Social security contributions to be reduced for 3 months from Sept

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The Cabinet has greenlighted a proposal to reduce social security contributions from 5 per cent to 2 per cent for three months to help almost 13 million employees and inject Bt24 billion into the economy.

Deputy government spokesperson Ratchada Thanadirek said yesterday (September 1) that the Cabinet has approved the Labour Ministry’s proposal to reduce the contribution rate for both employers and employees to the Social Security Fund in a bid to help alleviate people’s financial burden in the present Covid-19 situation.

“Employers and employees under Section 33 of the Social Security Act can contribute 2 per cent instead of 5 per cent of employees’ salaries, while insurers under Section 39 will pay Bt92 per month instead of Bt432,” she said. “The reduced rate will take effect from September and last until November.”

The ministry estimates that the reduction of social security contributions will assist 12.79 million employees nationwide to the tune of Bt13.07 billion and help 487,000 employers save up to Bt11.2 billion.

The estimated Bt24 billion is expected to be injected back to the economy to reduce economic contraction due to the virus outbreak.

It is estimated that an average employee under Section 33 will save Bt1,022 in three months, while those under Section 39 will save Bt1,008.

In the next three months the Social Security Fund expects to collect Bt26.46 billion in contributions instead of Bt50.77 billion, while the estimated compensation the fund has to pay to affected employees is Bt46.66 billion.

“The fund will use Bt17.2 billion from earlier contributions to pay the compensation, which will result in a loss of investment opportunities valued at Bt1.07 billion,” Ratchada added.