The Bank of Thailand expects unemployment to rise in the near future as the Thai labour market shifts towards greater capital intensity and away from labour-intensive activities.
Speaking after the central bank’s Monetary Policy Committee (MPC) meeting on Wednesday, MPC secretary Don Nakornthab said the panel is monitoring the labour market and although a new wave of investment has begun, it has not generated as many jobs as in the past.
According to the Board of Investment (BoI), labour demand typically tends to increase in line with rising investment values. However, modern investment models emphasise capital intensity and advanced technology over manual labour.
BoI data shows total labour demand rose from roughly 100,000 workers in 2018 to nearly 250,000 in 2025, driven by an expansion in investment capital. However, investment growth has increasingly diverged from labour demand.
The labour-to-capital ratio, which measures the number of workers required per unit of investment capital, declined to 0.2 workers per million baht in 2025 from a peak of 0.4-0.45 workers per million baht in 2021.
“Looking at this ratio, we’re using less labour these days than before. For example, a 100-unit investment used to create about 20 jobs, but now that same investment might only hire 10 people,” Mr Don said.
For the near term, the central bank expects both employment and job security to weaken, driven by several factors. The number of jobs created by newly invested businesses is insufficient to offset job losses from businesses that are closing.
Moreover, businesses are increasingly hiring foreign workers to address skills shortages among Thai workers, particularly in terms of education and language proficiency. In addition, some Thai workers tend to be selective about the types of jobs they are willing to take, he said.
Employers are also turning to temporary and contract workers to reduce salary and welfare costs, while gaining greater flexibility in workforce management, noted the regulator.
While investment has been growing in the digital sector, particularly in data centres driven by the artificial intelligence (AI) technology cycle, the positive spillover to the broader Thai economy remains limited, said Mr Don.
Thailand’s technology exports have increased significantly in recent years, primarily driven by the AI boom, but this growth has largely relied on imported inputs.
The import content of technology exports was 48% in 2018 and surged to 70% in the first four months of 2026, highlighting the growing reliance on foreign inputs. As a result, the benefits to the Thai economy remain limited, Mr Don noted.
According to the social outlook report by the National Economic and Social Development Council (NESDC) released on Monday, Thailand’s unemployment rate remained stable at 0.95% of the workforce in the second quarter, equivalent to 400,000 unemployed people, compared with 0.94% in the first quarter of this year. For 2025, the unemployment rate was 0.81%.
The number of employed people in the country tallied 41.5 million in the second quarter of 2026, up 5.1% year-on-year. There were 41.1 million employed people in the first quarter of this year, when employment grew by 4.6%.
Growth in the second quarter was driven by increases in both agricultural and non-agricultural employment, with the construction sector recording the highest growth, noted the NESDC.
A risk to agricultural employment is the super El Niño phenomenon, as several areas have already begun experiencing drought conditions that are expected to persist until the first half of 2027. This pattern could affect agricultural output, farmers’ incomes and demand for agricultural labour, prompting some workers to move to other sectors of the economy.
In addition, illegal employment of migrant workers in occupations reserved for Thais is expected to increase, said the NESDC.
In fiscal 2026, authorities found 3,217 migrants working illegally, with nearly one-third involved in occupations reserved for Thais, up 19.3% year-on-year, indicating authorities need to step up inspections and law enforcement measures, noted the state planning agency.