Quality Products, Not Cheap Labour, Pheu Thai Policy: Jaruphong

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Quality products, not cheap labour, Pheu Thai policy: Jaruphong

By The Nation

Pheu Thai secretary-general Jaruphong Ruengsuwan said his party's election promise to increase the daily minimum wage to a flat Bt300 would help labourers stand on their own feet.

"From now on cheap labour will no longer exist in Thailand, and with this policy, skills of workers will be upgraded and a policy to make only high-quality products adopted, to accommodate a party policy - Year 2020," he said.

Asked whether this policy would result in foreign companies migrating from Thailand, he said the Pheu Thai-led government would subsidise operations of Thai firms in other countries where labour is cheap.

Citing a study by the International Labour Organisation, he said the daily minimum wage should be Bt441 - a rate he said would by sufficient to feed and support a labourer with a wife and a child in one day.

Jaruphong dismissed criticism that the Pheu Thai Party would want to scrap the wage tripartite structure, saying it would want to make the Wage Tripartite Committee truly represent employees.

The highest minimum wage is now Bt215 paid in Bangkok. An adviser to the WTC said on Tuesday that the most practical increase would be Bt7, which could be approved by October at the earliest.

He said another promise to pay a minimum salary of Bt15,000 to government officials at entry level would continue, and could be implemented by October. Personal income tax could be lower by January.

Caretaker Labour Minister Chalermchai Sri-on warned against approving the flat Bt300 rate, saying it would result in a higher cost of living and higher commodity prices.

He said the Bt15,000 promise would also affect the entire financial structure and burden fiscal policy, because those now receiving less than Bt15,000 would not accept new officials getting more than they did, and would demand equal or higher salaries.

-- The Nation 2011-07-07

[wolf5370]

Asked whether this policy would result in foreign companies migrating from Thailand, he said the Pheu Thai-led government would subsidise operations of Thai firms in other countries where labour is cheap.

Erm, that's a good answer - to an entirely different question.

Caretaker Labour Minister Chalermchai Sri-on warned against approving the flat Bt300 rate, saying it would result in a higher cost of living and higher commodity prices.

He said the Bt15,000 promise would also affect the entire financial structure and burden fiscal policy, because those now receiving less than Bt15,000 would not accept new officials getting more than they did, and would demand equal or higher salaries.

Oh dear, someone that realises the cause and affect law - doubt she'll keep her job long then. No one likes a smart arse (that knows their job).

When will people understand that raising the minumum wage does nothing for those at the bottom - prices rise to pay the wages and because market forces allow, and more people lose their jobs. Setting starting wages higher than existing positions without insentives also is folly - not the best way to garner good morale.

The only way to help people at the bottom is to tax higher at the top and give benefits to the low paid - then it does not affect the company bottom line and does not cause job loses and direct inflation.

Thailand makes very little (I mean makes - not bolts together for a Japanese company etc) that is exported outside of produce (grain/fruit/meat). This needs to change before it can move away from attracting foreign business on the strength of it low cost labour market. What is need is incentives and drive for creativity, design and engineering - all of which requires education and foreign investment (to import skills and ideology) - education id oft promised, but never delivered and the latter is taboo (outside of cash investment). It requires nothing short of metanoia.

I once worked for a large multinational retail company (as a client of mine) - they where a very large company that most in Europe would know (they have shops here in Thailand too - but not many). When I first worked with them, they had a very sucessful clothing retail business selling to upper middle class women of a certain age (i.e. 40+ and/or concervative) - then they looked around and saw new companies like Gap and Next selling teenagers and twenties-somethings clothes hand over fist - so they tried to match it. In a stroke (over just one season really) they lost much of their clientel and gained very little of their new target - they never did get back all tyheir customers. The morale of the story is - if the model works, why take the risk changing it? (or "if it ain't broke, don't fix it!").

[whybother]

Asked whether this policy would result in foreign companies migrating from Thailand, he said the Pheu Thai-led government would subsidise operations of Thai firms in other countries where labour is cheap.

Erm, that's a good answer - to an entirely different question.

<snip>

Not only that, but it's adding insult to injury.

Asked if foreign companies will leave (causing unemployment), he stated that Thai companies will be subsidised to leave (causing even more unemployment).

[jonclark]

So what happens if the small business, for example a restaurant, you know the type a small Kao Man Gai type which operate on a shoestring budget can't afford to pay the 300 baht a day for it's staff. A fuc**ng useless policy which will increase poverty as employers lay off people, to pay for those that remain. So it seems there are 3 options

1) close the business

2) cut down on staff

3) put up prices to cover the extra cost

[Jingthing]

Just proclaiming the products "quality" doesn't actually make them quality. Clearly, cart before the horse here. Reminds me of the oh so successful "quality tourist" policy. Yep, as I said from day one, looking forward to sharp spikes in prices and much more unemployment. Happy days are here again ... for those close to the Thasksin dynasty.

Edited July 7, 2011 by Jingthing

[thunder30101]

Yes we wouldnt want those peasants making a decent wage which they could spend to buy more of the products they produce in their current slave labor job would we while the factory owner laughs all the way to the bank ?

[Jingthing]

Yes we wouldnt want those peasants making a decent wage which they could spend to buy more of the products they produce in their current slave labor job would we while the factory owner laughs all the way to the bank ?

You're not thinking too clearly. Clearly it would be great to redistribute more wealth from the rich in taxes to make reasonable mass wage increases possible. But for some reason (hint the Thaksins and their buddies ARE part of the ELITE) you don't hear any talk about PAYING for these increases from the hiso class. They've got to come from somewhere, Thailand's actual human capital (what the workers are producing overall) is quite low by international standard, so high wages aren't really justified unless they are earned. First, Thailand must prioritizing the CAUSE of wealth (aside from natural resources) human capital.

Edited July 7, 2011 by Jingthing

[whybother]

Yes we wouldnt want those peasants making a decent wage which they could spend to buy more of the products they produce in their current slave labor job would we while the factory owner laughs all the way to the bank ?

They're not going to get a decent wage if they're unemployed.

The idea is to increase skills and productivity. Then the companies can afford to pay more.

[thunder30101]

Oh yes two of the biggest red haters on the forum jump out of their gilded cages to tell thailand how much they should pay their slaves I mean workers. Of course in your home country if these people were you or your family and they were not paid enough to maintain a decent standard of living to provide for their families it would be a different story wouldnt it ???

[Jingthing]

Oh yes two of the biggest red haters on the forum jump out of their gilded cages to tell thailand how much they should pay their slaves I mean workers. Of course in your home country if these people were you or your family and they were not paid enough to maintain a decent standard of living to provide for their families it would be a different story wouldnt it ???

That's a loaded question and you are ignoring FACTS. Unemployment and even more so HIGH INFLATION are the two things that bring the most suffering, mainly to POOR PEOPLE. You don't even listen to me, I think they need massive reforms in TAXES of the wealthy, and major LAND reform. That's real right wing, is it?

[themockrat]

Sounds like a good idea. The world is already flooded with crappy Chinese products. We need low-cost while still quality products. That's the future Thai market.

[wolf5370]

Yes we wouldnt want those peasants making a decent wage which they could spend to buy more of the products they produce in their current slave labor job would we while the factory owner laughs all the way to the bank ?

Mmmm - as I said in my post above - raising the minimal wage DOES NOT gve people more expendable income - this is fact the world over. Low paid people are paid for doing menial, low skilled jobs - employers pay them because they are cheap. Indeed in this country, like many developing countries people still take the place of technology because they are cheaper. How will it help if 300 farm labourors are replaced by a tractor - its already started to happen - it will happen guarateed if running a tractor becomes more efficient. As the low paid get more money (in terms of bigger numbers on their pay cheque) several things happen - the cost of the wages id passed to the consumer (i.e. inflation) - so their money is worth less for a start - people that were being paid 300 baht for supervising people earning 200 baht, now have to be paid more and so on up - so again there is a hit on inflation. Companies always take advantage of increases when they can blame it on something external (like rising oil prices means price goes up - oil comes down, price stays the same) therefore inflation actual increases more than the hit it should take. Also, people start to hit tax boundaries and lose money as they do (not sure of the tax boundaries here - so can't be specific - but usually as people slip into a larger tax bracket they can actually earn less in real terms - i.e. take home).

This is why I said that the only way to improve the lot of the poorest sections (both paid AND unpaid) is to tax at a higher rate the those that have the greatest expendable inome (the rich) and pay it as benefits to the poor - thereby removing the pull of the employer. If any political party cares for the poor, it is social security that they aim for - not raising minimum wage.

Ecconimics is a complex beast - what looks good on the surface can actually be the opposite (and vice-versa) - of course politicians and Givernments know this too as they have teams of ecconomic pundits working for them - and public relations/publicity people to sell what sounds best and costs least!

I am not saying poor people should not have help - but raising minimum wage is not help - its propoganda - the selling of a lie - social safety net, benefits, social security - these are what help (decent free schooling, meals on wheels for the elderly, home care, and so on - paid by the state from taxing luxuries and excess wealth. Not promises of, not unpaid enforcement on the private sector that bankrupts small companies (like the 30baht medical did), but actual paid for services, managed, publicised and delivered. When I see that, then I will believe they care about the poor and not tinsel. This is A-political - i.e. from any party - not just this new Gov.

Edited July 7, 2011 by wolf5370

[thunder30101]

Sorry pal but on your retirement income maybe you havent noticed the price increases of the last year in food and energy to name just two things families depend on. What do you tell a thai family with kids whos income has dropped because of these price increases ??? How much money was made off the recent palm oil scam ? Who is subsidizing the cost of energy that fuels these same industries that cant afford to raise their workers wages ? Even china has come to realize that paying workers a decent wage to invest in their home country is the right thing to do.

[happyjune]

300b a day X 26 working days a month =7800b wage a month.

Are there actually many Thais anyway that don't make 7800b a month?

I am really asking, is this only going to effect 10% of the working population anyway kind of thing?

[noahvail]

300b a day X 26 working days a month =7800b wage a month.

Are there actually many Thais anyway that don't make 7800b a month?

I am really asking, is this only going to effect 10% of the working population anyway kind of thing?

Currently, the highest minimum wage is in Bangkok, at 215 baht/day. Times your 26 days, you get 5,590 baht. It's considerably lower in the provinces.

[IMA_FARANG]

Yes in the long run that is the only sensible policy. Education is the key to a work force that is capable of producing high quality and high value products that can sustain economic growth in a developed country. It will happen eventually, but the way to that goal may not be easy or peaceful. It's nice, if somewhat surprising, to see a person in government that actually realises that in the long term it is quality not low cost prducts that will be the answer.

Unfortunately, here in Thailand, there is a "economically privaledged" group that uses it's privaledges to stifle education. And fugitive-brother and sister-clone are in that group too...although they wouldn't want to admit it. No real hope there.

So for those reasons, the next decade or two is going to be a turbulent and troubled time in Thailand.

But if you think that's bad, wait until you see what will happen when the 1 billion plus people in China start asking for the same thing.

[Soutpeel]

The idea is to increase skills and productivity. Then the companies can afford to pay more.

[Nisa]

Citing a study by the International Labour Organisation, he said the daily minimum wage should be Bt441 - a rate he said would by sufficient to feed and support a labourer with a wife and a child in one day.

So, are they basically saying that having it at 300 means that the child still cannot eat? And that even at 441 baht a day does it mean Dad has to work 7-days a week or is it just assumed the family will not eat on week-ends?

[princejohnjay]

What is wrong with people and this world?? Cut down wages problem, increase wages problem...nothing pleases this world at all.

[wolf5370]

Sounds like a good idea. The world is already flooded with crappy Chinese products. We need low-cost while still quality products. That's the future Thai market.

It is - but it is a goal, not something that can be commanded (no magic wand). It takes the new Gov to concentrate on education and give incentives that engender ideas and creativity. Look at Cambridge University as an example (I know its a lofty example, but bear with me) - Cambridge has the highest density of technology companies and research companies in the world (more than Silicone Valley etc per capita) - many are joined to the University itself (came from post grad courses - University funded/arranged funding/sponsored etc - and earns back through part ownerships) - this model is age old in Cambridge (Cambridge is over 800 years old)) and many Universities around the world do similar now. It is not an over night process and could be disasterous to Thailand if she (the country I mean - not the caretaker-PM) tries to shift before the foundation is ready. Most of us are old enough to remember that all the cheap crap used to come from Japan - now all the best stuff does - Made in Korea also used to make us (me) think of cheap plastic toys and rebadged 15 year old Nissans - but not any more, yet Hong Kong is still struggling with that image.

I don;t think Thailand has that image actually - to me Thailand Thai good imported abroad is more the quaint, fairly expensive, stuff - not technological, more artistic or craft (wood carvings, bronze, silver, expensive furniture, silk) - not really known as a major exporter at all outside of exotic food and stapple. I too would like to see this change.

Thais just need to be educated better - in ways that give them interests that are cerebral too - Thais can be very creative as kids, and it seems to be it is almost knocked out of them by the school system here. No one seems to read for fun (other than comics), its rare that there are inter-school competitions outside of basic sports and the odd school quiz - I am thinking more along the lines of robot olympics and so on. This is why it needs real vision and real committment, because it needs sponsorship from commerce, its needs funding. Commerce needs a buyin (ROI) - kids need to be educated into being designers and engineers (not macarno bolt togther mechanics) - to carry that creativeness on from drawing cartoons to designing bridges etc. Long term view, long term startegy - PT got in on the anti-elite ticket; are still bashed for being run by some of the wealthiest people in the country; what better way to put their "money" where their mouth is and invest in the future BY investing in the kids! (and not in the Blair's New Labour way of throwing buckets of money, league tables and super-accademies - but my invigourating the students with interesting and fun lessons taught well in a modern thought provoking way, and bringing invention, intregue and lateral thinking out through projects and fun competition).

[Gippy]

How exactly would the government actually police this policy anyway? Has any small business owner on here ever had the government come round to check if you are currently paying the minimum wage? We certainly never have.

If we are forced to pay 300 baht a day for unskilled workers then we will either have to put our prices up or fire somebody, neither of which is going to help anybody.

[wolf5370]

Sorry pal but on your retirement income maybe you havent noticed the price increases of the last year in food and energy to name just two things families depend on. What do you tell a thai family with kids whos income has dropped because of these price increases ??? How much money was made off the recent palm oil scam ? Who is subsidizing the cost of energy that fuels these same industries that cant afford to raise their workers wages ? Even china has come to realize that paying workers a decent wage to invest in their home country is the right thing to do.

Is that directed at me? I'm not retired, I'm not old enough to retire - even here. I know, you took at shot at the odds, in my case you missed. I'm also not a a Red hater (assuming I was one of "the two" _ - in fact I have stated many times that I like some of their policies - in fact quite a few of them initially - before BKK and Thaksin's crusade that is, i.e. the real policies. Personally I think its strange the level of hatred between the two "camps" especially the farangs here (like little un-retired me). I think the attitude stinks and is wholey detrimental. There can be no discourse, because it always boild down to "AIrport take over" Vs "Bangkok riots".

You still missed the point - all of them - more money as a minumum causes higher prices, so more money = less buiying power. As is said about 9 times in the two posts above - social security is the way to help the poor - the rich pay for ther poor - not through the employer. Really can't put it any simpler than that.

What I would like the Government to tell them (because what I personally tell them is not relevant and can not help at all) is that their kids can go to school for free - free lunch - free bus - free books - free school, that they can have free health care, that they can have X Baht a month to help with living expenses beciuiase they are so poor, that they can get a clothing allowance, free accomodation/subsidised rent/etc, vouchers for stapples such as rice, meat, water, milk for kids, etc. Rather than giving them an extra 100 baht a day with the left hand and watch them lose it again as inflation is pushed up further.

I am not disagreeing that things are more expensive - somethings like milk is very expensive now - I am not saying (and never have) that infaltion is currently zero and increasing minumum wage will make things go up - but pushing your foot harder on the acceleator in your car makes your car speed up, even if it was moving when you did it. inflation is affected by many things, adding more to it will make things cost more - adding less to it will make things cost more too, just not as much. Benefits, social security, can be adjusted in-line with inflation - it would cost far too much to continually re-align minimum wage (especially as it is a big contributer to it here)

China is NOT a country to choose for workers rights - people can spend six months or more working away from their families in super factories - if they get sick, they are thrown out. Half day off a week and no money to go home (or just too far away). They are paid barelyy enough to cover their own food and send a little home. The people that get the decent wage are the "value" workers. With 2 billion workers to choose from, there is no incentive for factories to raise their salaries. What may be true in offices in Beijing and Hong Kong - isn't true in the factories out of town.

Edited July 7, 2011 by wolf5370

[whybother]

Oh yes two of the biggest red haters on the forum jump out of their gilded cages to tell thailand how much they should pay their slaves I mean workers. Of course in your home country if these people were you or your family and they were not paid enough to maintain a decent standard of living to provide for their families it would be a different story wouldnt it ???

Well, why stop at 300 baht a day. Why not lift it to, say, the same as Australia's minimum wage - about $120 (3,800 baht) a day.

[WinnieTheKhwai]

I suggest to wait and see what the actual proposal, and law looks like after it passes. I don't trust newspapers enough to accurately document and translate statements, and also (and especially) not to accurately locate people who are speaking on an area they have actual authority over. What I see a lot is taking some wingnut and let him blabber a bit, and presto: a new article that doesn't actually report news, but serves to confuse the public.

In all seriousness: It's actually quite impossible to guarantee 15K nationwide for new employees, without addressing what happens with existing employees who may not be graduates but are more productive.

Right now I'm curious, but optimistic that it looks like finally something is being done for the poor. So good intentions, but I think a feasible law isn't quite there yet. Thank Gawd for Thaksin to guide the process, because he understands business very well.I wish he could come back sooner rather than later and get Thailand back on track, CEO style.

Edited July 7, 2011 by WinnieTheKhwai

[letitbe]

So what happens if the small business, for example a restaurant, you know the type a small Kao Man Gai type which operate on a shoestring budget can't afford to pay the 300 baht a day for it's staff. A fuc**ng useless policy which will increase poverty as employers lay off people, to pay for those that remain. So it seems there are 3 options

1) close the business

2) cut down on staff

3) put up prices to cover the extra cost

or

4) increase number of hours worked in day

5) ignore law most laws are ignored here

6) make staff pay for previous things which often are free (not always) such as lunch

I am totally in favour of a minimum wage and think 300 baht a day is about right as usual its detail which will spoil it. In other countries which have a high social security net it works fine since minimum wage if mostly close to minimum social security net. Here they have almost no security net so very difficult to implement. As for 15,000 for government employees thats just totally stupid and simply helps widen the gap between really poverty poor and rest. They would not dare implement that in private sector since non graduates would be employed instead of those with useless degrees anyway. Its also going to hugely increase corruption in public sector where it is already rife with many jobs going to family members or being paid for. what an insane policy.

[ginjag]

Citing a study by the International Labour Organisation, he said the daily minimum wage should be Bt441 - a rate he said would by sufficient to feed and support a labourer with a wife and a child in one day.

So, are they basically saying that having it at 300 means that the child still cannot eat? And that even at 441 baht a day does it mean Dad has to work 7-days a week or is it just assumed the family will not eat on week-ends?

I don;t know what all this is about really, I live far better than the Thai around me, my daily food and living amounts to less than this 300/400 bht. breakfast +coffee/orange juice=40bht........lunch burger 25bht......dinner potatoes greens gravy chicken, fruit..70bht.......supper coffee 5bht. eaten at home.

Thais will live on Thai food at a third the price. And most eat with families so the cost is less.

All my food I buy at Tesco Lotus. If I bought Thai food I would live at a lot lower cost.

Yesterday 5 kilo's of rice at Tesco was 90 bht, chicken at 80 bht a kilo.

my days food 140bht......electric 50bht----water 10bht....incidentals 25bht--225 bht a day.

no I am not a cheap charlie..I eat very well-the same as in England.

I think that Thais need a better income, to live more comfortable. but I have proven --above it's not all that bad===COMMENTS==sure ???

[hammered]

Three hundred baht a day is entirely reasonable considering the hand jobby small raises of the last decade while basic commodities have increased by far far bigger percentages. It is making up for lost time. In the past decade there have also been some pretty big bonuses, dividends and pay raises paid to those employed on a more permanent basis while those at the bottom have seen an extra few baht a day. Maybe it is time for those who have seen the good times over the last decade and who enjoy reasonable to very good lifestyles see a tiny bit of belt tightening so that those who struggle can see a little more.

[RogueExpat]

In all seriousness: It's actually quite impossible to guarantee 15K nationwide for new employees, without addressing what happens with existing employees who may not be graduates but are more productive.

The buffalo has made an rather astute observation of one of the hurdles, out of many, that face some of the pie in the sky election promises.

Thank Gawd for Thaksin to guide the process, because he understands business very well.I wish he could come back sooner rather than later and get Thailand back on track, CEO style.

And then goes and completely destroys his own credibility, with a comment like this.

[Nisa]

Citing a study by the International Labour Organisation, he said the daily minimum wage should be Bt441 - a rate he said would by sufficient to feed and support a labourer with a wife and a child in one day.

So, are they basically saying that having it at 300 means that the child still cannot eat? And that even at 441 baht a day does it mean Dad has to work 7-days a week or is it just assumed the family will not eat on week-ends?

I don;t know what all this is about really, I live far better than the Thai around me, my daily food and living amounts to less than this 300/400 bht. breakfast +coffee/orange juice=40bht........lunch burger 25bht......dinner potatoes greens gravy chicken, fruit..70bht.......supper coffee 5bht. eaten at home.

Thais will live on Thai food at a third the price. And most eat with families so the cost is less.

All my food I buy at Tesco Lotus. If I bought Thai food I would live at a lot lower cost.

Yesterday 5 kilo's of rice at Tesco was 90 bht, chicken at 80 bht a kilo.

my days food 140bht......electric 50bht----water 10bht....incidentals 25bht--225 bht a day.

no I am not a cheap charlie..I eat very well-the same as in England.

I think that Thais need a better income, to live more comfortable. but I have proven --above it's not all that bad===COMMENTS==sure ???

To be truthful, I really have no idea of the consequences and benefits (except the perceived obvious) to raising the minimum wage. But I have to wonder if a 50% increase would cause prices to go up across the board and significantly raise the incredibly low unemployment rate in Thailand. I just couldn't imagine say increasing the rate of approx. $7.25 an hour in the US to $10.85 an hour over night ... I think it would have a huge impact on the cost of goods. But Thailand is not the US and typically the US raises the rate every couple years. However, you would have to go back nearly 15-years to see a 50% increase to what it is now. I am guessing a 15% increase would actually end up being more helpful in the long run. They can always continue to increase it but it is pretty hard to decrease it if a sudden jump does cause serious ripples through the economy. But when all is said and done .. I am clueless about the economic implications and would only like to see people living better with more opportunities. Oh, and my guess would be a dramatic increase would cause many jobs to be given to citizens of the poorer neighboring nations.

Edited July 7, 2011 by Nisa

[wolf5370]

Three hundred baht a day is entirely reasonable considering the hand jobby small raises of the last decade while basic commodities have increased by far far bigger percentages. It is making up for lost time. In the past decade there have also been some pretty big bonuses, dividends and pay raises paid to those employed on a more permanent basis while those at the bottom have seen an extra few baht a day. Maybe it is time for those who have seen the good times over the last decade and who enjoy reasonable to very good lifestyles see a tiny bit of belt tightening so that those who struggle can see a little more.

But that's the point isn't it - those that do enjoy reasonable to very good lifestyles will not need to tighten their belts, they do not change for better or worse - the guys at the bottom get an increase, which chains its way up the ladder (and Khun Good-Lifestyles gets a pay rise too) hurts Pay-Crap Industries, so it covers its costs by putting up the price - that ripples through industry, and inflation rises - now no one is any better off, but things are more expensive still and exports are hurt even more too. That's why it needs to be more taxes at the top and Government benefits at the bottom - keeps the employers out of it completely, thus the masses have greater spending power and companies sell more and THEN can afford to give across the board pay rises - it simply doesn't work backwards for all the want of trying or promising it will. Its the best way to give the poor more money without damanging the ecconomy - of course the infrastructure has to be paid for, but that is just taken into account with the taxation calculations.