Thailand has the welfare infrastructure to deal with the fallout of the Covid-19 crisis better than most countries

One of COVID-19’s first casualties in Thailand was the tourism sector, which employs over 7 percent of Thai workforce. In recent weeks the government has implemented several measures to slow the spread of COVID-19, including closing schools and venues that attract large groups of people, directly and indirectly affecting thousands of businesses.

On March 21, 2020, the Bangkok Metropolitan Authority announced that most firms that provide retail goods and services, including shopping malls, spas, beauty parlors, and many others, must also temporarily close their doors.

These measures, while necessary for slowing the spread of COVID-19, will inevitably lead to temporary leave without pay, reductions in work hours, salary cuts, and significant job losses for workers throughout the country.

Thailand is certainly not an exception. Many countries around the world are facing massive negative employment shocks due to COVID-19. It is becoming clear that for many countries—including several industrialized nations—social safety net systems are often attached to employment status and do not cover the most vulnerable.

In many cases, critical healthcare coverage, paid leave, and unemployment benefits are only available to full-time employees in permanent positions, leaving workers in the growing “gig economy,” part-time workers, and the self-employed without critical safety nets during the current global health and economic crises.

Millions of people may find themselves without effective access to healthcare due to the lack of employer-provided health insurance, and, ultimately, vulnerable to bankruptcy or falling into poverty.

A prominent feature of the Thai labor force is that the majority of workers are informally employed, meaning that most workers are not covered by social security or other employer-provided welfare that provides safety nets during tough economic times.

According to the 2018 Labor Force Survey, of the 38 million people in the labor force, 32 percent were self-employed and 38 percent worked in private firms. Of those working in private firms, over 50 percent were informally employed.

Ironically, the size of the informal workforce and the scarcity of employer-provided benefits for most workers was part of the impetus to develop universal welfare programs in Thailand. Unlike many countries, Thai citizens have access to healthcare as a right, regardless of employment status. Thais who are not covered through their employer have access to health coverage through Thailand’s universal healthcare program.

In addition, the Thai government implemented an unconditional cash transfer program in 2009 that currently provides 600-1,000 baht per month to Thai citizens age 60 and above. The program was implemented to provide greater financial security to Thailand’s elderly who predominantly worked in informal employment without access to pensions. While the amount is modest, the cash transfers comprise the most important source of income for 20 percent of Thailand’s elderly. Importantly, this income will not disappear when household members experience employment loss and can help cushion the loss of household income from other sources.

Although Thailand’s labor force remains largely informal, formal employment has increased significantly over the last few decades to over 40 percent today. Formal worker are protected by the Labour Protection Act and Social Security Act. Under the Labour Protection Act, workers are entitled to up to 30 days of paid sick leave. This is an important provision in a pandemic situation as it encourages workers to stay home when sick and provides financial stability.

In addition, the 11.6 million workers in private firms who are covered by Section 33 of the Social Security Act are eligible for unemployment benefits. The government has acted quickly to enhance unemployment benefits to help cushion inevitable job losses in the months to come. Workers who face involuntary job loss, forced resignation, or temporary job loss due to government-mandated closures are entitled to more generous benefits than normal.

As mentioned above, all Thai citizens have access to basic healthcare and those over 60 receive a monthly cash transfer from the government. Although these programs constitute important universal safety nets, informal workers largely fall through the benefits cracks. Most informal workers are ineligible for paid sick leave and cannot claim unemployment benefits when faced with temporary or permanent job loss. On average, informal workers in private firms earn a much lower income than their formally employed counterparts, thus job loss due to COVID-19 can put households with already precarious income into dire financial situations.

While some countries struggle with the logistics of distributing emergency aid to its citizens, one of Thailand’s strengths is that it already has the administrative capacity and infrastructure in place to administer universal social welfare programs.

If the government were to pursue emergency aid measures, such as cash transfers to citizens enrolled in the universal health program (who are largely informal economy workers) or adjustments to benefits in current welfare programs, the existing administrative infrastructure could be used to do that—which are several steps ahead of many countries around the world. It remains to be seen, however, whether these unexpected bright spots will be enough to dampen the inevitable negative blow to workers due to COVID-19.

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