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.