New graduate subsidy draws doubts

New graduate subsidy draws doubts

Conditions allowing layoffs stir concern

Young job seekers scan opportunities at an employment fair. The Centre for Economic Situation Administration on Wednesday approved a co-payment scheme to support new graduates finding work. (Photo by Pattarachai Preechapanich)
Young job seekers scan opportunities at an employment fair. The Centre for Economic Situation Administration on Wednesday approved a co-payment scheme to support new graduates finding work. (Photo by Pattarachai Preechapanich)

The private sector has raised concerns about the government co-payment scheme to support hiring, saying there are flaws that make the plan unfeasible.

The Centre for Economic Situation Administration (CESA) meeting chaired by Prime Minister Prayut Chan-o-cha on Wednesday approved the scheme to support 260,000 new graduates' employment by subsidising 50% of their wages for 12 months, but capped the maximum subsidy at 7,500 a month per person.

The Employers' Confederation of Thai Trade and Industry (EconThai) and the Federation of Thai Industries (FTI) agree with the policy in part.

The groups support a 50-50 split between the government and employers paying the salaries of new graduates, but are wary of the condition that participating companies must not lay off more than 15% of their staff.

"The inclusion of the 15% condition will only distort attempts to help workers," said Tanit Sorat, EconThai's vice-chairman.

"Allowing employers to lay off their staff will become a pitfall."

EconThai earlier suggested the government not allow businesses to cut costs by reducing their workforce because the co-payment already benefits employers.

The group also wants authorities to waive the minimum wage requirement for employers who join the scheme.

Mr Tanit believes the proposals made by the business sector are appropriate and should be used as a guideline. The government version does not appeal to employers.

"I guess the government has its own plan and does not agree with everything we suggested," said FTI vice-chairman Kriangkrai Tiannukul.

FTI shares EconThai's stance on the need to secure jobs for existing employees.

Mr Kriangkrai believes a co-payment scheme will yield a satisfactory outcome if the government implements it along with other measures such as a tax incentive programme.

Participating companies should benefit from these measures because more employment under the co-payment policy cannot avoid an increase in operation costs, he said.

The Education Ministry earlier reported there will be around 500,000 newly graduated students this year. According to EconThai, only 57% of them have university degrees.

Chairat Trirattanajarasporn, president of the Tourism Council of Thailand (TCT), said the tourism industry will not directly benefit from this scheme as it has to streamline fixed costs by maintaining or reducing workforce in line with softer demand.

Instead, he proposed during the CESA meeting easing some restrictions on loan requirements for tourism operators.

TCT suggested the government banks unlock the restriction on non-performing loan debtors who have only recorded bad loans this year, as this group lost its debt repayment abilities because of the unavoidable impact of the pandemic.

"More than 90% of tourism operators have had trouble servicing debt in recent months. When those bad repayment records appear at the National Credit Bureau, accessing the soft loans the government is allocating to state banks becomes impossible," said Mr Chairat.

"A co-payment scheme can help the economy to a certain extent, but there are more people waiting for help. For the tourism industry, soft loans are much more important to save us from a crisis."

DOMESTIC BOOST

CESA on Wednesday allowed civil servants and state-owned enterprise employees to take two days leave during the week, in part to boost domestic tourism via the "We Travel Together" scheme.

Danucha Pichayanan, deputy secretary-general of the National Economic and Social Development Council, said 2 million state officials and 270,000 state enterprises employees are eligible for the scheme, but they need to register for it before it expires in October.

Meanwhile, he said Gen Prayut ordered the Tourism Authority of Thailand (TAT) on Wednesday to improve conditions of the We Travel Together scheme to entice elderly citizens who have relatively high purchasing power to participate.

Mr Danucha said Gen Prayut told the meeting that the scheme, which requires applicants to register on the Paotang application, is unlikely to be of interest to the elderly.

The TAT was advised to allow the elderly to use coupons or smart cards to buy into the tourism stimulus scheme instead.


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