The government should boost private savings in the country by supporting village savings pools in the same way that it pays into social security and government pension funds, an academic said yesterday.

To improve social welfare and prepare for an increasingly older population, the government should subsidise savings cooperatives organised by villagers, Direk Pattamasiriwat said.

He was presenting a paper to the annual seminar of the economics faculty at the University of the Thai Chamber of Commerce.

Direk expressed concern about the large number of people without savings and social welfare benefits. His research found that families make only Bt21,519 a month on average and sock away only 13.5 per cent of that for the future. In fact, households should save more for life security, investment and retirement, he said.

While 55-60 per cent of households said they had the capacity to save, and most of them put their money in banks, the rest could not save any money and "this is a troubling issue", he said.

Too many families not only do not have enough money to save but are in debt. Many families owe  Bt100,000-Bt250,000. The debt level is not that different between rural and urban households, but the "burden of debt repayment" among upcountry families was heavier than among those in cities, Direk said.

The majority of households could not get access to social welfare. Direk said 18.9 per cent of households have social security. Only 3.7 per cent belong to the government pension fund and 4.7 per cent get welfare from employers. As few as 2.2 per cent of the elderly and 0.3 per cent of the disabled can access social welfare.

The figures suggest that coverage by the social welfare system is very limited, he said. The situation could be improved if the government supported social welfare among people in the informal sector. Villagers are starting to organise contractual savings and providing welfare for members, but the number of saving pools in rural areas is still small.

Direk found that 44 per cent of provincial households were members of savings cooperatives in their communities. Each family contributed on average Bt315 to a savings pool. Fewer families in cities are members of savings cooperatives but they deposit Bt559 on average.

Direk said country people wanted the government to make contributions to their savings cooperatives in the same way that it pays into social security and government pension funds, benefiting private employees and state officials.

Aat Wisanwanich, an economics lecturer at the University of the Thai Chamber of Commerce, told the seminar that the government's mega-investment plan would benefit towns rather than outlying areas and large firms over small ones.

The Bt1.8-trillion outlay over four years on improving mass transit, transport, education, housing and power and water supplies would help household income, but the distribution of the gains would be skewed, he said.

People in the non-agricultural sector will get 85 per cent of the overall income generated from mega projects, he said, while the share of those in the farming sector will be only 15 per cent.

The economic stimulus from the mega-projects will largely bypass small and medium-sized enterprises, Aat said, leaving little for the businesses that account for 99.8 per cent of all entrepreneurs and 80.4 per cent of the country's labour force.

Wichit Chaitrong

The Nation