Cabinet decision this week on reduced social security fund contributions for firms in Thailand for February and March. It falls far short of the wish list of tourism industry groups who want to see direct financial support from the government to save jobs. The leaders of both the Tourism Council of Thailand and the Association of Thai Travel Agents are also emphasising that vaccination programmes in Thailand and worldwide could see the industry recover later this year if the quarantine entry requirement is removed.
On Tuesday, a key tourism industry leader warned the government that over 1 million jobs are at risk over the next two months if substantial aid is not forthcoming for ailing business enterprises in the sector. It came on the same day the Thai cabinet announced sharp reductions in social security fund contributions for February and March and an extension of the property tax cut that will cost local authorities over ฿44 billion.
The Thai cabinet on Tuesday approved a range of measures to ease the burden on local firms who are experiencing economic challenges as the second wave of the Covid-19 virus stalks the country now extending into 63 provinces with the kingdom’s foreign tourism industry trade bodies warning that 1 million jobs are at stake in the coming weeks as many firms, getting by in survival mode, have reached the limit of their resources.
The key development on Tuesday was a reduction in social security contributions for February and March announced by Minister of Labour Suchart Chomklin.
Tourism bodies ask for 50% of salary costs warning one million more jobs will go in the next two months
On Tuesday also, Chamnan Srisawat of the Tourism Council of Thailand reiterated his organisation’s proposals voiced by tourism leaders throughout the kingdom.
They are calling for a 50% subsidy of staff salary costs, utility bill concessions, a programme of soft loans and a two-year moratorium on loan principal repayments.
Mr Chamnan, who is President of the body, told reporters that at least 800,000 jobs are in imminent danger and probably up to 1 million will be lost in the sector if something is not done urgently.
He said, already during the pandemic, one million jobs had fallen by the wayside but that this could reach two million by the end of March this year due to the current precarious state of finances for many business concerns.
Industry boss says foreign travellers will come back in large numbers when vaccinations kick in and the quarantine requirement is booted out
He pointed out that the foreign tourism industry would recover once the vaccination process in other countries and Thailand achieved critical mass. He suggested that this may happen sooner in 2021 than the government is anticipating.
‘We don’t want to leave these people. When Covid-19 is over, tourists will definitely return, so please help us survive for a while, maybe for three months,’ he declared.
10 million visitors can be achieved but with the quarantine barrier ‘nobody will come’ even for free
His prognosis was similar to that of Vichit Prakobgosol, the President of the Association of Thai Travel Agents.
Mr Vichit took aim at the government’s strict 14-day quarantine requirement and said that his body would appraise the situation, on a worldwide basis, as vaccination programmes step up and make progress.
‘If tourists can return with no quarantine, we will definitely see 10 million this year. If not, even if we let them in free of charge, nobody will come,’ he stated.
Social Security deductions will help firms
On Tuesday, the government announced a relaxation on Social Security Fund payments for both businesses and employees to take effect in February and March this year.
Under Thailand’s social security system, both employers and employees pay 5% of monthly salaries to a fund to which the government contributes a further 2.75%.
Employee contributions will be cut from 5% to 0.5% per month and for employers, it will fall from 5% to 3% on monthly salaries up to and capped at ฿15,000 per month.
The move will help employers as most Thai people, like counterparts in other countries where employers file tax and social security returns for staff, view their net salary as their pay and the employer effectively pays both deductions although, in theory, it is a contributory payment from the company and on behalf of the staff member, in the form of a deduction.
Social security scheme in Thailand is governed by a 1990 law and is highly valued by workers
Thailand’s social security system is also open to foreigners working in the kingdom and is governed by a wide-ranging 1990 law.
The system offers limited benefits such as 30% of the employee’s salary for 90 days if he/she has paid contributions for 6 months or more when they resign or a contract of employment ends and 50% if they are laid off.
The fund also pays for limited health care benefits and a retirement fund for any employee who has worked for 15 years and contributed to the system. In addition, there are a range of other benefits covering sickness, incapacity, accidents and death.
The scheme is highly valued by Thai workers and gives them access to both private and public hospitals although with limited health coverage.
Property tax cuts extended for another year
The cabinet also agreed on Tuesday to extend large cuts on property taxes of up to 90% in most cases including levies and transactions.
The extension of property tax waivers agreed on Tuesday will cost local government authorities in Thailand an estimated ฿41.44 billion which the central government will fund.
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Further reading:
Fact – only 6,556 visitors arrived in Thailand last month compared to 3.95 million in December 2019
Desperate foreign tourism business concerns are clinging to straws as they try to survive the crisis
Challenge of the virus and closure to tourism leads to major long term changes in the Thai economy
Finance Minister says economy must pivot away from tourism with a switch to S-Curve industries
Strengthening baht predicted as investors bet on a reopening of Thailand to mass tourism in 2021
World’s biggest free trade deal just signed will be a huge boost for the Thai economy and exports
RCEP deal agreed as India opts out – busy Bangkok ASEAN summit concludes on a low key
Chinese FM to visit Thailand in a Covid battered world of raised tensions and potential conflict
Prime Minister indicates that the cabinet reshuffle will be complete very shortly with no problem
Thailand’s economy has become dependent on government expenditure to stay above water
Thailand and US aim for a new more ‘proactive’ trading relationship as ambassador meets Prayuth
Rice price spike but drought conditions to recede – security concern for the Mekong river
US suspension of Thai preferential trade partner status part of Trump’s ongoing trade war
