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Social Welfare: The Big Burden from the Eyes of Elites

From the first national economic development plan in 1961 to today, most of Thais enjoyed an economic boom. The country even became known as the 'economic miracle' or the 'Fifth Tiger of Asia' during General Chatichai Choonhavan's government. However, the government gave little priority to the welfare of the people as most of the workforce was in the informal sector, self-employed, or worked in agriculture, and the government hesitated to protect wage-earners from insecurity. Also because of the uncertain of international trade and the world economy, Thailand could hardly have afforded social security that covered everyone. The bureaucratic elites believed that arranging social welfare would be too much of a burden on the national budget and would worsen public debt.

Thai welfare has depended mainly on the market. If the market failed to provide welfare to people, the government passed their concerns to the traditional safety nets – families and kinship, village communities, Buddhist temples, religious groups, and charities, as well as patron-client relationships were substituted as welfare providers before any government intervention (Schramm, 2003; Tonguthai, 1986). Compared to other East Asian and Southeast Asian countries, Thailand is the last to benefit from social security (Hort and Kuhnle, 2000; Ramesh, 2001).

The First Effective Step in 1990: A Long Struggle for the Social Insurance Act

In 1954, under Field Marshall Pibunsongkram's administration, the Thai Parliament approved a Social Insurance Act covering six contingencies: maternity,
sickness, incapacity, childcare, old age, and death. The law was heavily attacked by different groups and never implemented (Sungkawan, 1992). Between 1981 and 1988, there were some attempts to draft a social security bill, but not strong enough to get one into Parliament. However, the economic boom and the political conditions put pressure on General Chatichai Choonhavan's government to put a draft social insurance bill to Parliament in 1988. Most of the senate opposed the law. Parliament however unanimously passed the Social Insurance Act on 11 July 1990. This was an historic event, for its long journey marked the first step of a changing trend towards institutionalized social welfare.

After the 1997 Financial Crisis: A New Move to Welfare or Just a Populist Model?

In July 1997, the financial crisis weakened the Thai economy as well as the social well-being of the people. Many lost their jobs unexpectedly and a lot of people in the middle class abruptly became poor. Unemployment benefits were supposed to provide for them, according to the Social Insurance Act, but its activation had been postponed – there was no social safety net to protect them. Moreover, the government reduced the welfare and social services budgets more than half.

The International Monetary Fund (IMF) prescribed a series of measures to make the government change its policy by increasing expenditure on education, health, and social services. People on low-incomes were provided with free medical care. The government also tried to create more jobs in the public sector, undertook infrastructure development, backed vocational training and gave financial support to small businesses. These efforts, however, were too little, too late, and the government was unable to prevent a great number of Thai from falling into poverty.

In 1998 Thaksin Shinawatra founded the populist Thai Rak Thai (TRT) party in 1998, which won a historic election in 2001. Thaksin became Prime Minister and was the country's first PM to serve a full term. He introduced a range of innovations in government policies which were highly popular because they helped reduce poverty by half in four years. He launched, for instance, the nation's first universal health-care scheme – the 30-baht scheme: village-managed microcredit development funds, low-interest agricultural loans, direct injections of cash into village development funds (the SML scheme), and the One Tambon One Product (OTOP) scheme.

Thaksin's economic policies helped Thailand recover from the 1997 Asian Financial Crisis and substantially reduce poverty. GDP grew from 4.9 trillion baht in 2001 to 7.1 trillion baht in 2006 and Thailand repaid its debt to the IMF two years ahead of schedule. From the social welfare standpoint, the Thaksin administration gave more concern to people's social well-being. Although some scholars have pointed out that he had no interest in land reform, land for small farmers programs, tax reforms, or other policies to shift the structural position of peasants within the national economy, the residual model has been less emphasized.

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