New Thai Government's Pay Policy Worries Manufacturers

[webfact]

Pay policy worries manufacturers

By Nalin Viboonchart,

Petchanet Pratruangkrai

The Nation

Manufacturers are worried that the new government's policy to hike wages would push up the whole pay scale, which could make them lose their cost-competitiveness while consumers would inevitably have to shoulder higher prices.

"This means that we'll be in a difficult situation, as human-resource expenses will definitely surge. We may have to think about revising our production in Thailand to reduce the impact from higher costs," Anusorn Muttaraid, executive director of Delta Electronics (Thailand), said yesterday.

Raising the minimum daily wage to Bt300 is not an insurmountable problem, but the biggest impact will be on the company's workers who are currently receiving more than Bt300 per day, he said.

"Delta has to think about those workers' feelings, so it may have to raise their wages so that it can keep the gap between skilled workers and the newcomers," he said.

Delta employs about 7,000 daily workers, of whom roughly 1,000 get the minimum wage of about Bt200. The rest are paid more than Bt300 per day as they have worked with the company for years and have developed their skills.

Delta, one of the country's largest private employers, also carries about 13,000 full-time staff, whose salaries are not less than Bt15,000 per month. It seems that the company would not face any hardship paying a starting salary of Bt15,000, but that is not the case.

If Delta offers a higher salary to fresh graduates, it may have to think about adjusting the salary for holders of bachelor's degrees.

Paiboon Ponsuwanna, former chairman of the Food Industry Club of the Federation of Thai Industries, said hiking wages would send ripples through industry and end up hitting consumers and exports.

The food industry has more than 2 million workers, both skilled and unskilled, on the payroll now.

"Many buyers have asked whether Thailand will increase prices after hiking wages. We will destroy our own competitiveness if we quote higher prices when economic growth is sluggish in many import markets," he said.

Half of small and medium-sized enterprises might go out of business, particularly in the food and beverage industries. Millions of migrant workers will flow into Thailand. Exports this quarter will likely fall, Paiboon warned.

-- The Nation 2011-07-12

[webfact]

Panel backs wage-hike plan

By Business Reporters

The Nation

Committee in favour of 2-step approach towards implementing Bt300-a-day minimum wage

The Wage Tripartite Committee yesterday voiced initial support for the Pheu Thai Party's controversial election promise to raise the daily minimum wage to Bt300. However, its provincial sub-committees later proposed a two-step approach - one for major provinces and another for the rest of the country - far below the Pheu Thai plan.

The panel, which brings together representatives of the government, employers and workers, proposed that the daily wage of Bt300 should start in Bangkok, nearby provinces and Phuket as a pilot project.

However, the panel's provincial sub-committees were apparently not prepared for the big increase. After the meeting, Labour Ministry permanent secretary Somkiat Chayasriwong disclosed that sub-committees in 75 provinces had proposed an increase of Bt2 to Bt28 for 35 key provinces, while the remaining 40 provinces should get gradual adjustments to the same rates starting early next year. The proposed increase is a far cry from the Pheu Thai Party's Bt300 minimum-wage proposal.

The WTC will call another meeting early next month to consider the issue further.

Somkiat said the Wage Tripartite Committee agreed that hiking the wage to Bt300 should start in some provinces, including Bangkok and nearby provinces and Phuket. The minimum wage in Bangkok and nearby provinces is currently Bt215 and in Phuket it is Bt221. The remaining provinces would then be gradually adjusted, he said.

"We should wait until the new Labour Minister comes into office to manage the way the adjustment [is handled]," Somkiat said.

Somkiat warned that the minimum-wage policy would draw more labourers from neighbouring countries such as Cambodia, Laos and Burma, because they would also be entitled to reap the benefits of the higher wage environment. "I met Pheu Thai Party secretary-general Jarupong Ruangsuwan, to exchange views on this issue, but he didn't put any pressure on the ministry."

Meanwhile, the Centre for International Trade Studies at The University of the Thai Chamber of Commerce warned yesterday that Pheu Thai's populist policy to increase the minimum wage was likely to undermine exports, especially from labour-intensive industries. An increase in the minimum wage will mean higher costs and decreased revenue and efficiency, it said.

Centre director Aat Pisanwanich revealed that increasing the daily minimum wage to Bt300 and the starting salary for bachelor's degree graduates to Bt15,000 per month would increase costs of production by a monumental 28 per-cent. Production costs would soar by 31.5 per cent in the services sector and by 26.5 per cent for manufactured goods. Hence, exporters of food and tobacco goods will have to contend with a 35-per-cent rise in costs, the embroidery industry with 34-per-cent higher costs and the paper industry with a rise of 22 per cent.

As a consequence of the 39.5-per-cent increase in the minimum wage alone, hiking it from Bt215 to Bt300, costs of production will increase by an average 22 per cent; 29.6 per cent for manufactured goods and 19 per cent for the service sector, Aat said. Labour-intensive industries will suffer most from the minimum-wage increase.

Similarly, the increased starting salary for bachelor's degree graduates, raising it from Bt11,000 to Bt15,000, or an increase of 36 per cent, will prompt an overall increase in production costs of 5.7 per cent - 1.9 per cent for manufactured-goods industries and 7.3 per cent for the service sector, Aat said.

The paper industry will be hardest hit, with costs rising by 5.4 per cent, followed by textile and garment industries, with a1.5-per-cent rise in costs, and the tobacco industry, with costs rising by 0.8 per cent.

The UTCC's Centre for International Trade Studies said the value of Thailand's exports was likely to grow by 13 to 17 per cent, to between US$221 billion and $229 billion (Bt6.69 trillion and Bt6.94 trillion). It predicted that export industries would grow by 9.5 per cent to a value of $112 billion during the second half of 2011.

Although export industries have recorded significant growth of 21.5 per cent over the first half of this year, it is expected that industries will grow by a mere 9.5 per cent throughout the third and fourth quarters of 2011.

Moreover, the slow recovery of the global economy due to skyrocketing crude-oil prices and persisting public debt problems in European nations will stimulate the decline in Thailand's export growth, it said.

Negative effects

Raising the minimum daily wage to Bt300 and giving graduates a starting salary of Bt15,000 will hit the Kingdom's exports, with textile and garments and paper and paper products manufacturing being hardest hit by the significant increase in production costs.

Production costs increase:

By 22.3% (if the daily wage is Bt300)

By 5.7% (if Bt15,000 is starting salary)

-- The Nation 2011-07-12

[phupaman]

Panel backs wage-hike plan

By Business Reporters

The Nation

Committee in favour of 2-step approach towards implementing Bt300-a-day minimum wage

The Wage Tripartite Committee yesterday voiced initial support for the Pheu Thai Party's controversial election promise to raise the daily minimum wage to Bt300. However, its provincial sub-committees later proposed a two-step approach - one for major provinces and another for the rest of the country - far below the Pheu Thai plan.

The panel, which brings together representatives of the government, employers and workers, proposed that the daily wage of Bt300 should start in Bangkok, nearby provinces and Phuket as a pilot project.

However, the panel's provincial sub-committees were apparently not prepared for the big increase. After the meeting, Labour Ministry permanent secretary Somkiat Chayasriwong disclosed that sub-committees in 75 provinces had proposed an increase of Bt2 to Bt28 for 35 key provinces, while the remaining 40 provinces should get gradual adjustments to the same rates starting early next year. The proposed increase is a far cry from the Pheu Thai Party's Bt300 minimum-wage proposal.

The WTC will call another meeting early next month to consider the issue further.

Somkiat said the Wage Tripartite Committee agreed that hiking the wage to Bt300 should start in some provinces, including Bangkok and nearby provinces and Phuket. The minimum wage in Bangkok and nearby provinces is currently Bt215 and in Phuket it is Bt221. The remaining provinces would then be gradually adjusted, he said.

"We should wait until the new Labour Minister comes into office to manage the way the adjustment [is handled]," Somkiat said.

Somkiat warned that the minimum-wage policy would draw more labourers from neighbouring countries such as Cambodia, Laos and Burma, because they would also be entitled to reap the benefits of the higher wage environment. "I met Pheu Thai Party secretary-general Jarupong Ruangsuwan, to exchange views on this issue, but he didn't put any pressure on the ministry."

Meanwhile, the Centre for International Trade Studies at The University of the Thai Chamber of Commerce warned yesterday that Pheu Thai's populist policy to increase the minimum wage was likely to undermine exports, especially from labour-intensive industries. An increase in the minimum wage will mean higher costs and decreased revenue and efficiency, it said.

Centre director Aat Pisanwanich revealed that increasing the daily minimum wage to Bt300 and the starting salary for bachelor's degree graduates to Bt15,000 per month would increase costs of production by a monumental 28 per-cent. Production costs would soar by 31.5 per cent in the services sector and by 26.5 per cent for manufactured goods. Hence, exporters of food and tobacco goods will have to contend with a 35-per-cent rise in costs, the embroidery industry with 34-per-cent higher costs and the paper industry with a rise of 22 per cent.

As a consequence of the 39.5-per-cent increase in the minimum wage alone, hiking it from Bt215 to Bt300, costs of production will increase by an average 22 per cent; 29.6 per cent for manufactured goods and 19 per cent for the service sector, Aat said. Labour-intensive industries will suffer most from the minimum-wage increase.

Similarly, the increased starting salary for bachelor's degree graduates, raising it from Bt11,000 to Bt15,000, or an increase of 36 per cent, will prompt an overall increase in production costs of 5.7 per cent - 1.9 per cent for manufactured-goods industries and 7.3 per cent for the service sector, Aat said.

The paper industry will be hardest hit, with costs rising by 5.4 per cent, followed by textile and garment industries, with a1.5-per-cent rise in costs, and the tobacco industry, with costs rising by 0.8 per cent.

The UTCC's Centre for International Trade Studies said the value of Thailand's exports was likely to grow by 13 to 17 per cent, to between US$221 billion and $229 billion (Bt6.69 trillion and Bt6.94 trillion). It predicted that export industries would grow by 9.5 per cent to a value of $112 billion during the second half of 2011.

Although export industries have recorded significant growth of 21.5 per cent over the first half of this year, it is expected that industries will grow by a mere 9.5 per cent throughout the third and fourth quarters of 2011.

Moreover, the slow recovery of the global economy due to skyrocketing crude-oil prices and persisting public debt problems in European nations will stimulate the decline in Thailand's export growth, it said.

Negative effects

Raising the minimum daily wage to Bt300 and giving graduates a starting salary of Bt15,000 will hit the Kingdom's exports, with textile and garments and paper and paper products manufacturing being hardest hit by the significant increase in production costs.

Production costs increase:

By 22.3% (if the daily wage is Bt300)

By 5.7% (if Bt15,000 is starting salary)

-- The Nation 2011-07-12

Hi all.

Sorry to say the gullible PT supporters believed the pre election promise, 300Baht per day across the board

And now they are waiting for Yingluck to deliver.

[hammered]

Before the government is even formed, their betters are telling them not to enact any of their policies even though the public supported them and want to see them enacted. It will be interesting to see what way PTP go on this, but abandoning every policy is likely to upset a few million people. Then again they could always say the establishment wont let them introduce their policies, and PTP have already shown that what they say tends to be believed by a lot more people than what their opponents say

[whybother]

Before the government is even formed, their betters are telling them not to enact any of their policies even though the public supported them and want to see them enacted. It will be interesting to see what way PTP go on this, but abandoning every policy is likely to upset a few million people. Then again they could always say the establishment wont let them introduce their policies, and PTP have already shown that what they say tends to be believed by a lot more people than what their opponents say

I thought the idea of getting a majority in parliament was so the establishment COULDN'T tell them what to do.

But I'm sure their supporters will believe that anyway.

[hammered]

Before the government is even formed, their betters are telling them not to enact any of their policies even though the public supported them and want to see them enacted. It will be interesting to see what way PTP go on this, but abandoning every policy is likely to upset a few million people. Then again they could always say the establishment wont let them introduce their policies, and PTP have already shown that what they say tends to be believed by a lot more people than what their opponents say

I thought the idea of getting a majority in parliament was so the establishment COULDN'T tell them what to do.

But I'm sure their supporters will believe that anyway.

I hope they just enact their policies anyway, which is what they were elected to do. Then the other side of the equation becomes obvious, it has to be paid for and people can blame who they like at the next election. However, this election should establish that governments enact polices they say they will. How they enact them is also open to some variation

Everyone in Thailand thinks the establishment meddles in things parliamentary, and that has only been reinforced by how the previous goevrnment was formed. It isnt difficult to rile a load of people up about this as majorities way beyond those who vote PTP want to see this meddling stop or at least be reduced to negligible levels. Thailand is a changing place, for better or worse PTP are perceived by many as the only vehicle of change. Persoanlly I would also like to see other parties such as say the Dems also be seen as this but they have utterly undermined this by the deal for the previous government leaving the country in this situation where if you want to see change you only have one electoral option

[jaltsc]

Thailand is not out of the economic loop and immune to inflation. If wages go up, the price of the product goes up to assure the profit margin. Those companies who cannot compete in this situation will go out of business. Considering that there are other nations in southeast Asia where wages are even lower than in Thailand, exporting of manufacturing will take place. This would probably result in fewer people working, even at lower wages, and thus contribute to economic hard times for many individuals.

The Chinese are already making infrastructural changes in Cambodia and Laos in order to ship in raw materials and ship out finished products to take advantage of lower labor costs. This will have a significant effect on the earning power and standard of living of workers throughout Asia.

No matter what the exact scenario, the fat cats will continue to get fatter on the backs of the worker.

Edited July 12, 2011 by jaltsc

[OzMick]

Before the government is even formed, their betters are telling them not to enact any of their policies even though the public supported them and want to see them enacted. It will be interesting to see what way PTP go on this, but abandoning every policy is likely to upset a few million people. Then again they could always say the establishment wont let them introduce their policies, and PTP have already shown that what they say tends to be believed by a lot more people than what their opponents say

You forgot the 3rd, most likely alternative - enact their policies, <deleted> the country, and blame someone else. Tried and proven to work; apparently 40+% of thais believe that Abhisit murdered every person that died in the BKK uprising.

[hammered]

Before the government is even formed, their betters are telling them not to enact any of their policies even though the public supported them and want to see them enacted. It will be interesting to see what way PTP go on this, but abandoning every policy is likely to upset a few million people. Then again they could always say the establishment wont let them introduce their policies, and PTP have already shown that what they say tends to be believed by a lot more people than what their opponents say

You forgot the 3rd, most likely alternative - enact their policies, <deleted> the country, and blame someone else. Tried and proven to work; apparently 40+% of thais believe that Abhisit murdered every person that died in the BKK uprising.

And polticis is about perceptions, which why the Dems should dump Abhisit and as quickly as possible offer voters an alternative rather than just live in their aeon old house and face perpetual defeat under a man that guarantees defeat. Even sticking Chuan back until a new leader is groomed or whatever the Dems do would be better.

While there is no viable alternative the PTP can do exactly what you say and get away with it. The soon to be opposition needs to accept responsibility for their failings too and be willing to put country before themselves although it seems they are utterly incapable of this.

[webfact]

Chamber of Commerce Discusses Wage Hike

The University of Thai Chamber of Commerce says the wage hike policies promised by the Pheu Thai Party will be a big blow to the economy and will result in countless disadvantages.

The Director of the Center for International Trade Studies at the University of Thai Chamber of Commerce, At Pisanwanit said the plans to increase minimum wage to 300 baht a day and a monthly salary for a new graduates of 15,000 baht are good policies, but the government should be extremely careful in proceeding with these plans, as they could have considerable effect on the economy.

He explained that the proposed schemes will lead to a 20-30 percent rise in production costs for small and medium enterprises or SMEs, which make up 95 percent of all export businesses in the Kingdom, and this could harm as much as half of SME operators.

In addition, the populist payment will cause an influx of alien laborers, whose wage are half that of Thai workers.

It is expected that there will be an additional influx of one million foreign workers in Thailand.

Thailand is now home to five million alien workers.

Last but not least, he said the rise will encourage both domestic and foreign firms to relocate to neighboring countries.

In addition, the government should look into juristic tax and crude oil prices.

At went on to say that the upcoming Cabinet should refrain from controlling the baht, as the policy will harm the export sector, which is the heart of the Kingdom's business.

-- Tan Network 2011-07-12

[OzMick]

Before the government is even formed, their betters are telling them not to enact any of their policies even though the public supported them and want to see them enacted. It will be interesting to see what way PTP go on this, but abandoning every policy is likely to upset a few million people. Then again they could always say the establishment wont let them introduce their policies, and PTP have already shown that what they say tends to be believed by a lot more people than what their opponents say

You forgot the 3rd, most likely alternative - enact their policies, <deleted> the country, and blame someone else. Tried and proven to work; apparently 40+% of thais believe that Abhisit murdered every person that died in the BKK uprising.

And polticis is about perceptions, which why the Dems should dump Abhisit and as quickly as possible offer voters an alternative rather than just live in their aeon old house and face perpetual defeat under a man that guarantees defeat. Even sticking Chuan back until a new leader is groomed or whatever the Dems do would be better.

While there is no viable alternative the PTP can do exactly what you say and get away with it. The soon to be opposition needs to accept responsibility for their failings too and be willing to put country before themselves although it seems they are utterly incapable of this.

Why should a good man go to the wall because of false perceptions? Wouldn't it be better, if more difficult, to correct the perceptions that have been set up by thaksin's propaganda machine? There can never be a reconciliation until the people of Isaan understand that they were duped, deceived and used shamelessly to achieve one man's gred and lust for power.

It is my feeling that several of PTP's actions (thaksin's blatant involvement, Yingluk's cooking, running of UDD candidates knowing they would be charged, and the running of candidates still under 5 year bans) were designed to increase the feeling in the north that the system is stacked against them - certainly no aid to reconciliation.

[hammered]

Before the government is even formed, their betters are telling them not to enact any of their policies even though the public supported them and want to see them enacted. It will be interesting to see what way PTP go on this, but abandoning every policy is likely to upset a few million people. Then again they could always say the establishment wont let them introduce their policies, and PTP have already shown that what they say tends to be believed by a lot more people than what their opponents say

You forgot the 3rd, most likely alternative - enact their policies, <deleted> the country, and blame someone else. Tried and proven to work; apparently 40+% of thais believe that Abhisit murdered every person that died in the BKK uprising.

And polticis is about perceptions, which why the Dems should dump Abhisit and as quickly as possible offer voters an alternative rather than just live in their aeon old house and face perpetual defeat under a man that guarantees defeat. Even sticking Chuan back until a new leader is groomed or whatever the Dems do would be better.

While there is no viable alternative the PTP can do exactly what you say and get away with it. The soon to be opposition needs to accept responsibility for their failings too and be willing to put country before themselves although it seems they are utterly incapable of this.

Why should a good man go to the wall because of false perceptions? Wouldn't it be better, if more difficult, to correct the perceptions that have been set up by thaksin's propaganda machine? There can never be a reconciliation until the people of Isaan understand that they were duped, deceived and used shamelessly to achieve one man's gred and lust for power.

It is my feeling that several of PTP's actions (thaksin's blatant involvement, Yingluk's cooking, running of UDD candidates knowing they would be charged, and the running of candidates still under 5 year bans) were designed to increase the feeling in the north that the system is stacked against them - certainly no aid to reconciliation.

He isnt seen as good by many, maybe a majority.

[somo]

Before the government is even formed, their betters are telling them not to enact any of their policies even though the public supported them and want to see them enacted. It will be interesting to see what way PTP go on this, but abandoning every policy is likely to upset a few million people. Then again they could always say the establishment wont let them introduce their policies, and PTP have already shown that what they say tends to be believed by a lot more people than what their opponents say

You forgot the 3rd, most likely alternative - enact their policies, <deleted> the country, and blame someone else. Tried and proven to work; apparently 40+% of thais believe that Abhisit murdered every person that died in the BKK uprising.

Not every person just most of them.

So far international investors, a good indicator, have given the thumbs up to the incoming government as shown by the strength of the Thai Baht since the election.

[whybother]

So far international investors, a good indicator, have given the thumbs up to the incoming government as shown by the strength of the Thai Baht since the election.

So far international investors have given the thumbs up to a stable government.

If the PTP had formed a minority government needing help from a coalition, or especially if the Democrats had formed a coalition government, international investors would be leaving in droves because of the expectation of more violence and political instability.

A solid PTP win means that the red shirts won't be out on the streets, which is a good thing for the economy.

Edited July 12, 2011 by whybother

[OzMick]

You forgot the 3rd, most likely alternative - enact their policies, <deleted> the country, and blame someone else. Tried and proven to work; apparently 40+% of thais believe that Abhisit murdered every person that died in the BKK uprising.

And polticis is about perceptions, which why the Dems should dump Abhisit and as quickly as possible offer voters an alternative rather than just live in their aeon old house and face perpetual defeat under a man that guarantees defeat. Even sticking Chuan back until a new leader is groomed or whatever the Dems do would be better.

While there is no viable alternative the PTP can do exactly what you say and get away with it. The soon to be opposition needs to accept responsibility for their failings too and be willing to put country before themselves although it seems they are utterly incapable of this.

Why should a good man go to the wall because of false perceptions? Wouldn't it be better, if more difficult, to correct the perceptions that have been set up by thaksin's propaganda machine? There can never be a reconciliation until the people of Isaan understand that they were duped, deceived and used shamelessly to achieve one man's gred and lust for power.

It is my feeling that several of PTP's actions (thaksin's blatant involvement, Yingluk's cooking, running of UDD candidates knowing they would be charged, and the running of candidates still under 5 year bans) were designed to increase the feeling in the north that the system is stacked against them - certainly no aid to reconciliation.

He isnt seen as good by many, maybe a majority.

That is exactly why he was accused of murder, so that he would not be seen as a good man. His sins had to be painted as much worse than Thaksin's thefts, or some might start appreciate the reduction in school costs, the old age pension, and a FREE health system that actually had some funding, all in a time of fiscal austerity. BTW red propaganda is that these advances are the work of k. Thaksin.

[Samuian]

.......... Then again they could always say the establishment wont let them introduce their policies....

yes...think one can count on that, more divide, someones badly hurt, badly and as I see, this someone is on his way to pay back!

and considering:

..We will destroy our own competitiveness...

that rice supposed to be lifted from something US$ 400 a tonne to over 600 and considering the weak world economy, that one of the main rice exporting competitors, Vietnam has already gained much from the high Thai paddy prices, raising wages by over 30% and thus starting in Tourist industry sectors where already is a problem of very low arrivals - it's alltogether not a good outlook, it looks like the lambs have chosen their slayer!

Another Island,Ireland, Greece, Spain in the making?

This incredible obedience towards the "puu yai" and to what ever he says or demands, stupidity, low grade education, poverty and greed are no good combinations!

Does no one ever think about to tell this the electorate ... or won't they simply not understand or think it's a lie?

It's so obvious, they are given a "treat" but behind their backs theyare being robbed blind!

Edited July 12, 2011 by Samuian