The cabinet has approved a motion to cut employee and employer contributions to the Social Security Fund (SSF) from 5% each to 4% to ease the impact of the minimum wage hike.
Government spokesman Tossaporn Sereerak said the cabinet approved an amendment to Labour Ministry regulations governing SSF contributions to help businesses with the cost of the wage hike.
Once it is announced in the Royal Gazette, the change will take effect retroactively from Jan 1, the date the government's 300-baht daily minimum wage was enforced nationwide.
Contributions to the fund for accidents, illness, disability and death coverage will be cut by 1% from 1.5% of salary to 0.5%.
Contributions in other areas, such as childbirth and old age pension (3%) and unemployment (0.5%), will stay at present levels.
The changes mean the total contribution which employers and employees each make to the fund will fall from 5% of salary to 4%. The new rate will be effective until Dec 31.
Last year the government approved the same reductions in SSF contributions to diminish the impact from the 2011 floods. The reduction stopped taking effect at the end of last year.
The latest reduction is opposed by labour activists.
Wilaiwan sae Tia, deputy chairwoman of the Thai Labour Solidarity Committee, called on the government to review its decision to cut contributions to the fund.
She said the measure was unlikely to ease the strain of the wage hike on small- and medium-sized enterprises (SMEs).
Big investors stood to benefit most.
She said SMEs do not employ many workers and so the size of the contributions to the fund carry little weight in their decisions.
She said the government often turns to the SSF when it is desperate, manipulating it as a tool to solve political problems without taking into account the long-term future of the fund.
Chalee Loysung, chairman of the Thai Labour Solidarity Committee, said reductions in SSF rates may benefit employees and employers in the short term, as they will have to pay less in contributions.
In the long term, however, many subscribers to the fund will grow older and are likely to depend more on the fund's benefits, such as its provisions for medical care.
The fund's future could become unstable due to the lowered rates, he warned.
This could weaken the benefits and services available for subscribers after some years, when contributions may have to be increased again, he said.
Mr Chalee called on the government to ensure the reductions in the SSF contributions will not backfire on subscribers in the future.
On Jan 8, the cabinet approved a package it claimed would ease the strain of the wage hike on the country's almost 300,000 SMEs and create about 320,000 new jobs.
The 300-baht minimum daily wage took effect last April in seven pilot provinces, including Bangkok.
Between April and December last year 243,141 workers were laid off, according to Labour Minister Padermchai Sasomsap.
Among the measures approved on Jan 8 was 10 billion baht in soft loans from the SSF to boost the liquidity of SMEs. Other measures taken to reduce the impact of the wage hike include tax deductions that are 1.5 times the increase in wages, soft loans from the SME Bank and guaranteed loans from the Thai Credit Guarantee Corporation.