulture and vegetable production, and fish raising. The new approach is in keeping with the Eighth Plan which stresses sustainable livelihood and the communityís role in local development and environmental protection.

The sustainable agriculture approach is particularly relevant to the rural poor, who, for the most part, are currently rice farmers producing crops on poor or salty soils, and with no access to irrigation. The approach accepts that access to land, water, credit, and other resources is important, but sees the key ingredient as being knowledge concerning the appropriate agricultural technology to ensure a sustainable livelihood within the context of the local farm environment. Again, knowledge requires application to achieve results. It is through mutual exchange, learning and encouragement that farmers can obtain the required knowledge and achieve the confidence to apply it. The latter point underscores the importance of facilitating organisations and networks to which the poor have access.

Data Quality and Needs

In order to inform the policy and planning levels for the purpose of effectively allocating resources and support, and to assist the process of local, and farmer-to-farmer, learning and exchange, new types of quantitative data are required. These data would provide an inventory of farmers organisations, including agricultural co-operatives, registered agricultural organisations, and informal community-based farmer groups; the inventory would include capacity and needs assessment of all groups and the identification of community leaders and resource persons, and other civil society groups and individuals, who can help facilitate the farmer-to-farmer learning process and organisational capacity building. Subsequent to such a social mapping and inventory exercise, successful sustainable agricultural models, implemented by either individuals or community groups, should be identified, studied and documented. Such studies would include: community management of local resources and products, community industry and enterprises, operation of savings groups and community welfare funds, and the successful management of agricultural co-operatives, agricultural organisations and community based farmers groups. In addition, effective learning processes and training methods and successful participatory monitoring and evaluation programmes should also be documented for use by relevant support organisations and communities. The information would need to be up-dated regularly.

Indicators for chapter 1

I. For which data exist

Proportion of the population below a defined poverty lineIncome shares of population groups (by quintile)Gini-coefficient ratioNumber of rural households achieving sustainable food security

Indebtedness among rural households

II. For which data do not exist

No recommendations

 

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Dated: 26Jan1999