Thailand’s young graduates face an increasingly difficult job market as artificial intelligence and automation raise demand for specialized skills that many entering the workforce lack.

The number of unemployed Thais rose 10% from a year earlier to 401,000 in the second quarter, the highest in seven quarters. Kasikorn Research Center estimates that new graduates aged 20 to 24 accounted for about 44% of the total, or roughly 174,000 people.

The figures highlight a widening skills mismatch as Thailand tries to shift toward higher-value industries. The country will need about 1.1 million highly skilled workers from 2025 through 2029, with aviation and logistics, smart electronics, robotics and digital industries accounting for almost 70% of demand, Kasikorn Research said in a note Tuesday.

Yet more than 60% of Thai graduates are in humanities and social sciences, while the share graduating in science, technology, engineering and mathematics slipped to 22.3% in 2025 from 23.2% in 2020, the research unit of Kasikornbank Pcl said.

AI and automation could widen the divide by reducing demand for some entry-level and routine jobs while increasing the need for specialized technical skills. Weak consumer spending and elevated business costs are also making employers more cautious about hiring.

The pressure can be difficult to see in Thailand’s headline unemployment rate, which typically hovers around 1%. The country’s official rate can understate broader labor-market weakness because its large agricultural and informal sectors absorb millions of workers, including many in low-productivity or irregular employment.