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International trade

Thailand's Labour Market Faces Mounting Risks as SMEs Struggle with Innovation

Strategic Insights

— 2 min read

Thailand's small and medium-sized enterprises (SMEs) continue to face significant challenges in the labour market, with the impact of global trade wars disrupting sales and production continuity. Despite these pressures, innovation and technological adoption remain critical for SMEs to ensure their survival. According to the World Bank's Thailand Economic Monitor - February 2025, Thai businesses adopt innovation in their operations at a lower rate than regional peers, with only 11.9% incorporating innovation into their production processes. This innovation gap may have contributed significantly to the wave of business closures in 2024, during which nearly 24,000 SMEs deregistered and over 1,234 factories shut down, affecting more than 35,000 workers.

Key Takeaways:

  • The World Bank's Thailand Economic Monitor - February 2025 reports that only 11.9% of Thai firms incorporate innovation into their production processes, compared to 40.9% in the Philippines, 37.9% in Vietnam, and 37.3% in Malaysia.
  • The report highlights Thailand's relatively low investment in research and development, posing a structural barrier to business competitiveness.
  • The NESDC recommends expanding access to financing for Thai SMEs to enable them to adopt innovation and technology and improve production processes.
  • SMEs employ over 12.9 million people across Thailand, and strengthening their competitive edge would not only stabilize employment but also boost incomes for millions of workers.
  • The Philippines and Vietnam lead the region in terms of innovation engagement, with 40.9% and 37.9% of businesses engaged in process innovation, respectively.
  • Thailand ranks lowest across all categories, with only 11.9% of Thai businesses engaging in process innovation and 1.1% investing in R and D.
  • The NESDC calls on both the public and private sectors to prioritize innovation in production processes to enhance global competitiveness and help Thai SMEs scale and thrive on the international stage.

Statistics:

  • 11.9% of Thai firms incorporate innovation into their production processes (World Bank's Thailand Economic Monitor - February 2025).
  • 24,000 SMEs deregistered in 2024 (National Economic and Social Development Council).
  • 1,234 factories shut down in 2024, affecting more than 35,000 workers (National Economic and Social Development Council).
  • SMEs employ over 12.9 million people across Thailand.
  • 40.9% of businesses in the Philippines engage in process innovation (World Bank's Thailand Economic Monitor - February 2025).
  • 37.9% of businesses in Vietnam engage in process innovation (World Bank's Thailand Economic Monitor - February 2025).
  • 11.9% of Thai businesses engage in process innovation (World Bank's Thailand Economic Monitor - February 2025).
  • 1.1% of Thai businesses invest in R and D (World Bank's Thailand Economic Monitor - February 2025).

Sources:

  • World Bank's Thailand Economic Monitor - February 2025.
  • National Economic and Social Development Council (NESDC).

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