Thai businesses fear cost surge due to potential minimum wage hike

[webfact]

Businesses in Thailand are bracing for a potential increase in operating costs, following the government’s proposition to raise the daily minimum wage to 400 baht (US$ 11) within the year. The Federation of Thai Industries (FTI) has expressed its concern over the implications of this wage hike, particularly on small and medium-sized enterprises (SMEs), which are currently grappling with elevated interest rates and household debt.

 

“The daily wage should remain unchanged, in line with the tripartite wage committee’s decision,” stated Montri Mahaplerkpong, FTI’s vice chairman. The aforementioned committee, comprising representatives from the government, employers, and employees, had resolved to adjust the wage by an average of 2.37%, or by 2 to 16 baht (US$ 0.056 to 0.45) per day, a decision that commenced on January 1 this year.

 

Prime Minister Srettha Thavisin, however, suggested that the current wage increase is insufficient for some workers, particularly those in the Deep South, prompting a call for a more substantial wage adjustment that could occur more than once annually, reported Bangkok Post.

 

The FTI has warned that a rapid wage increase might lead to severe repercussions for SMEs, with some potentially facing closure. The federation further commented that the wage increase would have minimal impact on the Thai economy, as migrant workers, who stand to benefit from the wage hike, typically spend only half of their earnings in Thailand, remitting the rest to their home nations.

The FTI is also monitoring potential increases in illegal migrant workers from Myanmar, following the junta government’s attempts to fortify its military conscription plan in response to anti-government insurgency. It is anticipated that numerous individuals from Myanmar might cross into Thailand to evade conscription and seek employment.

In a related development, the FTI disclosed that Thailand’s Industries Sentiment Index (TISI) witnessed a rise in January, ascending to 90.6 points from 88.8 the prior month. This increase has been attributed to higher consumption, spurred by government initiatives such as the Easy E-Receipt scheme offering tax rebates up to 50,000 baht (US$ 1,393), visa-free policies for certain foreign visitors, and increased spending in the run-up to the Chinese New Year festival in early February.

 

The TISI figures were derived from a survey conducted among 1,331 entrepreneurs from 46 industry clubs under the FTI. The survey results revealed a prevailing concern over a global economic slowdown, with 82.5% of respondents citing this as the top negative factor. This was followed by high loan interest rates (73.7%) and fluctuating fuel prices (50.1%).

 

by Alex Morgan 

Picture courtesy of Apichart Jinakul

 

Source: The Thaiger 2024-02-22

 

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[bokningar]

So some people in Thailand understand the concept of inflation?

Not the politicians of-cause.

[ikke1959]

Raising the minimum wages will not have a big impact.. If people can buy the same or more the businesses will benefit from it, but with no salary increases people can buy less and that will hurt more. The greed however of businesses is unbelievable, all around the world thousands profit must be millions and millions must be billions and still nobody is satisfied..

[stoner]

51 minutes ago, webfact said:

2 to 16 baht

 

life changing. :(

[worgeordie]

The headline is over the top I think ,  Fear cost surge .... with 2- 16 Baht  wage increase

 

 

regards worgeordie

[Mike Lister]

One problem is that the minimum wage varies around the country, it is the lowest in the southern provinces. 

 

Another problem is that increasing the minimum wage by 20% to 400 baht will have a profound effect on costs. Employers will have no choice but to increase their prices by a similar amount. Add to that scenario the impact of the digital wallet giveaway program and inflation will erode any benefit derived from increasing the minimum wage in the first place. 

 

https://www.mazars.co.th/Home/Insights/Doing-Business-in-Thailand/Payroll/New-minimum-wage-effective-1-January-2024#:~:text=The wage increase became effective,%2C Pattani%2C and Yala Provinces.

[hotchilli]

7 hours ago, webfact said:

Businesses in Thailand are bracing for a potential increase in operating costs, following the government’s proposition to raise the daily minimum wage to 400 baht (US$ 11) within the year. The Federation of Thai Industries (FTI) has expressed its concern over the implications of this wage hike, particularly on small and medium-sized enterprises (SMEs), which are currently grappling with elevated interest rates and household debt.

Same old excuse to keep the workers down.

[Enoon]

 

**** you FTI.