Thailand’s Silver Economy – Trends and Opportunities

Author
Dr. Narain Chutijirawong
Executive Director | Clients & Markets
Deloitte Thailand

Contributor
Tasada Sangmanacharoen
Senior Consultant | Clients & Markets
Deloitte Thailand

Silver economy is a watch-listed agenda for businesses. It took the UK, US and France 45 years, 69 years and 115 years respectively to shift from an aging society to an aged society; but it took Thailand only 19 years while it will take Singapore and China 25 years. The United Nations defines a region as an Ageing Society when the share of people aged 65 and above is higher than 7% and is an Aged Society when the share expands above 14%, and a Super-Aged Society once this share soars over 20%. By 2030, the elderly aged 50 years and above will constitute 32% of the entire Asia-Pacific population. Besides, the birth rate in various regions is diminishing, whereas the death rate is climbing. The death rate in Japan and South Korea surpassed their birth rate since 2020 whilst the death rate in Indonesia, New Zealand, and Vietnam are projected to outpace it after 2050.

With this increasing aging trend, both the elderly and businesses are reconsidering the way of working, expanding their retirement age.

Working retirements also expanding among major regions from the 3 main factors:

1. Extend working due to the high cost of living
   During Covid-19, 1/3 of retired 50+ years old in UK returned to work for the financial purpose.
   
2. Lack of workforce among companies
   In Asia, the declining workforce population has incentivized corporates to hire retired aged population
   
3. Government raises its retirement age
   China, Japan, and South Korea are planning to raise its retirement age gradually and in phases to cope with the country's rapidly aging population

Thailand Silver Economy

Department of Older Persons indicates that Thailand aged 60 and above population consists of 12.7 million persons or 19% of the total population in 2022, which also contributed by 60-69 year-old over 7 million persons. Thai silver income by source also shows that 1/3 was contributed by work, and another 1/3 was constituted by income from their children. Also, about a quarter of silver who received income from their children only received 1,000-4,999 baht per year, which is far below than World Bank’s poverty line of around 27,000 baht annually. For the working silver, agriculture or fishery (60.5%), and Service or Seller (18.2%) are the most popular jobs for the silver. If classified by type, 65% of Thai silver work for their own business, 19% support family business without payment, 13% work as government/corporate employees, and 3% are employers.

We conceptualize four silver economy segments across Wealthy/Frugal and Technophile/Tech Laggards. In 2023, the wealthy silver would be worth 1.2 trillion baht for 677 thousand persons; however, the frugal laggard would only contribute 32.6 billion baht for the mass population of 4.5 million persons. The rate at which the silver market is going to become digital is also notable. The National Statistical Office reported that internet usage for the population >60 years is growing from 53.6% in 3Q2022 to 56.3% in 4Q2022.

Thus, considering the silver economy as homogenous would be misconceived. Different sectors need to develop, tailor to their goals and business environment, strategic segmentation to repurpose their go-to-market narratives and transformation. We also believe digital will be an important lever to activate this transformation. This is not just because the silver economy is becoming more and more digital, but also because digital drives agility and develops speed to change. One of the researches by Deloitte and MIT Sloan Management Review indicated that digitally matured organizations not only innovate more, they also innovate differently. Digitally matured organizations are twice as likely to cultivate partnerships with their ecosystem players to drive innovation.

Hence, as the silver economy gets more digital, organizations that are successful in being digital are expected to capture a greater share of the opportunities or are able to mitigate risks of being disrupted by the silver avalanche.

Business Trends for Silver

Aside from 4 segments of the silver economy, we foresee 6 business trends for silver as below:

1. Health care: such as elderly care which can be wholly new established or extend service range
2. Real estate: such as residence with functions tailored for the elderly, nursing home, silver community
3. Leisure and Self Development: such as tourism, learning, craft products, upskill activities for silver
4. Electronic Devices: such as tracking silver devices, medical devices supporting silver
5. Legal Consultation: such as living will consultation
6. Financial Product: such as reverse mortgage, insurance products for elderly

Aside from businesses to capture the opportunities of the silver, still, challenges to Thailand’s future demographic are still in red flag. The declining working age also implies less business successors. Thus, the business succession plans are required to be well equipped. Moreover, as Thailand has large group of silver that are frugal or receive slight income, not only the government but also private sectors should support our society and consider how to mitigate the challenges of Thailand’s future workforce, and to ensure that we are not in an “aged before having money” status.