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