Country Presentation Thailand (2)


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Country Presentation Thailand (2)

  1. 1. 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
  2. 2. Outline1. Thailand’s basic data2. Social protection in Thailand o Social assistance o Social insurance o Social service3. Social investment4. Future challenges5. Fiscal sustainability 2
  3. 3. Thailand’s Basic data (2011) GDP growth 0.1% (2011) and 4.2% (Q2/12) Population 67.6 Million GDP Per Capita $ 4,972 Dependency ratio 12.9% Labor force 39 Million Unemployment rate 0.7% Gini 0.37 (2012) Poverty 6.3% (2012) 3
  4. 4. Social Protection in Thailand Social Protection Social Service Social Social Healthcare EducationAssistance Insurance 4
  5. 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 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). 5
  6. 6. Social Assistance• 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 6
  7. 7. Social Assistance• 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. 7
  8. 8. Social InsurancePension for Government Official• 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. 8
  9. 9. Social Insurance Social Security Fund (SSF)• 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. 9
  10. 10. Social InsuranceProvident Fund • 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. 10
  11. 11. Social Service Healthcare• 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. 11
  12. 12. Social ServiceThailand healthcare system Scheme CSMBS UC SSS Start 1960s 2001 1990s Everyone does not Target Government employee, Private sector beneficiaries dependents and retirees covered by CSMBS nor employees UC Coverage 10% 74% 12% Funding Government budget Government budget Tri-parties Payment to health Fee-for-service Capitation Capitation facilitiesSource: Reproduced from National Health Security Office’s Presentation and Chalermpol Chamchan . 12
  13. 13. Social ServiceEducation• 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. 13
  14. 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. 15. GDP and Government Revenue 4000 18 16 3500 14 12 3000 Trillion Baht 10Billion Baht 8 2500 6 2000 4 2 1500 0 2011 2012 2013 2014 2015 2016 2017 Government revenue GDP 15
  16. 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 2012 2013 2014 2015 2016 2017 % of Gov. revenue % of GDP 16
  17. 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. 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