Six-month break in contributions

Both employees and employers will soon get a temporary break on their social security contributions.

"The reduction should be applicable for six months starting in June," Somchai Chumrat, chairman of the Social Security Office, said yesterday.

The board of the Social Security Office, which manages the Social Security Fund, has already agreed in principle to cutting the monthly rate that employees and employers pay into the SSF during the economic gloom, he said.

The board is scheduled to meet today.

"The board will only need to decide on the exact reduction amount," said Somchai, who is also the permanent secretary for the Labour Ministry.

Currently, 5 per cent of an employee's monthly salary is withheld by employers for submission to the SSF to ensure the employee is qualified to access SSF benefits.

The employer matches the employee's contribution.

If the employee's salary exceeds Bt15,000, the contributions by both the employee and employer are capped at Bt750 per month each.

"We believe the contribution rate should stand at just 2 per cent during the latter half of this year," Somchai said.

Employees' benefits would remain intact, while personnel costs would be eased for employers so that they wouldn't have to lay off workers, he said.

"On the contrary, this measure will save about 400,000 or 500,000 jobs," he said.

The lower rate would mean that the SSF would collect Bt20 billion less than what it generally would get, he said.

"But if we don't offer the contribution reduction, many people will lose their jobs and won't be able to make their monthly contributions anyway. Besides, these people will also ask for unemployment insurance from the SSF," he said.

"If this happens, the SSF will have to shell out more than Bt30 billion in unemployment compensation."

The board plans to require the government to keep contributing to an employee's SSF account at the usual fixed rate of 2.75 per cent of the employees' salary.

The Labour Ministry was also planning to seek a Bt280 million budget from the Tonkla Archeep Project, which provides free vocational training plus living allowances to the unemployed.

"We're requesting the budget so that we can extend similar help to workers at risk of getting laid off," Somchai said.

The budget would allow up to 47,024 workers at 105 factories to receive training and the stipends.