Professor Dr Kriengsak Chareonwongsak Social security for small businesses3

Second, the effect on employees. In the past, employees had to be responsible for their own medical costs, now the public sector and employers will pay contributions for them. This will increase work productivity because of better sanitary, welfare and basic health assurance. This in turn will build security for employees who previously were not able to join a health assurance program or to join social security programs. As a result, fewer people are likely to change jobs, as they will have increased security.


    Third, the effect on the government. In the short term, the government will subsidize social security funds for six types of beneficial compensation, at the rate of 2% of the employee’s wage in 2002. This scheme will involve 9,480 million baht, higher than the current government’s contribution of 1,490 million baht. However, the scheme will encourage employers and employees to become responsible for the cost burden, rather than simply leaving it to the government. So, in the long term, the scheme will lessen the state’s burden. It will compel employees in workplaces with one to nine employees to join social security programs and to be responsible jointly for the costs with their employers, rather than, for example, relying on the afore-mentioned 30-baht project.
    Fourth, the effect on taxpayers. The scheme still does not cover some groups, such as farmers, because of many limitations in collecting. The goal is to get employers and employees to take on the responsibility (as they will receive the benefits) – without drawing on limited public taxes.
It has been found that employees still have the ability to pay their contributions, based on their resources, without any detrimental effect on their standard of living. If we use 165 baht as the minimum wage per day (2002), an employee will receive 4,950 baht a month, or 59,400 baht a year. This amount is higher than 1989’s average poverty line for the country -  10,932 baht a year. Moreover, if we add the average cost of public health per se, that is, 3,691.2 baht, the lowest ceiling will be 14,623.2 baht. If we use this amount to be the minimum criteria for living, we find that an employee’s minimum annual income is still higher than the survival level.
Every effort should be made to address the problem of those outside of the social security net. This arises because of the non-registration of vendors and stalls to social security schemes, and the difficulty in measuring farmers’ income. An information center should be established to register all occupations whereby income can be properly assessed and everyone encouraged to enter into the social security system. When this happens, the equity of every group in society will be reinforced.
Social security for small businesses - losses and gains

Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
 kriengsak@kriengsak.com, http://www.ifd.or.th

Professor Dr Kriengsak Chareonwongsak Social security for small businesses2

Social security for small businesses - losses and gains

Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
 kriengsak@kriengsak.com, http://www.ifd.or.th

Almost 10.9% of the total number of employees at workplaces throughout the country will get higher social security benefits.

The fund will affect many groups of people in different ways:
Firstly, effect on employers or owners of workplaces. In the short term, the operational costs of Small to Medium Size Enterprises (SMEs) will increase as employers have to pay a contribution of at least 3.2% of the employee’s wage, but not more than 4%, depending on the risks at the workplace. A higher number of workplaces will now be involved in contributions, from 108,745 to 1,239,000,
Examples of workplaces that have the highest risks are mining, bomb production, fireworks, and construction. On the other hand, those businesses with the lowest risk burden are medical professionals, finance, and banking.
These increased costs however, may be offset in the long term by two factors – increased productivity and fewer resignations. Productivity is likely to increase through better welfare for the employees as they will be healthier. The increased productivity will decrease per unit costs and as a result, employers will be able to sell more goods to offset their social security contributions.
At the same time, employees will be comforted by the knowledge that their medical bills will no longer be a huge drain on them. In the past, they did not have any welfare such as the present 30 baht hospital card. Previously, whenever they were sick, they had to pay for all medical costs, and employees tended to look for work, which provided better welfare.
However, the new scheme will increase the administrative costs of small operators, as they will have to deal with the government sector and compile reports. Hence, employers should be allowed to share the resources of a private company to be responsible for such documentation and accounting.

Professor Dr Kriengsak Chareonwongsak Social security for small businesses

Social security for small businesses - losses and gains
Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
 kriengsak@kriengsak.com, http://www.ifd.or.th

This article analyzes the arguments for and against changes to the 2001 Social Security policy. Previously, Social Security applied only in work places with more than nine employees; however, it now applies wherever there is just one employee in the workplace.

Last many year (2001), the Thai cabinet agreed to expand the scope of social security to cover workplaces with one to nine employees; a decision promulgated on April 1, 2001. The legislation, however, does not cover employees of the Thai Red Cross Society, state enterprizes, the agriculture sector, and housewives.
This decision was more than likely propelled by two aims - to extend the social security net throughout the country according to the current constitution, and to earn increased income from the contributions of employers and employees.
Employers need to contribute to the scheme as they have a strong influence on the risks, both directly and indirectly, to which the employees are exposed. Direct risk, for instance, involves harm at the workplace itself. In such cases, only the employer pays a contribution to the social security fund once a year, on average, 0.2-1% of the employee’s wage.
Indirect risk is risk not related directly to the work place, and includes sickness, maternity leave, death, child allowances and aged pensions. In such cases, the employers are responsible for a proportion of the contributions to the social security fund to relieve the burden on employees - this is considered a form of welfare on the part of the employers. Employers and employees pay contributions at the rate of approximately 3% of wages. In addition, the government pays a part, normally an equal amount.
This fund covers workplaces, which have between one and nine employees, or 68.9% of the total number of workplaces in the country. The three biggest sectors are retailers and wholesalers, restaurants, and hotels, which account for 33.3% of the country’s total workplaces; followed by the manufacturing sector, at 17.0%, and finally public, social and individual services, with 11.1% of the country’s total workplaces