Activists propose ‘labour bank’ loans for low earners

Labour rights advocates are pushing for the establishment of a “labour bank” to offer low-interest loans to help workers, many of whom are in the clutches of loan sharks.

Narong Phetprasert, a Chulalongkorn University labour economist, said it was high time the country had a specialised system for providing financial assistance to low-income workers.

He said no law prohibited the settingup of such a bank and the government should sell bonds worth 30 billion baht to the Social Security Fund (SSF) to raise the money needed to make a loan programme available to some of its 11 million subscribers.

Mr Narong suggested that those eligible to obtain loans must be subscribers of the SSF, who could be granted credit no more than three times their salaries or not exceeding 45,000 baht.

He recommended interest rates of 10% annually with repayment deducted from their salaries.

“It is possible and the government and the SSF will have to provide assistance in the initial stage,” he said. “Under this scheme, the SSF members will invest about 3,000 baht each to raise 30 billion baht and that will become their source of funds when they need it.”

Chalee Loysoong, deputy chairman of the Thai Labour Solidarity Committee, backed the proposed bank, saying it would keep people out of the clutches of loan sharks charging high interest rates.

“These low-income earners can’t access financial help from banks because they don’t have collateral. The government has been trying to solve the problem of underground lending and the labour bank is a feasible solution,” he said.

The proposal was floated at a seminar on the Social Security Fund, whose assets are now about 2 trillion baht, 80% invested in security assets and 22% in high-risk assets.

Sawit Kaewvarn, secretary-general of the State Enterprises Workers’ Relations Confederation (SERC), said the proposal bank would ensure low-income earners had access to loans at reasonable rates if necessary. “We don’t know if it will be called a labour bank. We want a source of funds for the workers,” he said.