How Germany and Thailand try to safe their economies

Germany and  Thailand Economic

German Policies During the Pandemic

After the hit of coronavirus in the early 2020, the German government provided many policies assisting both individuals and businesses. The ‘umbrella’ scheme was established in order to provide economic assistance to all businesses, self-employed individuals, associations and institutions that are were temporarily closed due to lockdowns.

There are also other policies such as loans guaranteed by the state, subsidy of public loans to companies, support for developing medical products and research, and the postponement of tax payments and social security redistributions. Another measure is the so called “Kurzarbeit” or short term work. Under the scheme, company employees reduce their working time, but the state compensates parts of the lost wage.

The measures helped to keep the unemployment rate relatively stable. However, some companies complained about bureaucracy and high barriers. On the other side, some economists feared moral hazard effects, as some individuals might have received government support without actually needing it. Furthermore, it’s possible that some companies received government support who were already struggling before the pandemic. Liberal economists criticize subsidizing those unprofitable companies. It only postpones the bankruptcy and binds capital that could be used more productively elsewhere.

The vaccination program was launched in December 2020 – later than in the US, Israel and the UK. The government decided to give vaccines to the highest priority group first due to inadequate amount of vaccine in the first quarter of 2021. The group comprises of elderly people (over 80 years old), healthcare staffs, and nursing home staff, and emergency rooms and ambulance services. After this group the government, the government continued with the higher priority, the high priority, and the rest of the society regardless of health status and occupation. All vaccines (Biontech/Pfizer, Moderna, Astrazeneca, Janssen/ Johnson & Johnson) are free and available for anyone who lives or works in Germany. In November 2021 around 70 percent of the German population were fully vaccinated.

Despite these policies, there are emerging challenges for the government. Firstly, the government cannot convince some part of the people to voluntarily get vaccinated. An anti-vax movement has picked up various conspiracy theories such as the fatal side effects of vaccinations. Secondly, the delta variant of the coronavirus is still spreading and case numbers seem to rise again. Therefore, the government considers restrictions on unvaccinated people such as prohibiting from visiting unessential venues like theaters, football stadiums, and clubs.

All in all, the German Ministry of Finance estimates that the state expenditures due to the Covid pandemic could reach about 1,446 billion Euros. The pandemic has increased public budget deficits tremendously which make the country has the largest deficits in decades. Reducing the debt again will be a long term challenge.

Thai Policies during the Pandemic

The Thai government offered three main financial assistances consisting of soft loans, tax deductions and postponement, and expenditure reduction (i.e. electricity and water bill, contribution to social security, and compensation for workers outside the social security system). The length of implementation period of these policies varied.

Moreover, the government launched several phases of co-payment schemes such as Khon La Khrueng (government supports 50 percent of payment made via G-wallet), Rao Chana (government grants 3,500 baht for registrants, via G-wallet), Rao Rak Kan, Ying Chai Ying Dai, and Rao Tiew Duay Kan (government supports 40 percent of hotel fee and plane ticket and 600-900 baht of food coupon, payment made via G-wallet).

These policies should stimulate the economy and help people to keep their purchasing power. Millions of people registered to receive the financial aid, but the policies were criticized to be partly ineffective due to technological issues. The money was distributed via government’s e-wallet application. Therefore, middle, upper middle, and high income class received benefits, while it was difficult for the poor groups to receive the assistances. This group of people has to rely on cash allowance and various compensation from social the Social Security Office.

The management of vaccination is another challenge for the poor people. Despite being unvaccinated, many of them had to continue working and using public transportation. On the other hand, rich people can purchase the mRNA vaccine, which cost around 3,000 baht.  Furthermore, the government was slower than other countries in provide effective vaccines for the essential workers like doctors, nurses, other medical workers, people who work in funeral ceremony, volunteers, cleaning services, employees in supermarkets and markets, etc.

This mistake consequently resulted in a massive number of infected people during the midyear of 2021. Even though the numbers are rather low compared to Germany, the government had to impose another lockdown and extended the emergency decree. The decision affects the livelihood of the people, economic recovery, and the credibility of the government. The lockdown obstructed the country to return back to normal life. It also intensified the political conflicts, which have been ongoing since 2020.