III. Thailand's formalisation policies

Thailand has progressively pursued various formalisation policies, particularly over the last 30 years. This section provides an overview of policies aimed at formalising workers, providing informal workers social protection and bringing informal enterprises more firmly under government regulation.

Formalisation of workers through expanding social security

Although civil servants have long enjoyed a comprehensive welfare scheme, social security for private sector employees emerged much later with the industrialisation of the Thai economy starting in the 1970s. The Workmen’s Compensation Fund, which provides protection against work-related injur)', death and sickness, was

FIGURE 6.3 Monthly labour income for formal and informal workers, 2011-16 Source: Authors’ calculations from the 2011—2016 Thai Labor Force Surveys.

established in Bangkok in 1974, and was expanded nationwide in 1988 (Schmitt et al., 2013). The Social Security Act (SSA) B.E. 2534 (1990) was enacted in September 1990. The aim of SSA Section 33 is to provide an additional safety net to formal workers between the ages of 15 and 60 employed in the non-agricultural sector. Social Security Fund (SSF) benefits currently include non-occupational injury' or sickness benefits, maternity, invalidity, death, unemployment, old-age and child support. Tripartite contributions fund the scheme, with contributions from the employer and employee equalling 5 per cent of pre-tax labour income and the government making a 2.75 per cent contribution (Schmitt et al., 2013, 6-7).² In theory, all employees in firms employing one or more workers should be covered by social security, although in practice many firms do not register or pay contributions for their employees. As of 2017, there are 10,791,655 individuals registered under Section 33 of the SSA (Social Security Office Thailand, 2019).

There are two voluntary social security schemes that were established with the SSA. Section 39 of the SSA provides continuation of social security coverage for workers who have left social security-covered employment. Section 39 allows workers to transition in and out of unemployment, formal employment and informal employment without losing social security coverage. As of 2017, there are 2,497,619 individuals registered under Section 39 of the SSA (Social Security Office Thailand, 2019).

Finally, Section 40 of the SSA—which was enacted more recently in 2008—extends voluntary coverage to informally employed workers. Any individual between the ages of 15 and 60 who is not covered by Sections 33 or 39 of the SSA or other government social welfare schemes is eligible for this scheme (Schmitt et al., 2013, 9). Since this scheme targets informal workers, there is no contribution from the employer, and thus would not fit the International Labour Organization’s definition of formal employment. Simply put, this scheme attempts to bridge the gap in social protection between formal and informal workers by providing a social safety with similar coverage to informal workers. There are three different social security packages offered under SSA Section 40. The basic package, which costs 100 baht per month (70 baht from the insured and 30 baht from the government), provides sickness, invalidity and death coverage (Schmitt et al., 2013). The second package, which costs 150 baht per month (100 baht from the insured and 50 baht from the government), provides the same coverage as the basic package, but also includes an lump-sum old-age payment (Schmitt et al., 2013). Finally, a third package that was first offered in 2018 has benefits most similar to those enjoyed by formal workers under SSA Section 33 and 39. The monthly contribution for package 3 is 450 baht (insured person contributes 300 baht and the government supports 150 baht) and provides child payments in addition to the other benefits listed above (Social Security Office, 2017). As of 2017, 2,251,842 people are voluntarily covered under Section 40 of the SSA (Social Security Office Thailand, 2019).