Informal labor: A Vital Workforce for the Nation
Each year the Thai population from 15 years old will be counted as the Thailand’s workforce. Workers contribute to manufacturing and production. The current workforce can be classified into two types:
The “formal sector” means that workers who work in a formal employment system, earn a regular income and a definite salary. They can be referred to as “salary-man or woman.” Most importantly, formal sector are considered to be protected under the law. In addition, they have an opportunity or career advancement and receive social security benefits, pension, and health insurance.
The “Informal sector” refers to self-employed workers or workers who are not included in the social security system, as follows:
Informal workers can be classified into 2 groups
1. Being employed and has a regular salary. e.g.
-Hired manufacturing workers;
-Seasonal agricultural workers;
-Domestic workers and maids;
-Personal driver (in domestic sphere).
2.Self-employed professionals e.g.
-Farmers and gardeners
-Hairdressers and beauticians;
-Owners of a small grocery store.
In 2005the National Bureau of Statistics, Thailand surveyed that there were a total number of 36.3 million people in the labor force, which can be classified as:
-Informal sector: 22.5 millions of persons, or 62.1 % of all workers; and
-Formal sector: 13.8 millions of persons, or 37.9 % of all workers.
The statistic indicated that the majority of the workforce is in the informal sector. They are not eligible for social protection and work security. A large portion of the informal sector, consisting of over 85% worked in the agricultural sector, retail and wholesale commerce, hotels and restaurant.
1. The informal agricultural sector has 14.1 million persons or 38.9 % ;
2. Wholesale-Retail commerce has 3.5 million persons or 9.7 %;
3. The hotel and restaurant business has 1.7 million persons or 4.7 %;
Additionally, most informal workers, or 46.3%, have only attained primary and lower than primary education, comparing to the formal sector, of 22.8%, are better educated, as they were graduated from secondary school to university education.
Based on the above information, the Kasikorn Research Center considered that the informal sector is the majority component of the labor force in Thailand. However, the informal sector is not eligible for social security. At present, the law does not grant the informal sector the rights in an equal footing as the formal sector.
In addition, most informal sector have unstable employment conditions. The informal sector works in a circumstance that they cannot easily establish contact with government agencies or employers, thus, they are likely to face with health problems, unsafe work, unstable income, and poor quality of life.
At the same time, the informal sector has not been properly organized to a group, they do not enjoy the collective bargaining power under the labor law.
In 2005 2.9 million informal sectors suffered from accidents. There was a 1.8 million informal sector usually suffered from sharp tools. The informal sector has to rely on own healthcare when they have an accident.
The informal sector is not eligible for the social security system. As a result, unlike the formal sector, injured informal workers cannot claim compensation. This is a disadvantage for the informal sector, which also worsen their quality of life.
Informal Sector and Their Problems
The following are common problems that the informal sector face.
1. Informal sector do not have health and safety protection;
2. Informal sectors are not entitled to social security benefits because the labor law does not recognize them;
3. Informal sector cannot access services under the law because they cannot organize into a legal entity;
4. Informal sector have weak bargaining power because they cannot be organized into a union;
5. Informal sector often lack an opportunity for skill development, because they do not have any entity to represent and manage skill development;
The informal sector comprises 62 percent of the Thai workforce, they should be able to enjoy a better quality of life and work security. An intervention for informal sector helps to solve the social problems that may be a result of being informal workers, moreover, it could promote the efficiency of the labor force. Therefore, the following solutions for informal workers are recommended.
1. The informal sector should have social security;
2. The informal sector should enjoy occupational health and safety protection;
3. The informal sector should be supported to form their organizations;
4. Establish a social security fund for the informal sector;
5. Establish Institute for Informal Sector Skill Development;
Social Security Inclusion
Informal sector hardly has welfare protection in the social security system, serving as a social network to improve the informal sector’s quality of life. In many countries, the informal sector is included in the social security system, especially in developed industrial countries. In addition, some Asian countries, for example, the Philippines also provides the informal sector with the social security system.
The informal sector in Thailand, thus, should enjoy the same protection under the social security system. According to the study of actuarial experts, Thai informal sector are able to enter the social security system in five cases:
1. Illnesses An informal worker insurer that has paid the required contribution may access a medical treatment free of charge at the enrolled hospitals and received sick leave subsidy in the same manner as the formal sector.
2. Disability An informal worker insurer that has paid the required contribution receive medical treatment free of charge at the enrolled hospitals and receive disability compensation.
3. Maternity leaves and delivery An informal worker insurer that has paid the required contribution from 7 months or above is eligible to up to two times maternity and delivery benefit.
4. Child support An informal worker insurer that has paid the required contribution for one year or above is eligible to the child support benefit from newborn to six-year-old children.
5. Death An informal worker insurer that has paid the required contribution from one month or above is eligible to funeral support at 30,000 Baht.
The informal sector should be able to enjoy five benefits at a reasonably low contribution. The government should ensure adequate coverage through fiscal budget allocation as a Seed Fund to contribute to the informal sector social security fund. It is expected that in the future the informal sector social security will have an enormous amount of fund similar to the formal sector’s social security fund.
The formal sector enjoys the labor day celebration, whilst the informal sector is struggling on their own. The informal sector is workers, thus they should enjoy the equal quality of life and dignity in the same level as the formal workers. The social security inclusion will ensure that all Thai workers can build the work while enjoying a decent and secure life.
Source: Editorial Positioning Magazine