Social Integration through Social Protection Programmes : Some Considerations From Social Protection Scheme for Workers in the Informal Economy in Thailand

Expert group meeting on “Policies to Advance Social Integration” United Nations Headquarters, New York 2-4 November 2009

Narumol Nirathron, Ph.D. Labour and Welfare Development DepartmentFaculty of Social AdministrationThammasat UniversityBangkok 10200THAILAND

Outline of Presentation

Introduction : Informal Economy Situation and Responses

Informal workers in Thailand

Common problems

Government responses Social Protection for Workers in the Informal

Economy Social Protection Schemes : Lessons Learned

Introduction : Informal Economy

‘survival strategy’ ; ‘safety valve’. Ubiquity of work in the IE : poverty, leniency, culture Thus for some, work in the informal economy had not been

regarded as work, but rather as way of life. Workers not protected as workers, but rather as poor population :

recipients of social welfare benefits. Workers not protected by labour law Coverage by social security, though exists, is not on a par with

workers in the formal economy. Diversity in terms of work status, types of work, types of workers

and employment arrangement makes protection of workers in this sector a complicated task.

Workers in the IE

Targets of many gov’t social protection schemes : housing, skills training, low-interest loans.

Marginalization of workers in the informal economy has long been documented

Scores of academic research have been published as early as 1973 to illustrate plight of workers in the informal ‘sector’.

Non-governmental organisations, civil society have roles in promoting and protecting workers in the informal economy, particularly the home-based workers.

Common problems among workers in the informal economy

Poverty due to low and unsteady income Unprotected by labour law and social security law.

Basic rights haven’t been observed. Lack of access to occupational safety and hygiene. Limited access to capital. Limited opportunity for training and development. Insufficient data on informal labour by types, areas

and nature of problems : difficult for protection and promotion.

Shift in Employment Trend

Flexibilization : Informalisation of work Re-emergence of informal economy IE’s role in employment creation and poverty eradication Exploitation and marginalization of workers

Responses

In 2004 a Strategic Plan for Informal Economy (2004) was proposed by the National Economic and Social Development Board

The Plan aims to promote informal economy to support Thai economy and promote risk management strategy to protect informal workers.

In 2004 informal economy accounted for 46% of GDP or 62% of national income and workers in the informal economy accounted for 65% of employed persons.

In 2007 the Ministry of Labour drafted a strategic plan to promote and protect workers in the informal economy

In 2008, informal workers accounted for 63.8 % of employed persons in Thailand.

Agricultural workers accounted for highest percentage (57.5%), the second largest groups are workers in service, elementary occupation and craft industry respectively

Social Protection : Some findings from 2007 study of workers in the informal economy (marginalised groups)

>80% of workers reported that they were able to find help in time of need.

Social protection : Who should be responsible 42% Self 34% Government 16% Community Social Security 90% : Yes 63% in the case of casual workers. Despite being covered by the Universal Coverage of Health Case

Scheme, most workers responded that they need more coverage to compensate for loss of income in time of sickness.

Strong needs for compensation in case of disability from work and old-age pension Present need : care for children and the elderly

Social Protection for Workers in the IE

By Government By organised informal labour groups or organisations Community welfare

Social Protection for Workers in the IE : Government

Social Protection Scheme Guidelines

Social Insurance 1) Social Security : Covers only childbirth, disability and death.( In August 2009 the Cabinet approved in principle the extension of

coverage to 5 benefits : sickness, disability, death, childbirth and old-age pension)

2) Medical Insurance : Universal Coverage of Health Care Scheme

Labour Protection Ministerial Law 2003 covering home-based workers and Ministerial Law 2003 covering employees in agricultural work. Technically both are

not effective.

Public Assistance Informal workers are entitled to public welfare benefits targeted for the under-privileged such as public assistance funds.

Social Services Informal workers are entitled to general social services such as housing, skills training, pre-employment training, low-interest loans from

many sources including Village Fund Project, Bank of People Project.

Social Protection for Workers in the IE : Organised Groups

Informal labour groups or organisations provide more of in-kind service as follows :

Organised occupational groups and production groups : This is prevalent in the agricultural sector such as agricultural groups and taxi cooperatives.

Home-based workers network. The network offers mutual support, training, information dissemination and advocacy. The network has been working on homework legislation.

Cooperatives and credit unions of which services are focused on savings and information dissemination.

Social Protection for Workers in the IE : Community Welfare

A self-help system among people in the local area. Variety of forms and methods covering many

aspects of life. Fulfill needs of community, upgrade standard of

living, reduce debts, generating income and basic security such as health, education, funeral, welfare for the elderly, the disabled, labour rights protection through activity process, ritual, ideology and funding.

Social Protection Schemes : Lessons Learned Not so good practice (urban housing project) Good practice (rural community welfare)

A : PEOPLE-CENTERED HOUSING PROJECT

INTRODUCED IN 2003 : PILOT PROJECT

1) Community-based; strengthen (role of) community organization/savings group/cooperatives

2) Community planning through people’s participation; 3) Provide not only a housing project, but a ‘home’ in the atmosphere of strong and secure community, solidarity

4) Learning : A training ground for team building and teamwork in the community, collaboration and teamwork

5) Holistic : Physical environment, social environment, community welfare….

As of July 2008 there were 556 Projects in 1,108 communities covering 57,519

households nationwide. Many good practices of the project have been publicised.

The case study presented is taken as a lesson learned.

A : PEOPLE-CENTERED HOUSING PROJECT

In 2003 Community A, an urban squatter, was selected as one of the pilot projects. People in the community agreed (not unanimously) to demolish their squatter houses for a ‘non-slum-like’ and ‘standard’ house.

The community housed 131 households of which 77 households were original dwellers and 30 household are extended households and another 24 tenant households.

Almost half worked in the informal sector. To be eligible for the project, each household must have at least

20,000 baht (550 US $) savings in the savings group which was founded and later transformed into Housing Cooperatives.

Three phases of construction scheduled to finish at the end of 2005 Each phase was administered by a committee entrusted by

community members and were subjected to external scrutiny to assure effectiveness/transparency??????

Some community members who could not manage to save due to inconsistency of income had to leave.

The Making of Community A

Founded before 1971 Enlarged in 1985 as a result of slum relocation

from World Trade Center (Bangkok) First savings group in 1993 but later dissolved 1995 : Fight against demolition -first exercise 1996 : Linked with DANCED 1998 : Linked with Social Investment Fund 2001 : Linked with ESCAP 2003 : Selected as a pilot project : a ‘milestone’ for

the community

A : PEOPLE-CENTERED HOUSING PROJECT

Phase I and II finished in 2005. Homeowners had to borrow extra money as money from the

cooperatives was not sufficient. Complaints of unexplainable high expenses from construction. Community leaders were believed have vested interests in the

acquisition of construction materials. Cooperatives (community leaders) were accused of lack of

transparency and mismanagement of money. Dividend was not paid to cooperative members.

Homeowners have to pay for rent (of the land) and the monthly hired-purchase payment. This was never the case before.

Unable to cope with increase financial burden, some community members decided to withdraw from the project. Some considered to follow suit.

A : PEOPLE-CENTERED HOUSING PROJECT

Construction in the 3rd Phase was suspended since 2006 due to problems from blueprints and transparency.

Prospective homeowners (3rd Phase) were in much more difficult situation. They had to pay for rent (as the old houses were already demolished). There were also payment for hired-purchase of the new house and the debts.

People were proud of the new housing settlement : better physical environment and legal conditions. However there were negative remarks as people struggled to find money to build the house and ended up resorting to loan sharks.

Under these cloudy circumstances, the situation in the community was far different from the one prior to the arrival of the project.. For many, the secure house didn’t seem to guarantee secure livelihoods.

The Aftermath : People’s accounts

We are now a legal community, we are no longer a slum. Now we can expect to have more external organizations come to us.”

“For the poor, housing means debt as other expenses are already almost intolerable. Who can finish a house with a 150,000 Baht loan. We need 400,000 baht to build a house. We had to borrow money from the loan sharks.”

“I don’t know where the extra expenses came from. There was no explanation from responsible persons”

The Aftermath : People’s accounts

“I prefer that kind of life. People are more friendly and trusting each other.”

“We used to share and discussed on many matters.”

“We used to earn enough to get by. No worries about rent and debts. In the slum days, people were willing to contribute on special occasions as Childrens’ Day, Father’s Day or Mother’s

Day. Foods were abundant.”

What is the coping strategy ?

At personal level, people adjusted by working harder. They were more frugal.

Leave On the transparency matter, people resorted to

horizontal and vertical relationship.

Analysis

Before the project, Community A was an exemplar of strong community. The new settlement provides a more ‘livable’ physical environment but

people had to adjust to a new financial obligations. The project introduced a totally new situation for community members. It

was different from the times they stood against the authority which was an ‘outsider’.

This time it was rather ‘ an internal business’ that the community members had to sort out. This new situation therefore required a new set of thinking, knowledge and action.

This implies a new compatible set of capital, learning process, management competency and ideology.

The capital in this sense does not limit to financial capital as financial capital alone does not guarantee effectiveness. Instead, the capital has to be monitored by ideology which is not merely compassion, solidarity and sharing. Responsibility, honesty, accountability and transparency of community leaders and members are essential.

This requires an ongoing learning process and management competency much as appropriate mechanisms to assure the integration of the system.

Too much emphasis on ‘scale of development’ was also a contributing factor’.

The marginalised group in the community could not speak for themselves

B: A COMMUNITY WELFARE PROJECT

In one good practice, a rural community which suffered from debt problems came to realize that community problems would be solved only by participation from community members. Thus community members from 8 villages brainstormed and decided to put an end to debt problems.

With strong social capital and leadership the community decided to start a savings group in 1997.

From the savings group, the community were able to organize occupational group activities.

Group activities in turn helped mobilize community participation. In 2002 a community master plan was drafted through a

participatory process. From this process that the community learned of its strengths and weaknesses.

Linkages among villages have also been strengthened. Local administration leader also played a crucial role. Participation in community development was observed.

A community welfare fund was established in 2002.

B: A COMMUNITY WELFARE PROJECT

In 2005 there were 93 activities organized by 5 community organizations. Activities concerned economic, health, occupational, human development and environmental aspects.

After 7 years (2009), community welfare fund manages to provide 12 types of benefits concerning birth, sickness, education, HIV patients, income generation activities and loans of land. This is attributed to many factors namely strong social capital and financial capital, horizontal interactive learning, good management and strong core values.

Community welfare fund receives annual contribution from Village Fund and Local Administration Organisation.

B: A COMMUNITY WELFARE PROJECT : LESSONS LEARNED

1) There is no one best way to organize community welfare. It depends on needs and problems of respective community;

2) Rural communities are more collaborative whereas urban communities rely more on formal savings system;

3) Social capital is vital to success. Strong and accountable leadership is vital;

4) Communities which are successful in managing fund provided by the government (cash transfer) are the ones that already have experience in community welfare which requires high collaboration among community members, high management competency and strong ideology.

5) Community welfare is also a learning process which can be replicated in other endeavors.

Conclusion

In sum the present social protection scheme, though somewhat limited, aims to ‘promote’ and ‘protect’ workers. In the meantime aims to reduce income generation gap much as providing social security. There are schemes that provide opportunity for human development and self-reliance.

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