New co-payment aid for SME wages

New co-payment aid for SME wages

Worry over mass layoffs in the country

Roughly 1,300 workers gather upon learning their garment factory abruptly closed. Sutthiwit Chayutvoraken
Roughly 1,300 workers gather upon learning their garment factory abruptly closed. Sutthiwit Chayutvoraken

The government is set to roll out a fresh 50% co-payment subsidy for the monthly salary of employees of small and medium-sized enterprises (SMEs), its latest move to deter mass layoffs in the country.

Deputy Prime Minister Supattanapong Punmeechaow said the new aid measure is scheduled to be proposed at the meeting of the Centre for Economic Situation Administration on Friday.

"This co-payment scheme should be implemented as soon as possible to assist SMEs in keeping their businesses open and retaining employment," he said.

Mr Supattanapong said the scheme will be funded by either the 300-billion-baht budget the government reserved to help people and businesses affected by the third wave of the pandemic, or the 170 billion baht that is reserved for stimulating investment and domestic consumption as well as maintaining employment.

The two budgets are part of the new 500-billion-baht loan decree.

"The National Economic and Social Development Council (NESDC) has been tasked with working with the Federation of Thai Industries (FTI) and the Thai Chamber of Commerce to identify SMEs eligible for the measure," he said.

According to Mr Supattanapong, qualified SMEs for the new co-payment scheme comprise those that could not acquire a soft loan from the central bank's 250-billion-baht package.

The measure could last 3-9 months, he said.

Supant Mongkolsuthree, the FTI chairman, said the new co-payment scheme is suitable for some industries that have the potential to recover rapidly, such as the export sector's supply chain.

He said the scheme may be inappropriate for the tourism industry, which has been ravaged by the pandemic for a long time, causing immense damage.

Last year the government launched a co-payment subsidy scheme, running from September to Oct 31, 2020, to help entrepreneurs retain employees. The scheme was later extended by the cabinet's approval to December 2020.

The NESDC recently said the country's unemployment is likely to soar this year because of the severe impact of the third wave of Covid-19.

Workers in micro, small and medium-sized enterprises could experience the greatest losses, perhaps working reduced hours as these businesses have been hit hard since last year, said Danucha Pichayanan, secretary-general of the NESDC.

In fact, if the outbreak is not quickly contained, these businesses may be unable to continue operations, resulting in the permanent termination of employees and delayed recovery, he said.

Mr Danucha also warned there may not be enough job openings to accommodate recent graduates. With an economy growing slower than expected, entrepreneurs may postpone hiring, which would affect 490,000 new graduates, he said.

The new graduate and worker programme initiated last year under the loan decree has a 12-month duration. Its expiry could affect roughly 140,000 workers, said Mr Danucha.

The NESDC reported on May 24 the unemployment rate hit a 12-year high in the first quarter this year, attributed to the fresh waves of Covid-19 outbreaks.

The unemployment rate was 1.96% in the first quarter, representing 758,000 unemployed workers, up from 1.86% in the fourth quarter of 2020. The rate is the highest since 2.08% in 2009 during the global financial crisis.

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