Thailand launches retirement fund for non-formal workers

pix 5Thailand’s government took an ambitious and innovative step to strengthen the Kingdom’s social safety net last week by launching a national retirement program for workers in the non-formal sector, a significantly large part of the total labor force that some estimate to be at least 25 million strong.

Local media reported that hundreds of thousands of people around the country signed up for the new program on the first day of its inception. They lined up at branches of the Bank for Agriculture and Agricultural Cooperatives, the Government Savings Bank and Krung Thai Bank across the country. The three banks are state-owned or partially state-owned.

The Social Security Office set aside roughly $98 million as seed money for the program, known as the National Savings Fund (NSF), while the workers joining the fund deposited  $4.5 million on the first day alone. Thailand already had two more limited versions of social security funds that covered some non-formal workers. These funds will be terminated and folded into the NSF, which will cover a greater number of people.

Expanding and strengthening the social safety net is one component of reducing disparities in Thailand. Gaps in income and access to credit, health, education and other services have contributed to societal tensions and political conflicts in recent years. Traditionally, economists consider widening income gaps to be a common feature of rapidly growing developing nations. As economies mature, however, those gaps should narrow, according to many economic theories.

Thailand has a fairly large body of informal workers compared to developed countries, but its pool of informal workers is relatively typical of developing countries. As of July, Thailand’s population aged 15 and older totaled 55.2 million people, according to the National Statistics Office. A total of 38.6 million were considered employed or available for work. The rest were either unemployed (390,000 people), seasonally inactive or not in the workforce because they were students, housewives, the elderly or for other reasons.

Of those employed, 12.1 million were working in agriculture, which was 1.08 million fewer people employed in that sector compared to one year ago. Many agriculture jobs are considered part of the non-formal sector. Other non-formal sector jobs include street vendors, taxi drivers and freelance workers.

“I want to apply for this scheme because I feel the government has the duty to take care of Thai citizens. People with limited income truly deserve such benefits,” Surachet Jarurattanaviboon, a 48-year-old freelancer, told The Nation newspaper as he lined up to register for the new fund.



Thailand Focus August 24, 2015
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