Bt300 Minimum Wage To Cost Additional Bt140 Billion: Thai Chamber

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YINGLUCK GOVERNMENT

Bt300 minimum wage to cost additional Bt140 bn: Chamber

By PETCHANET PRATRUANGKRAI

THE NATION

The implementation of a nationwide daily minimum wage of Bt300 will create an additional burden of Bt140 billion a year for private enterprises, according to the Thai Chamber of Commerce.

Businesses, in particular small and medium-sized enterprises (SMEs), will be unable to shoulder the excessively high costs. The government must help private enterprises shoulder the higher burden, said chamber vice chairman Phongsak Assakul.

The University of the Thai Chamber of Commerce (UTCC), the academic arm of the chamber, will conduct a comprehensive study to consider how private enterprises can survive after paying higher minimum wages. The university will study how enterprises will be affected by the policy and what the government should do to lessen the impact.

The chamber will report the outcome of the study next week and discuss implementation of the policy with the Pheu Thai Party.

Phongsak claimed the policy would reduce Thailand's competitiveness among Asean countries as a destination for foreign direct investment.

Raw materials will flow freely under the Asean Economic Community from 2015. Foreign investors will not need to invest in Thailand any longer as other countries, in particular Indonesia, have lower labour costs, he said.

Phongsak said suppliers of automobile products, mostly SMEs, would be the first to collapse as carmakers shift to importing materials from other countries due to the excessively high prices of Thai goods.

He said it would not only force Thai enterprises into a dead end but also encourage foreign direct investment to move to other countries.

Thanavath Phonvichai, director of the UTCC's Economic and Business Forecasting Centre, said enterprises would have to pay an additional Bt140 billion to 5 million unskilled labourers each year. Enterprises are expected to spend more than this as skilled labourers and graduate employees will also need higher payments compared with unskilled labourers.

Thanavath said the policy would create a chain reaction in the Thai economy. The government should consider the policy carefully to ensure minimum impact on all involved.

Moreover, he warned that inflation would climb rapidly next year due to higher wages and consumer goods prices due to the minimum wage measure.

-- The Nation 2011-07-15

[Sateev]

Of course, the financial wizards at Peua Thai had NO IDEA what the cost of their campaign promise might be...and the poor working people assumed it was some kind of magic made by Khun Thaksin.

Promise them anything, and then have someone else to blame when the result (election landslide) is achieved, and the thing won't fly...where was the Thai Chamber of Commerce during the campaigning?

[siampolee]

.where was the Thai Chamber of Commerce during the campaigning?

Dubai ??

[GiantFan]

Of course, the financial wizards at Peua Thai had NO IDEA what the cost of their campaign promise might be...and the poor working people assumed it was some kind of magic made by Khun Thaksin.

Promise them anything, and then have someone else to blame when the result (election landslide) is achieved, and the thing won't fly...where was the Thai Chamber of Commerce during the campaigning?

Good points. Reminds me of the baht healthcare plan that Thaksin started. Hospitals left holding the bag. Also, loans to farmers. They didn't realize that they needed to be repaid. Lots of Fortuna's in Isaan, but eventually, lots of land sold to repay the loan.

[ginjag]

Of course, the financial wizards at Peua Thai had NO IDEA what the cost of their campaign promise might be...and the poor working people assumed it was some kind of magic made by Khun Thaksin.

Promise them anything, and then have someone else to blame when the result (election landslide) is achieved, and the thing won't fly...where was the Thai Chamber of Commerce during the campaigning?

The winning party knew full well how much it cost-the same as how much the overall campaign cost-and the Samsungs and the University starters. They didn't care their motive to achieve was solely to GET IN. Then if they backworded on most things it didn't matter cause they then can receive the perks to get double money back.

Thais seem to think in general money grows on trees, easy come easy go. That is why a big % of foreigners get ripped off-not caring.

[DP25]

PTP is a crony capitalist big business party masquerading as a social welfare party. I wouldn't worry too much about them implementing a nation wide 300 baht minimum wage. Expect them to honour their campaign pledge to lower corporate income tax however. And pass some free trade agreements.

[473geo]

Rather sad don't you think that so many are on the minimum wage at the outset, also why do those higher up the chain require adjustment to maintain the disparity.I wonder how many major companies actually pay the minimum wage, or is it the medium sized companies taking full advantage to uphold high profit margins?

[whybother]

Rather sad don't you think that so many are on the minimum wage at the outset, also why do those higher up the chain require adjustment to maintain the disparity.I wonder how many major companies actually pay the minimum wage, or is it the medium sized companies taking full advantage to uphold high profit margins?

Those higher up the chain get paid more because of their training or their experience. Their isn't much disparity between the bottom and the next few links.

It's fine complaining about companies having high profit margins, but the fact is, if they can't make the high profit margins here, then they will go somewhere else. At least no one will need to worry about minimum wages, since there will be no jobs.

[djlest]

140 billion means nothing to PTP... just as long as it secures them the title 'we take from the rich and give to the poor'

That alone will keep them winning polls - and that is they really care about...

Afterall the country could go into recession and as long as they throw a few hundred baht to the dogs - they will be protected with loyal servants.

[hellodolly]

Will this raise affect any of Thaksin's business?

I liked this part

"The university will study how enterprises will be affected by the policy and what the government should do to lessen the impact."

A university studying what to do to lesson the impact.

How about scrap the idea all together.

Now I am not saying to keep the wages low but I am saying to be reasonable about them. Does a labor in Issan really need 300 baht a day is 300 baht a day enough in Bangkok? Can the business afford it. Just down the street from where I live we had a 7 11 go out of business last year. Would all the other ones be able to keep there doors open under the 300 baht a day or would they have to let staff go.?

Take all the employed workers in Thailand give them 300 baht a day. Figure out how much money that works out to. After six months figure out how much the employed workers are making. Divide that by the original number of employed workers and see if you still get 300 baht a day.

[hellodolly]

Rather sad don't you think that so many are on the minimum wage at the outset, also why do those higher up the chain require adjustment to maintain the disparity.I wonder how many major companies actually pay the minimum wage, or is it the medium sized companies taking full advantage to uphold high profit margins?

Those higher up the chain get paid more because of their training or their experience. Their isn't much disparity between the bottom and the next few links.

It's fine complaining about companies having high profit margins, but the fact is, if they can't make the high profit margins here, then they will go somewhere else. At least no one will need to worry about minimum wages, since there will be no jobs.

I have no idea what I am talking about.

That being said I was wondering if when you say a high profit margin are you talking about the percentage return on the money they have invested.

For instance 10,000,000 baht profit is a lot of money. But if they invested 10,000,000,000 to get it would it still be a high profit margin. Would a person invest there money in a company that only returned 1% on it?

[whybother]

I have no idea what I am talking about.

That being said I was wondering if when you say a high profit margin are you talking about the percentage return on the money they have invested.

For instance 10,000,000 baht profit is a lot of money. But if they invested 10,000,000,000 to get it would it still be a high profit margin. Would a person invest there money in a company that only returned 1% on it?

That's exactly the point. People and companies that invest their money want a return on their investment. If they can't get it in Thailand, they will look for it somewhere else. Without the investment dollars, there is no company. Without the company, there are no jobs. Pointless have a large increase in minimum wage then, isn't it?

(Maybe I should have put "high profit margins" in quotes to refer to 473geo's term.)

[otherstuff1957]

Rather sad don't you think that so many are on the minimum wage at the outset, also why do those higher up the chain require adjustment to maintain the disparity.I wonder how many major companies actually pay the minimum wage, or is it the medium sized companies taking full advantage to uphold high profit margins?

Actually, a lot of the minimum wage jobs are in agriculture, service jobs and light industry. So, raising the minimum wage would have an immediate, direct impact on the price of food. The second area to be effected would be clothes and other light consumer goods. Ironically, most luxury goods are made by skilled labor or are imported & so would not be effected!

So, a dramatic raise in the minimum wage would have an immediate negative effect on the very people who it should help, but, aside from the negative impact on the economy as a whole, wouldn't really have much of an immediate impact on the middle or upper classes.

To put it simply, if the cost of producing a bag of rice increases by 30%, the price would jump from about 200b to 260b(or more). An extra sixty baht a month wouldn't really be noticed by a middle class family, but would be a considerable amount for a poorer family. Now, take that increase and apply to almost all locally produced foods & clothing and you can see that the increased wages would probably be more than offset by the increased cost of living. The hardest hit would be the elderly poor.

There are no shortcuts to alleviating poverty. What is needed is a long-term plan to improve job skills & education, combined with improved social services and all around economic reform. Their goals should be aimed at 2020, not 2012.

[makescents]

How about enforcing the current min wage?

Set wages on a provincial basis?

[whatsupdoc]

Rather sad don't you think that so many are on the minimum wage at the outset, also why do those higher up the chain require adjustment to maintain the disparity.I wonder how many major companies actually pay the minimum wage, or is it the medium sized companies taking full advantage to uphold high profit margins?

Those higher up the chain get paid more because of their training or their experience. Their isn't much disparity between the bottom and the next few links.

It's fine complaining about companies having high profit margins, but the fact is, if they can't make the high profit margins here, then they will go somewhere else. At least no one will need to worry about minimum wages, since there will be no jobs.

I really wonder which companies make those alleged high profit margins??? Most of the companies I know about (SME's) are struggling to survive and the wage increase might kill them. The economy is very bad already; just look around to see how many shops haven't managed to survive in the current circumstances.

[473geo]

I have no idea what I am talking about.

That being said I was wondering if when you say a high profit margin are you talking about the percentage return on the money they have invested.

For instance 10,000,000 baht profit is a lot of money. But if they invested 10,000,000,000 to get it would it still be a high profit margin. Would a person invest there money in a company that only returned 1% on it?

That's exactly the point. People and companies that invest their money want a return on their investment. If they can't get it in Thailand, they will look for it somewhere else. Without the investment dollars, there is no company. Without the company, there are no jobs. Pointless have a large increase in minimum wage then, isn't it?

(Maybe I should have put "high profit margins" in quotes to refer to 473geo's term.)

Care to take a stab at how many people actually work for companies, organisations, that have the option are likely to choose to relocate and run a business else where. (.after all you can hardly pick Thai rice in Cambodia) I think you will find there is a very small percentage... If business cannot absorb a slight increase in the minimum wage over say 3 years......time to for them to move on if they choose.

[OzMick]

Rather sad don't you think that so many are on the minimum wage at the outset, also why do those higher up the chain require adjustment to maintain the disparity.I wonder how many major companies actually pay the minimum wage, or is it the medium sized companies taking full advantage to uphold high profit margins?

Rather a naive post! Minimum wage is what you get when you start until you prove your worth. After you have done that and receive ,say, double the minimum wage, would you be happy with the same pay when the minimum wage is given a huge percentage increase and the pimply kid hired last week is on very nearly the same as you?

Who decides whether a profit margin is high? As well as a fair return on capital, there is also a risk factor. Thanks to k Thaksin and his red-shirt/black-shirt army, Thailand is now seen as politically unstable, increasing the risk factor and the profit margin required to make Thailand a viable investment gambit.

[473geo]

Rather sad don't you think that so many are on the minimum wage at the outset, also why do those higher up the chain require adjustment to maintain the disparity.I wonder how many major companies actually pay the minimum wage, or is it the medium sized companies taking full advantage to uphold high profit margins?

Actually, a lot of the minimum wage jobs are in agriculture, service jobs and light industry. So, raising the minimum wage would have an immediate, direct impact on the price of food. The second area to be effected would be clothes and other light consumer goods. Ironically, most luxury goods are made by skilled labor or are imported & so would not be effected!

So, a dramatic raise in the minimum wage would have an immediate negative effect on the very people who it should help, but, aside from the negative impact on the economy as a whole, wouldn't really have much of an immediate impact on the middle or upper classes.

To put it simply, if the cost of producing a bag of rice increases by 30%, the price would jump from about 200b to 260b(or more). An extra sixty baht a month wouldn't really be noticed by a middle class family, but would be a considerable amount for a poorer family. Now, take that increase and apply to almost all locally produced foods & clothing and you can see that the increased wages would probably be more than offset by the increased cost of living. The hardest hit would be the elderly poor.

There are no shortcuts to alleviating poverty. What is needed is a long-term plan to improve job skills & education, combined with improved social services and all around economic reform. Their goals should be aimed at 2020, not 2012.

The simple solution is to phase the increase in over 3 years, but nobody to myknowledge has said that is not the way this will happen......as usual everybody is putting the cart before the horse.....

[whybother]

Care to take a stab at how many people actually work for companies, organisations, that have the option are likely to choose to relocate and run a business else where. (.after all you can hardly pick Thai rice in Cambodia) I think you will find there is a very small percentage... If business cannot absorb a slight increase in the minimum wage over say 3 years......time to for them to move on if they choose.

We aren't talking about "a slight increase in the minimum wage over say 3 years". We are talking about a 40-70% increase in 6 months.

It's not just the companies that relocate. It's the ones that downsize. It's the suppliers of goods and services to those (both relocating and downsizing) companies. And also, the companies that choose not to expand or invest here in the first place.

[whybother]

The simple solution is to phase the increase in over 3 years, but nobody to myknowledge has said that is not the way this will happen......as usual everybody is putting the cart before the horse.....

There are lots of simple solutions, but we are discussing PTP's promises to increase minimum wages by a large percentage in a short time frame.

[hammered]

Seems nobody is looking at how inflation on basic products the poor use (real inflation by price actually pai rather than government massaged figures) means that their minimum wage is now worth about half what it used to be. It is easy for a bunch of foreigners who have never lived like a poor Thai person to go on about how stupid it would be to increase minimum wage as it would lead to..... That is a good argument to never increase minimum wage. Oh and the quaint little argument that if the poor were better trained they could command higher wages falls on the minor problems that the education system needs massive overhaul and nobody has even tried this ever and of course if you are living on sub 200 baht a day you don't really have any money to buy the books or computers that give the advantage to middle classes in education. Something has to be done even if it means taxing the rich more and using that money to directly advantage poor people in some way. Failure to address this issue while a super elite continue to be seen so rich and far away in lifestyle will result in massive social problems that make the red demo of last May look like a tea party. The poor are already lining up behind a party that promises it now and constantly rejecting a party that says slowly. If the party they expect to give it now doesn't and they have already rejected the slowly and wait your turn approach what happens next?

[animatic]

Of course, the financial wizards at Peua Thai had NO IDEA what the cost of their campaign promise might be...and the poor working people assumed it was some kind of magic made by Khun Thaksin.

Promise them anything, and then have someone else to blame when the result (election landslide) is achieved, and the thing won't fly...where was the Thai Chamber of Commerce during the campaigning?

The winning party knew full well how much it cost-the same as how much the overall campaign cost-and the Samsungs and the University starters. They didn't care their motive to achieve was solely to GET IN. Then if they backworded on most things it didn't matter cause they then can receive the perks to get double money back.

Thais seem to think in general money grows on trees, easy come easy go. That is why a big % of foreigners get ripped off-not caring.

And the PTP backers don't give a toss about Small and Medium Sized Enterprises,

they are just flies buzzing around them. Let them eat cake ( rice cake).

[whybother]

Seems nobody is looking at how inflation on basic products the poor use (real inflation by price actually pai rather than government massaged figures) means that their minimum wage is now worth about half what it used to be. It is easy for a bunch of foreigners who have never lived like a poor Thai person to go on about how stupid it would be to increase minimum wage as it would lead to..... That is a good arguement to never increase minimum wage. Oh and the quaint little argument that if the poor were beter trained they could command higher wages falls on the minor problems that the education system needs massive overhaul and nobody has even tried this ever and of course if you are living on sub 200 baht a day you dont really have ny money to buy the books or computers that give the advantage to middle classes in education. Something has to be done even if it means taxing the rich more and using that money to directly advantage poor people in some way. Failure to address this issue while a super elite continue to be seen so rich and far away in lifestyle will result in masive social problems that make the red demo of last May look like a tea party. The poor are already linign up behind a party that promises it now and constantly rejecting a party that says slowly. If the party they expect to give it now doesnt and they have already rejected the slowly and wait your turn approach what happens next?

Is anyone saying don't increase minimum wages?

Do the PTP have any plans to tax the rich more? The only plan they have is to REDUCE corporate tax.

The poor are lining behind the party that promises more ... only to find that they are now saying "slowly".

Will Thaksin be funding another "overthrow the government" peaceful protest because the PTP isn't delivering on it's promises?

[animatic]

Seems nobody is looking at how inflation on basic products the poor use (real inflation by price actually pai rather than government massaged figures) means that their minimum wage is now worth about half what it used to be. It is easy for a bunch of foreigners who have never lived like a poor Thai person to go on about how stupid it would be to increase minimum wage as it would lead to..... That is a good argument to never increase minimum wage. Oh and the quaint little argument that if the poor were better trained they could command higher wages falls on the minor problems that the education system needs massive overhaul and nobody has even tried this ever and of course if you are living on sub 200 baht a day you don't really have any money to buy the books or computers that give the advantage to middle classes in education. Something has to be done even if it means taxing the rich more and using that money to directly advantage poor people in some way. Failure to address this issue while a super elite continue to be seen so rich and far away in lifestyle will result in massive social problems that make the red demo of last May look like a tea party. The poor are already lining up behind a party that promises it now and constantly rejecting a party that says slowly. If the party they expect to give it now doesn't and they have already rejected the slowly and wait your turn approach what happens next?

Yes a very good point. When will then penny drop for those who blindly bet on PTP promises of instant wage paradise?

[thaicbr]

" The poor are already lining up behind a party that promises it now and constantly rejecting a party that says slowly. If the party they expect to give it now doesn't and they have already rejected the slowly and wait your turn approach what happens next?"

the shit will hit the fan..........

[whatsupdoc]

Rather sad don't you think that so many are on the minimum wage at the outset, also why do those higher up the chain require adjustment to maintain the disparity.I wonder how many major companies actually pay the minimum wage, or is it the medium sized companies taking full advantage to uphold high profit margins?

Actually, a lot of the minimum wage jobs are in agriculture, service jobs and light industry. So, raising the minimum wage would have an immediate, direct impact on the price of food. The second area to be effected would be clothes and other light consumer goods. Ironically, most luxury goods are made by skilled labor or are imported & so would not be effected!

So, a dramatic raise in the minimum wage would have an immediate negative effect on the very people who it should help, but, aside from the negative impact on the economy as a whole, wouldn't really have much of an immediate impact on the middle or upper classes.

To put it simply, if the cost of producing a bag of rice increases by 30%, the price would jump from about 200b to 260b(or more). An extra sixty baht a month wouldn't really be noticed by a middle class family, but would be a considerable amount for a poorer family. Now, take that increase and apply to almost all locally produced foods & clothing and you can see that the increased wages would probably be more than offset by the increased cost of living. The hardest hit would be the elderly poor.

There are no shortcuts to alleviating poverty. What is needed is a long-term plan to improve job skills & education, combined with improved social services and all around economic reform. Their goals should be aimed at 2020, not 2012.

Excellent post!

[Skywalker69]

.where was the Thai Chamber of Commerce during the campaigning?

Dubai ??

[hellodolly]

I have no idea what I am talking about.

That being said I was wondering if when you say a high profit margin are you talking about the percentage return on the money they have invested.

For instance 10,000,000 baht profit is a lot of money. But if they invested 10,000,000,000 to get it would it still be a high profit margin. Would a person invest there money in a company that only returned 1% on it?

That's exactly the point. People and companies that invest their money want a return on their investment. If they can't get it in Thailand, they will look for it somewhere else. Without the investment dollars, there is no company. Without the company, there are no jobs. Pointless have a large increase in minimum wage then, isn't it?

(Maybe I should have put "high profit margins" in quotes to refer to 473geo's term.)

Care to take a stab at how many people actually work for companies, organisations, that have the option are likely to choose to relocate and run a business else where. (.after all you can hardly pick Thai rice in Cambodia) I think you will find there is a very small percentage... If business cannot absorb a slight increase in the minimum wage over say 3 years......time to for them to move on if they choose.

Some valid questions.

However a raise of 50% to 150% is not a slight raise.

To make it easy for you to understand go in and ask your boss for a slight decrease in your wage 150%. Give him three years to implement it.

[Skywalker69]

Of course, the financial wizards at Peua Thai had NO IDEA what the cost of their campaign promise might be...and the poor working people assumed it was some kind of magic made by Khun Thaksin.

Promise them anything, and then have someone else to blame when the result (election landslide) is achieved, and the thing won't fly...where was the Thai Chamber of Commerce during the campaigning?

The winning party knew full well how much it cost-the same as how much the overall campaign cost-and the Samsungs and the University starters. They didn't care their motive to achieve was solely to GET IN. Then if they backworded on most things it didn't matter cause they then can receive the perks to get double money back.

Thais seem to think in general money grows on trees, easy come easy go. That is why a big % of foreigners get ripped off-not caring.

And the PTP backers don't give a toss about Small and Medium Sized Enterprises,

they are just flies buzzing around them. Let them eat cake ( rice cake).

Exactlly, I wonder what would happen if you increase the wages in the Euro zone or in th US with 60-65%

[Skywalker69]

" The poor are already lining up behind a party that promises it now and constantly rejecting a party that says slowly. If the party they expect to give it now doesn't and they have already rejected the slowly and wait your turn approach what happens next?"

the shit will hit the fan..........

I think you´r right, the red shirt movment can easily turn on the PTP.