Political turmoil may increase the unemployment rate this year to 1% of the workforce, up from 0.7-0.8% reported in 2013.
The protests could delay fresh investments in both the public and private sectors, said Federation of Thai Industries (FTI) vice-chairman Thanit Sorat.
”It is quite clear that Thailand will not have a new government until the latter half of this year due to the problems facing election procedures,” he said.
A political vacuum will delay public investment, which will affect private spending and consumption.
Several economists believe the economy will expand by only 3% this year, down from a previous projection of 4-5%.
These negative factors are enough for the unemployment rate to rise to 1% of the workforce, which stood at 39.1 million last year. The rate was 0.77% in 2012 but increased to 0.8% last year.
Yongyuth Chalamwong, research director at the Thailand Development Research Institute, said that if the political tension ends soon, the economy may contract in the first quarter but will gradually recover in the second, third and fourth quarters.
This would not greatly affect the labour force because Thailand has experienced low unemployment for years, while migrant workers normally meet demand for unskilled workers.
Mr Yongyuth said that, in principle, if economic growth stays lower than 4%, it will increase the unemployment rate to 1%.
This year, with economic growth expected to be 3-4%, it will eventually affect workers and the negative situation will become clearer in the second half and next year when investors delay or halt expansion or relocate investments to other countries.
Parts and components manufacturers in electrical appliance and electronics sectors that hire 400,000 workers annually would feel the pinch if the economy slows down.
Mr Thanit said an FTI survey showed manufacturers may lay off workers if the situation becomes worse.
Many of the 300,000 to 400,000 new graduates that will enter the job market in March may have no job, he said.
Thanin Pa-em, deputy secretary-general to the National Economic and Social Development Board, said the Bangkok shutdown has affected sectors such as tourism and cleaning service firms.
First published: Bangkok Post, January 31, 2014