Hike in minimum wage will cause more losses than gain: FTI

[webfact]

Hike in minimum wage will cause more losses than gain: FTI

By PHUWIT LIMVIPHUWAT 
The Nation

 

Supant Mongkolsuthree, chairman of the Federation of Thai Industries.

 

The Federation of Thai Industry (FTI) is urging the next government to work more closely with the private sector in crafting key economic policies, stating that further hiking the minimum wage – a policy proposed by several political parties – will hurt the low-income sector and be harmful to the economy.

 

The FTI has prepared its white paper for the new government, in which it calls for the private sector to play a bigger role in creating economic policies and suggests that the government streamline its workforce. 

 

“Moving forward, the private sector should play a more central role in economic policymaking,” FTI chairman Supant Mongkolsuthree said yesterday in an interview with The Nation.

 

He said that new economic policies should further promote technological innovation, and that both public and private organisations should start focusing on technology to boost their efficiency. 

 

Technology will add value to both labour and goods, which will help boost the income of employees as the cost of living continues to rise, Supant said. 

 

“Furthermore, the new government should consider coming up with a clear roadmap for seriously downsizing its total number of employees,” he said, hinting that the government’s workforce is far too big, leading to diseconomies of scale and causing inefficiency in its organisations.

 

Also, if the workforce is scaled back, government employees will start earning more, which in turn will boost their productivity – something that is much needed, he said.

 

When asked which economic policy proposal worries the FTI the most, Supant responded saying a hike in minimum wages remained the private sector’s key concern. 

 

“Increasing the minimum wage will increase the cost for businesses, making them less competitive,” FTI’s vice chairman Kriengkrai Thiennukul said in a separate interview. 

 

This will force many businesses to leave Thailand and opt for neighbouring countries in the CLMV (Cambodia, Laos, Myanmar, Vietnam) region. It may also cause some businesses to try and cut costs by relying more on technology to produce goods and reduce the number of employees. 

 

Hence, he said, unemployment will increase and low-income earners who these populist policies are meant for, may actually end up losing, Kriengkrai said. 

 

“Instead, the government could encourage private businesses to ‘pay by skill’, which will prevent layoffs and allow some workers to be paid well above the minimum wage,” Suphant suggested. 

 

Burin Adulwattana, chief economist and strategist at Bangkok Bank, added: “While hiking the minimum wage may not lead to inflation as some have speculated, it will lead to an economic slowdown as costs for local businesses will rise.” 

 

He concurred with Kriengkrai in that a hike in minimum wage rate may result in workers being laid off, as businesses will try to cut costs by moving abroad or opt for automation to replace their workforce.

 

Source: http://www.nationmultimedia.com/detail/breakingnews/30366750

 

-- © Copyright The Nation 2019-03-29

[fxe1200]

Hey Mr. Adulwattana, your Bangkok Bank is laying off employees even without a wage hike. This is were unemployment comes from, replacing living tellers with ATMs. 

 

As the workload to be done in the agricultural, manufacturing and services sector will not decrease due to a hike in the minimum wage, there will be no significant layoffs.

 

Besides a wage hike would definitely stimulate the local consumption, which leads to higher profits for companies and more tax income for the state. A minimum wage at a reasonable level can increase employment, and enhance growth and efficiency. The situation today, with a minimum wage nobody can live on, not to mention supporting a small family, is another burden on family clans, who have to subsidy their offsprings way into their adulthood.

[newatthis]

The same all over the world: Employers do not want to pay employees sufficient for a satisfactory lifestyle.

[jonclark]

Well in am sorry FTI many of your members attended the fundraising party for PRPP and one of their policies is to raise the minimum wages to 400 baht. 

 

If they don't like the idea of a 400 baht minimum wage - they probably should have been more careful when shelling out millions of baht for a table at the fundraiser shouldn't they? 

 

https://asia.nikkei.com/Politics/Thai-election/Thai-parties-promise-bumper-wage-hikes-as-election-day-nears2

 

[Sonhia]

Talk to mostly any Thai about thier working conditions: pay, worker rights, equality, sick pay, age and sex discrimination and so on, see what they have to say!

 

The reply maybe very negative... 

 

They deserve much better treatment plus much more than they do now. Better protection, treatment, contracts of employment, salaries, pension plans and so...

 

 

 

 

[geoffbezoz]

Certainly will result in more losses. Loss of life that is as more and more unscrupulous employers, generally the family run conglomerates, truck in even more illegal Burmess/Cambodias  in a dangerous manner to end up as RTA victims on Thailand's roads, with the intent to just boost their profits even more.  Lets face it a few years ago they bitched about introducing a minimum wage at all.

[MaxLee]

7 hours ago, webfact said:

Hike in minimum wage will cause more losses than gain

Yep it will simply skyrocket the cost of living by a huge margin. Need a calculator?

[Srikcir]

7 hours ago, webfact said:

the government streamline its workforce. 

Yes!

Eliminate the military draft, reduce the size of the military by 20% and cut its budget 10% for the next five years. That will put a lot more federal funding into the economy to increase upward mobility of low to middle income classes.

8 hours ago, webfact said:

“Increasing the minimum wage will increase the cost for businesses, making them less competitive,”

If applied equally across the board, then businesses become less competitive as EQUALS. Thus, in effect they become competitive.

[Genmai]

1 hour ago, Srikcir said:

applied equally across the board

You mean applied equally across borders? Neighbouring countries are starting to look better for just about everything every day here.

 

2 hours ago, Sonhia said:

They deserve much better treatment plus much more than they do now. Better protection, treatment, contracts of employment, salaries, pension plans and so...

What about the employers? Don't you think they deserve some standards also? How about workers improving and increasing the quality and quantity of their output?

 

Every single worker I've employed here who decided to quit did so at the drop of a hat without honoring the standard employment agreement that states a 30 day notice must be provided so we actually have time to look for a new person since there are ongoing orders, projects, etc. Not a single person followed this protocol. Don't like work after 6 months? Gone without a trace, don't pick up phone, no notice, nothing. Although we're a tiny company we've had no choice but to install a time-card machine because staff continually abused our system by coming late/leaving early/way longer lunch breaks. Also we've had to pay for security camera installation because stock has been going missing and nobody owns up. In contrast - we've never cut a single baht out of their salary, always pay their social security and salary on time every time, don't ask anything unreasonable of them.

 

Your comment seems to suggest that you've never employed a Thai full time to do things for you. Try it for a few months, then see how you feel about this issue.

[zydeco]

10 hours ago, webfact said:

“Increasing the minimum wage will increase the cost for businesses, making them less competitive,” FTI’s vice chairman Kriengkrai Thiennukul said in a separate interview. 

Then he should be the first one to have his salary cut to 300 baht/day.

[geistfunke]

On 3/29/2019 at 1:23 PM, Genmai said:

Every single worker I've employed here who decided to quit did so at the drop of a hat without honoring the standard employment agreement that states a 30 day notice must be provided so we actually have time to look for a new person since there are ongoing orders, projects, etc.

I have 20 workers for more than ten years and can not confirm your problems. Sure it is important to earn the trust of your workers. The minimum payment in Thailand for 2019 should be at least THB 500,-/day. Unfortunately, exploitation is still normal in Thailand.   

[Genmai]

I'm happy for you that you've been able to find and keep 20 good employees for ten years. Its a real rarity and I hope you appreciate that. I also hope you appreciate that not every employer here shares your experience. It's not a farang thing either - I know plenty of Thai business owners whose major headaches have always stemmed from dealing with other Thai people working for them. 

 

As for exploitation being normal in Thailand - again, I think that's as true for the employers as it is for the employees. How many times have any of us walked into an establishment staffed by a dozen shelp-shlopping pimple poppers drooling over Candy Crush on their MePhones to ask for screws or some stupidly simple thing, only to be "mai mee"-ed away? Everyone who lives here for at least a few years understands that this is not a country for quality, whether that is quality of service, attitude or goods it's generally the rule and not the exception that those things all suck big time here. Nevertheless, those people all get paid a minimum wage when in reality a huge majority of lazy/unmotivated staff here end up costing the company more than what they provide for it. The qualified capable people in the work force likely already earn much more than the minimum wage because that's what their skills command. Why should businesses be forced to pay more money to completely useless (or worse than useless) staff if their productivity doesn't increase accordingly? Is this not exploitation also?

 

You're more than welcome to pay all of your workers 500, 1000, 5000 or however many baht a day you wish. The question is - will the resulting burden of increased price carried over to the consumer be something that the market is willing to bear? And will other bigger companies also have that expectation of their consumers? Or will they simply look to other low cost countries in the region to remain competitive? And what would the latter choice mean for Thai workers?