Rapid Assessment for Resilient Recovery and ... - GFDRR

• Long-term: Add a social assistance pillar to supplement universal pensions
and social insurance to complete the country’s social protection system.
During the past crises and disasters, Thailand has had to develop ad-hoc measures
to respond. Measures first implemented during shocks/disasters then tend to
continue after the crises have subsided (this has been the case with free bus
transportation which once started could not be stopped). A comprehensive and
well developed social protection system would enable better/smoother disaster
response. It would also help the country complete the missing part of Thailand’s
progression to the Social Protection Floor. Generally social protection consists of
several pillars – social assistance or safety nets, pensions, social insurance and
active labor market programs. Thailand already has universal non-contributory old
age pensions and pensions for persons with disabilities (PWDs). There needs to
be some adjustment to the benefit levels but this is already being considered by
the government in the form of an age supplement to existing universal pensions.
It would also be useful to add a means tested supplement to cover the additional
needs of poorer households. The country also faces a hollowed out family
structure in areas from which migrants originate to work in the major employment
centers of the country – in that households are composed of children and grand
parents as adults have moved away in search of work opportunities. Thus, either
a universal or means-tested child benefit, which would be predictable and not
ad-hoc, will help. The creation of a single register proposed earlier would help the
country develop a comprehensive social assistance system. A recent analysis for
the government by the Thailand Development Research Institute shows that a
social assistance system would be fiscally sustainable.
The expansion of social insurance is made challenging by the high degree of
informality of the Thai economy – it is unusual for an upper middle income country
to have almost 70 per cent of the economy classified as informal. 198 So far, only
565,000 have joined the system and there is a risk of adverse selection in which
the most risky volunteer to be covered which could cause long-term risk management
problems for the social security system. The approach needs to be reviewed
before the adverse selection risk causes financial problems for the system – one
way to modify this to reduce the adverse selection risk could be require a minimum
number of years of participation before full eligibility for benefits and until then the
benefits would be linked to the total value of contributions including government
subsidy similar to the approach proposed in the National Savings Fund Law. It is
targeted to getting the informal sector to save for retirement with government sub
sidies topping up the established funds. At age 60, the value of the savings is
converted into an annuity paid monthly as a pension – in cases where the annuity
is less than the minimum pension, the government provides additional funds with
the total being paid as a living allowance.
198 Only about 9.4 million out of Thailand’s 36 million employed are covered by social insurance and another 2.7 are
covered by government pensions and benefits. There has been an attempt by social security to voluntarily bring in some
of the remaining 24 million under social insurance coverage by offering incentives such as government subsidies but so
far only 800,000 previously formal sector employees who left covered formal employment have exercised their option to
continue in the scheme by making contributions themselves.
THAI FLOOD 2011 RAPID ASSESSMENT FOR RESILIENT RECOVERY AND RECONSTRUCTION PLANNING
237