The Thai Economy: Stabilization and Reforms

Abstract

The economic crisis that erupted in 1997 was the most severe in Thailand's modern history. Its impact was not confined to the low and lower-middle income classes in urban centres alone; a wide range of socio-economic groups were adversely affected, from high-level industrialists, bankers, financiers, and white-collar employees to factory workers, farmers, petty traders, and street vendors. The hardest hit initially were those in the urban centres, particularly company employees and factory workers who had been laid off. New hiring was slowed down and even halted, causing new entrants to the labour market to have few employment prospects, while those who managed to keep their jobs were under constant threat of falling income and unemployment. The crisis thus resulted in large-scale unemployment in urban centres, a phenom enon previously unseen in Thailand. The number of those laid off during the second half of 1997, as estimated by the National Economic and Social Devel opment Board (NESDB), was 42,200, with unemployment reaching 1.15 mil lion, or 3.5 per cent of the labour force, at the end of 1997. By the end of 1998, unemployment as a result of the crisis was believed to exceed 2 million.