1. MITIGATING VULNERABILITIES& PROMOTING RESILIENT GROWTHSequencing, cost-efficiency and fiscal-sustainability of socialprotection Policy DialogueYos VajraguptaSenior Researcher Thailand Development Research InstituteNovember 1-2, 2012

2. Outline1. Thailands basic data2. Social protection in Thailand oSocial assistance oSocial insurance oSocial service3. Social investment4. Future challenges5. Fiscal sustainability 2 3. Thailands Basic data (2011)GDP growth 0.1% (2011) and 4.2% (Q2/12) Population67.6Million GDP Per Capita$ 4,972Dependency ratio 12.9% Labor force 39 Million Unemployment rate 0.7%Gini 0.37(2012)Poverty6.3% (2012)3 4. Social Protection in ThailandSocial ProtectionSocial ServiceSocial Social Healthcare EducationAssistance Insurance4 5. Social Assistance Social assistance programs in Thailand started in 1941. Target groups are disadvantaged people such as children, seniors,disabled individuals, women, low-income persons, and people sufferedfrom natural disaster. Social assistance programs focus on cash transfer,counseling, training, in-kind assistance, andemergency accommodation. Cash benefits are provided to elderly, disabled person, and HIV infectedperson (500 baht or $14.5 per month).5 6. Social Assistance Before 2009 and 2010 the cash assistance programs for elderly anddisabilities are not universal respectively. The decision for providingbenefits was decentralized and selected by local government. Since October 2011, elderly pension changed to graded or progressivepensionAge range Amount 60-69600 baht per month 70-79 700 80-89 800 90 and older 1,0006 7. Social Assistance Funeral allowance of 2,000 baht ($58) for senior citizen aged 60+years. Monetary assistance has been low since the Ministryof Social Development and Human Security received small budget(less than 1% of government budget). Besides the cash transfer, government also provides assistancethrough government-run nursing homes,elderly care centers, care home for disabilities and disadvantagechildren.7 8. Social InsurancePension for Government Official A retired government officials who started their job with governmentbefore March 1997 can choose between receiving a lump sumpayment or a pension from the government. After March 1997, new government officials must be a membership ofthe Government Pension Fund (GPF). GPF: 2nd pillar under the World Banks Multi-Pillar system. GPF member can contribute between 3 to 12 percent of salary whilegovernment contributes only 3 percent plus another 2% for post-reform compensations.8 9. Social InsuranceSocial Security Fund (SSF) The SSF was setup under the Social Security Act in 1990. 1st pillar under the World Banks Multi-Pillar system. There are three types of insured persons: article 33, 39 (formal workers) and40 (informal workers). Since 2008, the SSF provides seven types of benefits, i.e. sickness, maternity,invalidity, unemployment, death, old-age benefits, and child allowance. The SSF for article 33 is financed through employer (5%), employee (5%), and government (2.75%) contribution. While article 39 iscontributed by employee (288 baht) and government (120 baht). Article 40 ispaid solely by employee amount 3,360 baht per year. 9 10. Social InsuranceProvident Fund Provident Fund Act 1987. 3rd pillar under the World Banks Multi-Pillar system. Objectives: to encourage long-term saving for private employee and state-enterprise employee and to provide income security for retired employees. The provident fund is financed by employer and employee contribution. Employees contribution rate must be between 3 to 15 percent of salary and employer pays not less than employee.10 11. Social Service Healthcare Three healthcare schemes are Civil Servant Medical Benefit Scheme(CSMBS) , Universal Healthcare Coverage (UC) and Social SecurityScheme (SSS). The first two schemes are non-contributory while SSS are copaymentby employee, employer, and government. Although the government contribute to all schemes but the quality ofCSMBS is a lot better than the rest. Government has spent tremendous expenditure on CSMBS forgovernment officials and their dependants. The scheme covers about5 million people (10%), but consumes 62 billion baht ($1.8 billion) in2009, which was about 30% of total healthcare expenditure. 11 12. Social ServiceThailand healthcare system Scheme CSMBS UCSSS Start1960s 2001 1990sEveryone does notTarget Government employee,Private sector beneficiaries dependents and retireescovered by CSMBS nor employees UCCoverage10%74%12% FundingGovernment budget Government budget Tri-parties Payment to healthFee-for-service CapitationCapitation facilitiesSource: Reproduced from National Health Security Offices Presentation and Chalermpol Chamchan .12 13. Social ServiceEducation The education system in Thailand covers the kindergarten level (earlychildhood education), the primary and lower-secondary level (compulsoryeducation), the upper-secondary level (basic education, both in general andvocational), and the university level and above (higher education). On August 2009, 15 years free education policy (kindergarten to high school)was initiated with the aim to lessen the financial burden of parents. Otherthan the education fee, the policy also cover expenses for books, utensils,uniform, school equipment, and extra-curricular activities. Besides free education policy, government also subsidies school lunch andmilk expenses for kindergarten to elementary school and provides loan forpoor family for upper secondary/vocational.13 14. Social Investment 1,500 1,400 1,300Billion Baht 1,200 1,100 1,000 900 800 2010 2011 2012 2013 2014 2015 2016 2017 14 15. GDP and Government Revenue 400018 16 350014 12 3000Trillion Baht 10Billion Baht 8 2500 6 20004 2 150002011 2012 20132014 20152016 2017Government revenue GDP15 16. Social Investment (% of GDP and Government revenue)60% 10.5%50% 10.0%40% 9.5%30% 9.0%20% 8.5%10% 8.0%0%7.5%2011 201220132014 20152016 2017% of Gov. revenue% of GDP16 17. Future ChallengesMoving to Ageing society more dependent people less labor forceCoverage: Universal vs. TargetingQuality of welfareFinancial constraint more social expenses source of fund: less tax payers SSF: defined benefit 17 18. Fiscal SustainabilityTax reform Increase VAT (from 7% to 10%) Expansion of income tax base Property tax Reduce tax privilege incentive from Board of Investment tax allowance on stock investment (LTF, RMF)Welfare society CSR, Social enterprise informal safety net (community, social network)18