Spotlight on ballooning welfare spending

Is Thailand becoming a welfare state? The answer remains to be seen, given the government's fiscal constraints.

Public debt has risen recently, nearing the statutory ceiling of 70% of GDP.

The government is striving to establish a welfare system that supports all segments of society, particularly low-income and vulnerable groups. While the financial assistance and benefits provided may be modest and intended merely to help recipients get by, they are significant for those who rely on them.

The administration revised the eligibility criteria for the state welfare card, initially attempting to exclude the parents of children who claimed parental tax deductions on their income tax returns. However, the government scrapped this screening method recently following public outcry.

The goal is to ensure welfare benefits are directed to those who are genuinely poor, rather than those who merely qualify on paper. The move also reflects growing concern within the Finance Ministry over the government's rising welfare spending burden.

What is the government's current welfare expenditure burden?

A significant portion of the government's annual spending budget consists of costs that cannot realistically be cut, including welfare spending for both public and civil servants, which has continued to increase, especially as Thailand transitions into an ageing society.

Debt servicing obligations and salaries and compensation for public sector employees also cannot be reduced. Taken together, this spending accounts for more than half of the government's annual budget and is trending upwards, rising from 62% of total government spending in 2019 to 67% in 2023, before easing to 66% in 2024.

Welfare expenditure for civil servants and the public has increased consistently over time. Spending on civil servant welfare accounted for 12.7% of total government expenditure in 2019, rising to 15.1% in 2024, equivalent to 542 billion baht. This category includes medical benefits, gratuity and pension payments, as well as government contributions to the Government Pension Fund.

Welfare spending for the public tallied 11.9% of the annual expenditure budget in 2019, rose to 13.1% in 2021, then dipped to 12.2% in 2024, amounting to 437 billion baht.

Government welfare spending for the public includes: (1) living allowances for the elderly, people with disabilities, and HIV/AIDS patients; (2) child support subsidies; (3) school lunch programmes and supplementary nutrition programmes (school milk); (4) government contributions to various social funds, including the National Savings Fund, National Health Security Fund, Social Security Fund, Elderly Fund, and the Pracharat Welfare Fund for Grassroots Economy and Society, which administers the State Welfare Card programme.

Based on Thailand's medium-term fiscal framework for 2027-2030, there are growing concerns about rising government obligations, particularly healthcare costs. To address this issue, a committee was established to review medical expenses under the public healthcare welfare system, exploring measures to reduce costs and improve spending efficiency. Healthcare expenditures are expected to continue increasing as the population ages.

The National Health Security Fund, which oversees Thailand's Universal Coverage Scheme (UCS), also known as the 30-baht scheme, received a budget allocation of 272 billion baht for fiscal 2026, which translates to a per-person allocation of 4,298 baht for individuals covered by the scheme.

This growing burden is increasingly viewed as a fiscal risk. Credit rating agencies have urged the government to maintain stricter fiscal discipline following the sharp increase in public debt during the pandemic.

In response, the Finance Ministry set a target to reduce the fiscal deficit to a ceiling of 3% of GDP by 2029. For fiscal 2026, the fiscal deficit is projected to remain at 4.4% of GDP.

What welfare systems does Thailand have?

Thailand's most important welfare mechanism is the Social Security Fund, which operates as a contributory system involving the government, employees and employers. Employees are entitled to benefits when they become ill or suffer work-related injuries. Upon retirement, they are also eligible to receive a monthly pension for life, although the amount may not be substantial.

Civil servants are covered under a government-funded healthcare scheme. The medical benefits also extend to their parents and up to three dependent children who are not yet adults. Spending under this scheme has risen steadily, and during the first half of fiscal 2026, expenses amounted to 64 billion baht.

The UCS covers nearly 50 million people, around 70% of the country's population, with the scheme launched in 2001 by Thaksin Shinawatra's Thai Rak Thai Party as the first nationwide universal healthcare initiative in Thailand.

According to Thailand Development Research Institute, welfare-based healthcare programmes existed before the UCS. In 1975, under the government of MR Kukrit Pramoj, a programme offered free medical treatment to low-income citizens, and successive governments implemented healthcare welfare programmes targeting low-income groups and other vulnerable members of society.

The state welfare card programme, a policy of the National Council for Peace and Order government led by Gen Prayut Chan-o-cha, represented the first major attempt to establish formal criteria for identifying and supporting only those classified as poor. The programme was introduced in 2017.

Research by Chatra Kamsaeng, a Thai public policy researcher, discovered that of the 14 million cards issued, only around 3 million were received by individuals who were genuinely poor. Up to 2.7 million people who were genuinely poor did not receive a card.

The study also found some households in the top 20% income bracket were among the beneficiaries of the programme.

The state welfare card is designed to support low-income individuals, with a key eligibility criteria being annual income of no more than 100,000 baht. Under the programme, the government provides beneficiaries with a monthly allowance of 300 baht through an electronic wallet for essential expenses.

In addition, cardholders are entitled to a range of subsidies, including a cooking gas subsidy of 80 baht every three months, power bill support of up to 315 baht per household, water bill support of up to 100 baht per household, and a public transport allowance of up to 750 baht per month.

Why is the eligibility criteria for the welfare card being revised?

According to Vinit Visessuvanapoom, director-general of the Fiscal Policy Office, the rejig addresses two issues. The first is reducing leakage by removing beneficiaries whose financial conditions have improved or whose income exceeds the eligibility threshold, ensuring that limited government resources are directed towards those most in need.

The second issue is reaching those who have been overlooked by adopting a more proactive approach. The Interior Ministry and the Social Development and Human Security Ministry plan to conduct field visits to identify genuinely disadvantaged individuals who may be unable to travel and register on their own, ensuring they can access welfare benefits.

The revised eligibility criteria for the state welfare card introduces four additional categories of ineligibility: students considered under the care of their parents; shareholders or company directors; individuals holding stock or bond investment accounts; and individuals paying life insurance premiums exceeding 12,000 baht per person per year.

The income criteria was also revised, as previously eligibility was based on average household income not exceeding 100,000 baht per person per year. Under the new criteria, eligibility is determined based on individual income, which must not exceed 100,000 baht per person per year.

The new financial asset criteria follows the same rule, evaluating individuals rather than the household. Personal deposits and savings lottery holdings must not exceed 100,000 baht per person.

In terms of real estate, in addition to maintaining the existing limits of no more than 10 rai of agricultural land and no more than 1 rai of non-agricultural or residential land, applicants must also not own a motor vehicle, except for motorcycles with an engine capacity not exceeding 300cc; three-wheeled vehicles; small four-wheeled public-hire vehicles; or vehicles used for agricultural purposes.

Applicants must not hold credit card or loan balances exceeding a combined total of 100,000 baht across all accounts.

Regarding the criterion concerning children claiming tax deductions for their parents, which would disqualify the parents from the welfare card, critics said the measure was unfair.

On June 11, the Finance Ministry agreed to remove the condition, and the entire set of eligibility criteria is expected to be reviewed again and submitted to the cabinet for consideration.

A final decision on all criteria is expected before July 17, which is the scheduled date to announce individuals eligible to receive the card.