MITIGATING VULNERABILITIES & PROMOTING RESILIENT GROWTH
Sequencing, cost-efficiency and fiscal-sustainability of social
protection– Policy Dialogue
Yos Vajragupta
Senior Researcher
Thailand Development Research Institute
November 1-2, 2012
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Outline
Thailand’s basic data 1.
Social protection in Thailand 2.
o Social assistance o Social insurance o Social service
Social investment 3.
Future challenges 4.
Fiscal sustainability 5.
Thailand’s Basic data (2011)
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0.1% (2011) and 4.2% (Q2/12) GDP growth
67.6 Million Population
$ 4,972 GDP Per Capita
12.9% Dependency ratio
39 Million Labor force
0.7% Unemployment
rate
0.37 (2012) Gini
6.3% (2012) Poverty
Social Protection in Thailand
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Social Protection
Social Service
Social
Assistance
Social
Insurance Healthcare Education
Social Assistance
5
• 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 suffered from natural disaster.
• Social assistance programs focus on cash transfer,
counseling, training, in-kind assistance, and emergency accommodation.
• Cash benefits are provided to elderly, disabled person, and HIV infected
person (500 baht or $14.5 per month).
Social Assistance
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• Before 2009 and 2010 the cash assistance programs for elderly and disabilities are not universal respectively. The decision for providing benefits was decentralized and selected by local government.
• Since October 2011, elderly pension changed to graded or progressive
pension
Age range Amount
60-69 600 baht per month
70-79 700
80-89 800
90 and older 1,000
Social Assistance
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• Funeral allowance of 2,000 baht ($58) for senior citizen aged 60+
years.
• Monetary assistance has been low since the Ministry
of Social Development and Human Security received small budget
(less than 1% of government budget).
• Besides the cash transfer, government also provides assistance
through government-run nursing homes,
elderly care centers, care home for disabilities and disadvantage
children.
Social Insurance
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• A retired government officials who started their job with government
before March 1997 can choose between receiving a lump sum
payment or a pension from the government.
• After March 1997, new government officials must be a membership of
the Government Pension Fund (GPF).
• GPF: 2nd pillar under the World Bank’s Multi-Pillar system.
• GPF member can contribute between 3 to 12 percent of salary while
government contributes only 3 percent plus another 2% for post-
reform compensations.
Pension for Government Official
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• The SSF was setup under the Social Security Act in 1990.
• 1st pillar under the World Bank’s Multi-Pillar system.
• There are three types of insured persons: article 33, 39 (formal workers) and
40 (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 is
contributed by employee (288 baht) and government (120 baht). Article 40 is
paid solely by employee amount 3,360 baht per year.
Social Security Fund (SSF)
Social Insurance
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• Provident Fund Act 1987.
• 3rd pillar under the World Bank’s 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.
• Employee’s contribution rate must be between 3 to 15 percent of
salary and employer pays not less than employee.
Provident Fund
Social Insurance
Healthcare
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• Three healthcare schemes are Civil Servant Medical Benefit Scheme
(CSMBS) , Universal Healthcare Coverage (UC) and Social Security
Scheme (SSS).
• The first two schemes are non-contributory while SSS are copayment
by employee, employer, and government.
• Although the government contribute to all schemes but the quality of
CSMBS is a lot better than the rest.
• Government has spent tremendous expenditure on CSMBS for
government officials and their dependants. The scheme covers about
5 million people (10%), but consumes 62 billion baht ($1.8 billion) in 2009, which was about 30% of total healthcare expenditure.
Social Service
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Thailand healthcare system
Social Service
Scheme CSMBS UC SSS
Start 1960s 2001 1990s
Target beneficiaries
Government employee, dependents and retirees
Everyone does not
covered by CSMBS nor UC
Private sector employees
Coverage 10% 74% 12%
Funding Government budget Government budget Tri-parties
Payment to health facilities
Fee-for-service Capitation Capitation
Source: Reproduced from National Health Security Office’s Presentation and Chalermpol Chamchan .
Education
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Social Service
• The education system in Thailand covers the kindergarten level (early
childhood education), the primary and lower-secondary level (compulsory
education), the upper-secondary level (basic education, both in general and
vocational), 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. Other
than 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 and
milk expenses for kindergarten to elementary school and provides loan for poor family for upper secondary/vocational.
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Social Investment
800
900
1,000
1,100
1,200
1,300
1,400
1,500
2010 2011 2012 2013 2014 2015 2016 2017
Billion B
aht
15
GDP and Government Revenue
0
2
4
6
8
10
12
14
16
18
1500
2000
2500
3000
3500
4000
2011 2012 2013 2014 2015 2016 2017
Tri
llio
n B
aht
Billion B
aht
Government revenue GDP
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Social Investment (% of GDP and Government revenue)
7.5%
8.0%
8.5%
9.0%
9.5%
10.0%
10.5%
0%
10%
20%
30%
40%
50%
60%
2011 2012 2013 2014 2015 2016 2017
% of Gov. revenue % of GDP
Future Challenges
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Moving to Ageing society
• more dependent people
• less labor force
Coverage: Universal vs. Targeting
Quality of welfare
Financial constraint
• more social expenses
• source of fund: less tax payers
• SSF: defined benefit
Fiscal Sustainability
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Tax 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)
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