ECONOMIC AND POLITICAL CRISES IN THAILAND
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their capacity for recovery (see Dercon and Saphiro 2007 for the effects of shocks on the poor and poverty mobility). Accessing Informal Loans Borrowing to cover liquidity shortfalls was a key coping mechanism for all respondents. Most of the informal workers interviewed in the slums, landless in rural areas, and cross-border migrants had increased their debt commitments during 2009 by purchasing food on credit, borrowing from relatives and friends, accessing village funds, or getting informal loans from moneylenders. Borrowing from banks was impossible for informal workers and for the landless because of the many requirements, including proof of employment and collateral. Loans from friends and family were for the most part interest free but also small and short term (2–3 months). Loans from moneylenders could be accessed quickly and had longer repayment periods, but also high interest rates, reaching in some cases as much as 20 percent per month. Many borrowers ended up in serious difficulties trying to pay back their debt. There were instances of both Thai and migrant families unable to pay back their debts and fleeing their homes, further exacerbating their vulnerability. A disturbing finding was that drug dealers were becoming informal moneylenders and were forcing their highly indebted borrowers to sell drugs to repay the debts, a situation that resulted in many of these borrowers running away to other provinces to avoid being abused. This finding is possibly related to the sharp increase in drug dealing reported in the slums during the crisis period. Shifting Sectors Factory workers used the strategy of shifting sectors with a good degree of success. In view of the reduction in income in manufacturing, workers moved to agriculture and back to manufacturing when external demand stabilized, creating a situation in which the low unemployment rate of around 1.5 percent remained relatively unchanged throughout the crisis.7 In spite of the important reductions in income by moving from manufacturing, a high-income sector, to low-income agriculture, there were overall gains in using this strategy. Participants indicated that staying in the city underemployed or unemployed would have been impossible given the high costs of living, which could be covered only with overtime and extra bonuses. Severance payments and unemployment insurance, which is set at 50 percent of the last salary received,