Fair Pay Must Take Account Of Economic Reality: Thai Opinion

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EDITORIAL

Fair pay must take account of economic reality

By The Nation

Promises of a high minimum wage rise have to be made cautiously, and alongside other factors such as education and market conditions

The decision-makers in charge of the minimum wage rate should not let political influence dictate their prospective decision on the minimum wage later this month.

The National Wage Committee is scheduled to review the minimum wage on June 16, after its members acknowledged during last week's meeting that Thai workers are facing increasing pressure from consumer price rises of 3-5 per cent, which are in line with the current inflation rate of 3.94 per cent.

The minimum wage was established to provide a degree of fairness for workers. In theory, it should enhance the bargaining power of hard-working labourers. The regular upward adjustment of the minimum wage should help ease the day to day burden on low-wage earners who have to contend with ever-increasing prices and balance their income against necessary expenditure which is pushed hard by overall inflationary pressure.

However, politicians often tend to make unrealistic promises to workers about high wage rises. This is especially the case during general election seasons when grassroots voters express growing concern over price rises.

Prime Minister Abhisit Vejjajiva has been criticised for failing to control prices in spite of the fact that the problem has now become a nationwide concern.

The Abhisit government has desperately tried to contend with higher inflation by, for instance, subsidising diesel prices, but the consequences of such a fuel subsidy can distort real costs. In addition, the unrealistic suppression of fuel prices can also lead to inefficient energy consumption.

A survey from January to May this year showed that the average minimum daily wage nationwide was Bt175.82. Permanent Secretary for Labour Somkiat Chayasriwong said recently that, considering the overall price rises, a minimum wage adjustment seems to be inevitable.

The question is, what will be the best level at which to set the minimum wage?

Low wage earners naturally want to see their income rise substantially, but a sharp and unrealistic increase does not always fix the problem of the rising cost of living.

Manufacturers tend to react fast to a possible wage rise by raising the prices of goods. A prospective wage rise can also have a psychological impact on the market, and can lead to further price rises even ahead of the actual wage rise.

However, politicians still use the promise of a wage rise to attract voters. Candidates from almost every political party have already promised a certain wage level on their campaign billboards, even though they may have no authority to do so and do not take into account that the wage rate should be considered against the overall economic environment.

It is not possible to dictate the optimum wage level for the future, but politicians will always offer the highest number they can. Such irresponsible promises only put greater pressure on the Wage Committee.

The ideal minimum wage level should be one that balances the interests of workers, employers and consumers. The political factor should not be overdone here because an imperfect rate can have negative consequences such as distorting the overall market, pushing up labour costs to a non-competitive level and affecting consumer spending.

The minimum wage rise should go in line with an increase in capacity, otherwise outsourcing will follow, and that would affect the job stability of low-income workers in the longer term.

Instead of irresponsibly promising the highest figures possible, politicians should offer better solutions for workers to improve their conditions. The questions to address are policy platforms to boost the capacity or productivity of workers, plus education and training.

When workers gain skills and capacity, they worry less about a minimum wage because they can use their skills to better negotiate their income level. That is a more desirable way of improving workers' wellbeing.

-- The Nation 2011-06-08

[Thai at Heart]

a. Stop allowing the import of foreign daily wage labour

b. Improve the schools

c. Allow more FDI

[RogueExpat]

Typical stuff by Phua Thai, promise absolutley anything and find a way not to deliver after you have your position.

Offer an election promise of 300B per day or 15,000B per month skilled salary, with absolutley no idea how they are going to deliver, pay for, or carry out the initiative. Why not just offer everybody in marginal seats free land.

Its a wonder that their supporters actually believe any of the crap that comes out of PT politician's mouths.

Quotes from the above article sum it up in reality:

However, politicians often tend to make unrealistic promises to workers about high wage rises. This is especially the case during general election seasons when grassroots voters express growing concern over price rises.

Low wage earners naturally want to see their income rise substantially, but a sharp and unrealistic increase does not always fix the problem of the rising cost of living.

Manufacturers tend to react fast to a possible wage rise by raising the prices of goods. A prospective wage rise can also have a psychological impact on the market, and can lead to further price rises even ahead of the actual wage rise.

It is not possible to dictate the optimum wage level for the future, but politicians will always offer the highest number they can. Such irresponsible promises only put greater pressure on the Wage Committee.

[pastitche]

So tell me do you believe in the concept of a minimum wage?

Typical stuff by Phua Thai, promise absolutley anything and find a way not to deliver after you have your position.

Offer an election promise of 300B per day or 15,000B per month skilled salary, with absolutley no idea how they are going to deliver, pay for, or carry out the initiative. Why not just offer everybody in marginal seats free land.

Its a wonder that their supporters actually believe any of the crap that comes out of PT politician's mouths.

Quotes from the above article sum it up in reality:

However, politicians often tend to make unrealistic promises to workers about high wage rises. This is especially the case during general election seasons when grassroots voters express growing concern over price rises.

Low wage earners naturally want to see their income rise substantially, but a sharp and unrealistic increase does not always fix the problem of the rising cost of living.

Manufacturers tend to react fast to a possible wage rise by raising the prices of goods. A prospective wage rise can also have a psychological impact on the market, and can lead to further price rises even ahead of the actual wage rise.

It is not possible to dictate the optimum wage level for the future, but politicians will always offer the highest number they can. Such irresponsible promises only put greater pressure on the Wage Committee.

[EdDantes]

I don't see how fair pay for all is an option in any country as the global trading system currently stands, in fact the trend in pay disparities is that they are becoming more unfair.

Every nation cites pressure to become 'more competitive'. Lately we've seen 'the rise of the rest' continuing thanks to their cheap labour and untapped natural resources, and also helped by rich countries' politicians putting private debt on their public accounts.

Looking ahead, will all of this eventually lead to equilibrium where the price of manual labour/minimum wage is pretty similar worldwide, or will corporations and bankers still have ways to play nations against each other in an ever more biting race to the bottom for the many, and race to the top for a few?

It's bad enough that politicians over-promise/under-deliver, but there's a dire lack of discussion about what kind of a future we're facing in the long run.

[anterian]

Fair wages is a non starter, Workers are in a supply and demand situation. If there is a shortage of workers, employers have to compete with each other for workers, so offered wages go up. If there is a large unemployed work force then wages stay static or fall.

So to improve wages a government has to create work, shrink the unemployment pool.

[animatic]

Fair wages is a non starter, Workers are in a supply and demand situation. If there is a shortage of workers, employers have to compete with each other for workers, so offered wages go up. If there is a large unemployed work force then wages stay static or fall.

So to improve wages a government has to create work, shrink the unemployment pool.

Agreed,

but a large part of the problem is importing desperat neighbor workers for much less than a Thai would be paid for the same work, and thus keeping the day rate artificially low.

Secondly lack of training tpo raise untrained workers who won't take the dirty jobs anyway into positions where they can earn decent money for value given to a company.

[anterian]

Fair wages is a non starter, Workers are in a supply and demand situation. If there is a shortage of workers, employers have to compete with each other for workers, so offered wages go up. If there is a large unemployed work force then wages stay static or fall.

So to improve wages a government has to create work, shrink the unemployment pool.

Agreed,

but a large part of the problem is importing desperat neighbor workers for much less than a Thai would be paid for the same work, and thus keeping the day rate artificially low.

Secondly lack of training tpo raise untrained workers who won't take the dirty jobs anyway into positions where they can earn decent money for value given to a company.

Agreed also, but this is not just a Thai problem, unskilled immigrants, legal or otherwise, are becoming a global problem. As to your second point, you need to include the increased but unrealistic expectations of many people, people who feel they deserve a better job with more status but in fact lack the capability.

[TAWP]

a. Stop allowing the import of foreign daily wage labour

b. Improve the schools

c. Allow more FDI

Why do you hate poor people of other countries?

Everyone is always so adamant that everyone should be showing solidarity...until they have to share something.

[citizen33]

The trend in countries like the USA and UK is not merely that the gap between the top and bottom is widening, but that lower and middle-income people as a group are falling further behind the top 10%. Despite economic growth since the 1970s the middle has gained little. On the other hand, the accumulation of wealth at the top leads to too much liquidity chasing profit, with the results that we've seen. A lot of the arguments above that assume trickle-down and implore the poor to wait for better times are wide of the mark. Even the small business crowd which seems to be over-represented on TV is likely to be part of the 'squeezed middle'.