New minimum wage will affect SMEs

[rooster59]

New minimum wage will affect SMEs

 

 

As the government is going to increase minimum wage, at least 15 baht higher, as New Year’s gifts for workers and to become effective end of this month, concern is growing among employers that small and medium enterprises (SMEs) will bear the burden.

 

Mr Tanit Soratna, vice president of the Employer’s Confederation of Thai Trade and Industry, said SMEs which form up to 80% of industry will bear the burden of higher minimum wage if it is increased 15 baht higher, or 5%.

 

He said the 5% increase is higher than the inflation rate which is set to be 1.6% this year.

 

Full story: http://englishnews.thaipbs.or.th/new-minimum-wage-will-affect-smes/

 

 

-- © Copyright Thai PBS 2018-01-07

[Pib]

Poor SMEs...having to pay 15 baht per day per employee...the horror. 

 

And I'm sure the 1.6% inflation figure is the official govt "adjusted/headline" inflation figure, but in the real world inflation for day-to-day living inflation has went up more than 1.6%.   It's like when that plate of prepared food use to be 40 baht last year  but now it's 45 baht....that's 12.5% inflation.   Or that personal care item at the market went from 20 baht to 25 baht this year....at 25% increase.  Or the cost of tobacco/liquor going up due to higher govt excise  tax.

[RichardColeman]

One big fear I have with Thai wage increases is pollution and more litter. Currently I recycle everything - get about 200 baht every 3 months for it which is nice (everything counts and its the water bill for a month), and if they make the recyclists wage too high and the costs go up too far to make recycling a viable option, then all those bottle, tin and paper collectors will be unemployed and the majority that litter that is currently being collected and recycled will just be laying on the streets and beaches and roads.   

 

Thinking that Thai people will pay the government or council to recycle their stuff like UK council tax is imaginary science fiction !

[Pib]

Many recyclists that come around to your residence to buy recyclables are self-employed...not getting a wage from an employer.  And here in my Bangkok moobaan whenever the local govt garbage truck picks up garbage they go through it while dumping it in the truck to pick out recyclables and put them in separate bags hanging on the truck...and I expect the garbage is picked through again when dumped at the landfill/burn plant.  And many people take their recyclables to a various little companies who buy it....many of them around.     I expect there will still be plenty of recycling going on for many years in Thailand due to so many poor making a living off it without the fear of the govt taxing to recycle stuff.

[billd766]

16 minutes ago, Pib said:

Many recyclists that come around to your residence to buy recyclables are self-employed...not getting a wage from an employer.  And here in my Bangkok moobaan whenever the local govt garbage truck picks up garbage they go through it while dumping it in the truck to pick out recyclables and put them in separate bags hanging on the truck...and I expect the garbage is picked through again when dumped at the landfill/burn plant.  And many people take their recyclables to a various little companies who buy it....many of them around.     I expect there will still be plenty of recycling going on for many years in Thailand due to so many poor making a living off it without the fear of the govt taxing to recycle stuff.

 

The local recycler used to come regulary but for some reason he stopped coming in the last half of 2017. Now I keep it and give it to the trash guys every month. They do a great job out here and take all my trash every week and I pay 30 baht per month.

[Pib]

18 minutes ago, billd766 said:

 

The local recycler used to come regulary but for some reason he stopped coming in the last half of 2017. Now I keep it and give it to the trash guys every month. They do a great job out here and take all my trash every week and I pay 30 baht per month.

He's probably staying at home trying to get Win 10 1709 to work.  Yea, here in my Bangkok moobaan we pay 240 baht per year (20 baht per month)...twice a week pickup....and for 8 years I didn't pay anything as the moobaan central management picked up that bill for everyone up until last year.   But my MIL in the province pays 30 baht per month like you for garbage pickup twice a week.

[Anak Nakal]

Workers need a wage to live on

[Get Real]

If they can´t pay people working 315 Bath per day. Then just shut the doors! Don´t dare go out and complain!

[robblok]

People here are saying its only a bit of money.. its a 5% increase of wages of course its going to hurt the companies. I am not saying it should not be done but 5% is not a little bit its substantial. You are looking at it as 15bt... not at 5%. 

 

I feel its a nice increase for the workers.. Its more of an increase than what many get in my country (percentage wise).

 

Do remember what happened after the last high increase of salaries.. all of a sudden everyone wanted more money.. market vendors ect everyone and the prices rose and in the end the workers did not win that much. Better to get a smaller rise that hopefully does not upset the other people. Otherwise this raise is again for nothing.

 

Normally you get raises if you increase in productivity and an raise that keeps pace with inflation (separate raise). 

[robblok]

31 minutes ago, Get Real said:

If they can´t pay people working 315 Bath per day. Then just shut the doors! Don´t dare go out and complain!

You think a 5% in salary cost is nothing for a large company (depends of course on their profit). It really depends how labor intensive the work is and how much of the total costs are labor costs. 

 

 

[holy cow cm]

1 hour ago, robblok said:

You think a 5% in salary cost is nothing for a large company (depends of course on their profit). It really depends how labor intensive the work is and how much of the total costs are labor costs. 

 

 

You are so correct. Normally they try to pass the increase on of that to the buyers, who if are not the actual retailers have to suck it in before reaching retail. Retail markets normally never give a product increase. Too easy to find another suppplier that keeps their yearly bonus the same. 

[Get Real]

4 hours ago, robblok said:

You think a 5% in salary cost is nothing for a large company (depends of course on their profit). It really depends how labor intensive the work is and how much of the total costs are labor costs. 

 

 

No, Rob. I know that most of the Thai companies today work with a margin profit that is fantastic. You might not think it´s so much, due to that it´s only 5-10 bath per product but it sums up. 

But, ok! As well as I say that they can shut the doors if they can´t pay. Then, of course, I also need to say that the people getting the raise really need to start work. That instead of dragging their lazy <deleted> behind them like a big weight every day. As you tried to state it. It cuts both ways. 

Edited January 7, 2018 by Get Real

[robblok]

28 minutes ago, Get Real said:

No, Rob. I know that most of the Thai companies today work with a margin profit that is fantastic. You might not think it´s so much, due to that it´s only 5-10 bath per product but it sums up. 

But, ok! As well as I say that they can shut the doors if they can´t pay. Then, of course, I also need to say that the people getting the raise really need to start work. That instead of dragging their lazy <deleted> behind them like a big weight every day. As you tried to state it. It cuts both ways. 

I am not in the know about the profit margin of Thai companies, just saying that 5% is a lot if the company is labor intensive (if the workers don't increase productivity). 

 

I am not saying the workers don't deserve it or anything like that, just saying that 5% is not something that is minor most people would love a 5% raise and keep doing the same thing. Just ask all those pensioners if they think a 5% increase is nothing. I know the 15 baht sounds like nothing and 15 bt is nothing.. but it still is 5%.

 

Anyway good on the workers and if you say the companies can pay its all good. In the end the consumers will pay probably. 

[Thechook]

Didn't Yingluk get attacked and screamed down when she increased the minimum wage and now her opposition are doing the same.  Prayuth's popularity is at its lowest since 2014, is he trying to buy it back?

[robblok]

5 hours ago, Thechook said:

Didn't Yingluk get attacked and screamed down when she increased the minimum wage and now her opposition are doing the same.  Prayuth's popularity is at its lowest since 2014, is he trying to buy it back?

The increase of YL was crazy far higher as this one and if you were here at that time you would have noticed that after that pay rise everyone else raised their prices too as they all wanted to cash in and in the end it did not help the workers much because of the high increase of other prices.  There is a difference between 5% and 40%. 

 

The 5% is something normal and should be absorbed much better and will probably not give such a massive rise in other costs as 40%. 

[billd766]

8 hours ago, Thechook said:

Didn't Yingluk get attacked and screamed down when she increased the minimum wage and now her opposition are doing the same.  Prayuth's popularity is at its lowest since 2014, is he trying to buy it back?

 

Yes she did.

 

The difference however is that she raised it in some cases by 120 baht and this government proposes only 5%. A large difference.

 

IMHO the 5% is not really enough.

 

 

[lkn]

21 hours ago, robblok said:

You think a 5% in salary cost is nothing for a large company (depends of course on their profit). It really depends how labor intensive the work is and how much of the total costs are labor costs. 

Presumably this is mostly factory workers. Based on the staff in malls, HomePro, 7-Eleven, etc. the companies have no problem hiring dozens of superficial staffers to hang around in the aisles, and most office workers etc. are probably not on minimum wage.

 

[robblok]

2 minutes ago, lkn said:

Presumably this is mostly factory workers. Based on the staff in malls, HomePro, 7-Eleven, etc. the companies have no problem hiring dozens of superficial staffers to hang around in the aisles, and most office workers etc. are probably not on minimum wage.

 

Probably, i have no clear insight in the price of staff of homepro and 711.. one would think 711 would be minimum wage too (just an assumption could be totally wrong)

[Pib]

Employers will always cry when the minimum wage is increased....even the smallest increase causes them to cry...cause them to say it will hurt their business....maybe cause reduced hiring....maybe this...maybe that....the sky is falling.      

[janclaes47]

7 hours ago, lkn said:

Presumably this is mostly factory workers. Based on the staff in malls, HomePro, 7-Eleven, etc. the companies have no problem hiring dozens of superficial staffers to hang around in the aisles, and most office workers etc. are probably not on minimum wage.

 

Many of the staff in DIY stores and malls are partially paid by the shop and partially by the manufacturer of a certain product, maybe even completely by the manufacturer I don't know, but fact is that many of them are actually employees of the manufacturer.

[Grumpy Duck]

Let me see if I can find my usual cartoon on this subject from the US. 

[NiwPix]

Guys, while agree 15 baht is not much it’s like said before...it’s 5%.
And I also agree that many ( especially hardware stores ) are overstaffed. But these are not the businesses that will feel the 5%. Homepro, 7/11, sizzler, yayoi, ( enter franchise name here ) have marketing teams that will be able to put the 5% into their sale prices without the average consumer even noticing.
But think of all the non-franchise business that make a normal living. They don’t have marketing teams, bachelors in business etc.
If they have 10 employees, there payroll will be 90,000 ( plus social security, which would be another ~5k ). Now, a 5% increase means his payroll is now 94.5k and and few baht more for social security. Means now his payroll and social security is at 100k.
Basically 5k more expenses. The average business owner will notice this. 5k a month = 60k per year. 60k sounds like a nice 2 week holiday with the family....gone.
Just food for thought that it will not affect the large companies, but small family owned businesses. While it will not bankrupt them, they will notice/feel it.


Sent from my iPhone using Thaivisa Connect

[Grumpy Duck]

1 hour ago, NiwPix said:

Guys, while agree 15 baht is not much it’s like said before...it’s 5%.
And I also agree that many ( especially hardware stores ) are overstaffed. But these are not the businesses that will feel the 5%. Homepro, 7/11, sizzler, yayoi, ( enter franchise name here ) have marketing teams that will be able to put the 5% into their sale prices without the average consumer even noticing.
But think of all the non-franchise business that make a normal living. They don’t have marketing teams, bachelors in business etc.
If they have 10 employees, there payroll will be 90,000 ( plus social security, which would be another ~5k ). Now, a 5% increase means his payroll is now 94.5k and and few baht more for social security. Means now his payroll and social security is at 100k.
Basically 5k more expenses. The average business owner will notice this. 5k a month = 60k per year. 60k sounds like a nice 2 week holiday with the family....gone.
Just food for thought that it will not affect the large companies, but small family owned businesses. While it will not bankrupt them, they will notice/feel it.


Sent from my iPhone using Thaivisa Connect

I agree with you on big businesses, I seriously doubt a family owned business will have 10 employees. More likely it is operated by family members not paid by hourly wages with the dirty work done by 1 or 2 employees most likely treated like slaves. Maybe the workers will be able to visit their families for 2 weeks a year instead of 1with that 5% raise. 

[oldcarguy]

the problem is everyone up the ladder will want the 15 baht raise or more.....

 

 at some point they end up firing the least productive person and make the rest work harder....

 

and further in the future buying a machine to do the work loses a few more jobs ,

 

the USA  labor leaders are pushing for a $15 an hour wage ,  which will end up in more people being let go , 

but yes the remaining will get $15 an hour , and rising prices will wipe that out pretty quick , 

 

Workers need to be more productive and EARN the higher wage , not have the Government force it....

 

 

[Pib]

A lot of SMEs simply do not comply with minimum wage requirements as there are loopholes for them to get around them, like having someone hired/paid on a day-to-day basis even though that person has been on staff for a long time...it's like being in temporary hire status forever.  Or van or truck drivers working for a company where the driver is paid "so much for each trip he makes" and not by a minimum wage per day.   So many ways around the minimum wage for a lot of employers. 

 

Though in the fact that most Thais will "not" go complain to the local labor office about some employment/pay practice and you have a recipe for continued employment/pay abuse.

[lkn]

1 hour ago, Pib said:

A lot of SMEs simply do not comply with minimum wage requirements as there are loopholes for them to get around them, like having someone hired/paid on a day-to-day basis even though that person has been on staff for a long time

I recently had to do an employment agreement with a Thai, so I searched for templates, and everything I found was for a fixed period, not permanent hire. Could just be a fluke, but I bet it’s to avoid severance payment proportional to time worked, annual leave, etc.

 

Doubtful that Thai labour law would actually allow a fixed contract for work that is clearly not of a fixed time period, but as long as the workers do not take it to court, no-one cares.

 

As for the wage increase, my view is that if you cannot generate at least 315 baht of value by having a person work 8 hours for you, then you really should not hire that person in the first place.

Edited January 10, 2018 by lkn