New Thai Govt's Populist Policies 'May Hit Growth Of Businesses'

[473geo]

Major companies put out to SME's and that is one area where such business may suffer, the major corporates procurement sector is ruthless, they negotiate to leave limited margin for the producer in order to maintain their profit levels and competitive edge........any SME that has a say three year contract to supply product may well have failed to build into the module a major lift in the minimum wage, unfortunate, another part of the learning curve. While I agree this could well cause a loss of margin for the remaining duration of the contract, do we blame the government for putting up the minimum wage to a reasonable level, the major corporate purchaser for driving down the margin for the producer, or the SME management for being short sighted and not ensuring sufficient margin.

"do we blame the government for putting up the minimum wage to a reasonable level" - Who else can you blame?

And this isn't just about raising minimum wages. No one is saying don't raise minimum wages.

It's about raising minimum wages by such a large percentage in such a short time. The tax offset will help some companies, but only those that are making enough profit after taking in all the extra costs.

A rise in the minimum wage pushes more disposable income into the purchasing sector, so if the SME's have a good product the market will probably be able to absorb a price increase....

Limited inflation can promote growth in the economy

Tell me are you able to release the percentage and timing of the minimum wage rises you appear to be privy to.......I doubt it will be an immediate full on rise......but if it suits your political standing to hold the new government to this promise......then I feel you are not discussing the possible effect of a realistic minimum wage increase but rather angling to accuse the government of either causing hardship/unemployment/failed business........or not delivering on their promise........

For me as I have stated previously I think the government will build the minimum wage as quickly as is reasonably possible.....people may get impatient but I think as long as the promise is delivered this term the government will be ok.

Arise in minimum wage = a rise in prices, so rest assured there will be no more disposable income, if anything less disposable income. Then, there will also be more unemployment which again means less disposable income.

Then there will be higher prices, meaning less spending, also meaning less exports, also meaning less jobs and again means less income.

Wages usually rise along with the prices, not other way around.

if a man is paid 200 baht a day, and he then receives an increase of 50% I rest assured that his disposable income has risen 100 baht......where he chooses to spend his new found wealth is up to him and remember these are people with the ability to keep overheads to a minimum, they have had years of practice...

[kuffki]

if a man is paid 200 baht a day, and he then receives an increase of 50% I rest assured that his disposable income has risen 100 baht......where he chooses to spend his new found wealth is up to him and remember these are people with the ability to keep overheads to a minimum, they have had years of practice...

when a man is paid 100 baht more, 50% rise, rest assured he will be paying 50% more on everything he buys the day after he gets his 100 baht.

I am starting to see that you simply may not understand how economics works,

Remember when fuel prices went up? so did the price of bread, milk and every other necessity. One thing though wit that, 1 truck can carry lots of milk and bread and prices still almost doubled. What do you think would happen to prices when main expense -wages- go up by 50%?

[473geo]

A rise in the minimum wage pushes more disposable income into the purchasing sector, so if the SME's have a good product the market will probably be able to absorb a price increase....

Limited inflation can promote growth in the economy

Tell me are you able to release the percentage and timing of the minimum wage rises you appear to be privy to.......I doubt it will be an immediate full on rise......but if it suits your political standing to hold the new government to this promise......then I feel you are not discussing the possible effect of a realistic minimum wage increase but rather angling to accuse the government of either causing hardship/unemployment/failed business........or not delivering on their promise........

For me as I have stated previously I think the government will build the minimum wage as quickly as is reasonably possible.....people may get impatient but I think as long as the promise is delivered this term the government will be ok.

There is always inflation. In most countries, wages usually increase at a similar rate to inflation.

The PTP are saying that there will be a rise to 300 baht nation wide within 12 months. I am not discussing what they might do. I am discussing what they have promised to do.

If the PTP are going to promise things so that they get elected, then they should be held responsible for the consequences ... or for not delivering on their promise. You can't really expect otherwise, can you? Do you think the Democrats would be treated any differently?

Well it appears I can see into the future by your response......and no,..... I would expect any government to adjust policy accordingly if there was an assured negative effect on the country as a whole....as I can see into the future...all will be fine...just relax and let it all happen.......

[473geo]

if a man is paid 200 baht a day, and he then receives an increase of 50% I rest assured that his disposable income has risen 100 baht......where he chooses to spend his new found wealth is up to him and remember these are people with the ability to keep overheads to a minimum, they have had years of practice...

when a man is paid 100 baht more, 50% rise, rest assured he will be paying 50% more on everything he buys the day after he gets his 100 baht.

I am starting to see that you simply may not understand how economics works,

Remember when fuel prices went up? so did the price of bread, milk and every other necessity. One thing though wit that, 1 truck can carry lots of milk and bread and prices still almost doubled. What do you think would happen to prices when main expense -wages- go up by 50%?

So did the dairies, and bakeries all go out of business because the price doubled, due to a fuel increase.......because that is what we are told will happen if there is a minimum wage rise.....

I understand economies of scale, a man that eats his own rice and chickens is not affected by a price rise of bread, he drinks water not milk, maybe a little home made rice wine now and then.....his trip into town on the baht bus once a week may go up 5 baht.......the only time he may be affected in the way you suggest is if he gets to a salary level where he considers luxury items are affordable......but you don't appear to want that to happen

Edited July 30, 2011 by 473geo

[kuffki]

if a man is paid 200 baht a day, and he then receives an increase of 50% I rest assured that his disposable income has risen 100 baht......where he chooses to spend his new found wealth is up to him and remember these are people with the ability to keep overheads to a minimum, they have had years of practice...

when a man is paid 100 baht more, 50% rise, rest assured he will be paying 50% more on everything he buys the day after he gets his 100 baht.

I am starting to see that you simply may not understand how economics works,

Remember when fuel prices went up? so did the price of bread, milk and every other necessity. One thing though wit that, 1 truck can carry lots of milk and bread and prices still almost doubled. What do you think would happen to prices when main expense -wages- go up by 50%?

So did the dairies, and bakeries all go out of business because the price doubled, due to a fuel increase.......because that is what we are told will happen if there is a minimum wage rise.....

I understand economies of scale, a man that eats his own rice and chickens is not affected by a price rise of bread, he drinks water not milk, maybe a little home made rice wine now and then.....his trip into town on the baht bus once a week may go up 5 baht.......the only time he may be affected in the way you suggest is if he gets to a salary level where he considers luxury items are affordable......but you don't appear to want that to happen

Yes the man will also peddle his OWN, HOMEMADE generator, bring his own water from the ocean, Oh but wait, the man who eats his own rice and chicken would be self employed farmer, so the wage increase would not apply

Of course that man when he needs help on his farm, would pay his staff half in money and the other half in chickens and rice to cover the wage increase. Oh but wait, if he pays in rice and chickens then he does not have enough food for himself

[Thaddeus]

remember these are people with the ability to keep overheads to a minimum, they have had years of practice...

And years and years of more practice to come.

[473geo]

if a man is paid 200 baht a day, and he then receives an increase of 50% I rest assured that his disposable income has risen 100 baht......where he chooses to spend his new found wealth is up to him and remember these are people with the ability to keep overheads to a minimum, they have had years of practice...

when a man is paid 100 baht more, 50% rise, rest assured he will be paying 50% more on everything he buys the day after he gets his 100 baht.

I am starting to see that you simply may not understand how economics works,

Remember when fuel prices went up? so did the price of bread, milk and every other necessity. One thing though wit that, 1 truck can carry lots of milk and bread and prices still almost doubled. What do you think would happen to prices when main expense -wages- go up by 50%?

So did the dairies, and bakeries all go out of business because the price doubled, due to a fuel increase.......because that is what we are told will happen if there is a minimum wage rise.....

I understand economies of scale, a man that eats his own rice and chickens is not affected by a price rise of bread, he drinks water not milk, maybe a little home made rice wine now and then.....his trip into town on the baht bus once a week may go up 5 baht.......the only time he may be affected in the way you suggest is if he gets to a salary level where he considers luxury items are affordable......but you don't appear to want that to happen

Yes the man will also peddle his OWN, HOMEMADE generator, bring his own water from the ocean, Oh but wait, the man who eats his own rice and chicken would be self employed farmer, so the wage increase would not apply

Of course that man when he needs help on his farm, would pay his staff half in money and the other half in chickens and rice to cover the wage increase. Oh but wait, if he pays in rice and chickens then he does not have enough food for himself

Sigh......electricity is free as his luxuries of a TV and fridge do not utilise enough to hit payment level; his water is collected rain water; his family work the farm, and he goes and labours to supplement the meagre income from the farm.......

Edited July 30, 2011 by 473geo

[ballpoint]

if a man is paid 200 baht a day, and he then receives an increase of 50% I rest assured that his disposable income has risen 100 baht......where he chooses to spend his new found wealth is up to him and remember these are people with the ability to keep overheads to a minimum, they have had years of practice...

If a man is paid 200 Baht a day and his small employer can't afford to pay him 300 Baht a day then he ends up earning 0 Baht a day. If a bunch of men are earning 200 Baht a day and their medium sized employer ups it to 300 Baht a day, and then must up the wages of more experienced workers already earning 300 baht a day to 450 Baht a day to keep them happy, and then those currently earning 450 baht a day to 675 baht a day... then the employer either puts prices up or a whole bunch of people will be earning 0 Baht a day.

[473geo]

if a man is paid 200 baht a day, and he then receives an increase of 50% I rest assured that his disposable income has risen 100 baht......where he chooses to spend his new found wealth is up to him and remember these are people with the ability to keep overheads to a minimum, they have had years of practice...

If a man is paid 200 Baht a day and his small employer can't afford to pay him 300 Baht a day then he ends up earning 0 Baht a day. If a bunch of men are earning 200 Baht a day and their medium sized employer ups it to 300 Baht a day, and then must up the wages of more experienced workers already earning 300 baht a day to 450 Baht a day to keep them happy, and then those currently earning 450 baht a day to 675 baht a day... then the employer either puts prices up or a whole bunch of people will be earning 0 Baht a day.

If a man earning 200 baht a day feels underpaid he may work at half speed.....a 50% increase may galvanise him into working twice as hard, production increases 100% for an increased cost of 50%.........better increase the minimum wage right away eh?

[kuffki]

Sigh......electricity is free as his luxuries of a TV and fridge do not utilise enough to hit payment level; his water is collected rain water; his family work the farm, and he goes and labours to supplement the meagre income from the farm.......

, no more needs to be said

[whatsupdoc]

If a man earning 200 baht a day feels underpaid he may work at half speed.....a 50% increase may galvanise him into working twice as hard, production increases 100% for an increased cost of 50%.........better increase the minimum wage right away eh?

Please employ some people, give them a 50% raise and let us know what happens...... In the meantime, dream on.

[ballpoint]

If a man earning 200 baht a day feels underpaid he may work at half speed.....a 50% increase may galvanise him into working twice as hard, production increases 100% for an increased cost of 50%.........better increase the minimum wage right away eh?

If a man is paid 200 baht a day to do a specific job and works twice as hard for 300 baht a day he'll finish the job in half the time and only earn 75% of what he would have had he done it for 200 baht a day at half speed.

[473geo]

If a man earning 200 baht a day feels underpaid he may work at half speed.....a 50% increase may galvanise him into working twice as hard, production increases 100% for an increased cost of 50%.........better increase the minimum wage right away eh?

Please employ some people, give them a 50% raise and let us know what happens...... In the meantime, dream on.

I never employed people on a minimum wage, and always paid any staff well.....so the occasion of being forced by government mandate to pay staff a decent living wage never applied.........

[rixalex]

If a man earning 200 baht a day feels underpaid he may work at half speed.....a 50% increase may galvanise him into working twice as hard, production increases 100% for an increased cost of 50%.........better increase the minimum wage right away eh?

Most workforce does the minimum amount of work it can get away with, regardless of salary. It's called human nature. Not that that is a reason to not put wages up, but just don't expect production increases, and certainly not in the realms of 100% - that's just fantasy land.

[473geo]

If a man earning 200 baht a day feels underpaid he may work at half speed.....a 50% increase may galvanise him into working twice as hard, production increases 100% for an increased cost of 50%.........better increase the minimum wage right away eh?

If a man is paid 200 baht a day to do a specific job and works twice as hard for 300 baht a day he'll finish the job in half the time and only earn 75% of what he would have had he done it for 200 baht a day at half speed.

on the production line his output doubles, company take on an extra salesman to go out and sell the increased output; company profits increase; customers are impressed with the decreased delivery time for orders, they increase their order level, the company is on the up......

[rixalex]

I never employed people on a minimum wage, and always paid any staff well.....so the occasion of being forced by government mandate to pay staff a decent living wage never applied.........

Perhaps that had more to do with the fact that your staff were skilled and expected something around the market rate, or else would not have worked for you, rather than to do with what a fantastic caring generous employer you were.

[473geo]

If a man earning 200 baht a day feels underpaid he may work at half speed.....a 50% increase may galvanise him into working twice as hard, production increases 100% for an increased cost of 50%.........better increase the minimum wage right away eh?

Most workforce does the minimum amount of work it can get away with, regardless of salary. It's called human nature. Not that that is a reason to not put wages up, but just don't expect production increases, and certainly not in the realms of 100% - that's just fantasy land.

European norm is accepted that the effect of a payrise lasts 90 days.......however that is not ever likely to have taken into account a 50% payrise........

Just to let you know I have seen men galvanised to work a lot faster, but it was the time the pub was closing......money didn't come into it......

[473geo]

I never employed people on a minimum wage, and always paid any staff well.....so the occasion of being forced by government mandate to pay staff a decent living wage never applied.........

Perhaps that had more to do with the fact that your staff were skilled and expected something around the market rate, or else would not have worked for you, rather than to do with what a fantastic caring generous employer you were.

Perhaps

[davehowden]

I have found the cost of some of these PT promises. Of course niether party mentioned the cost or where the money is going to come from. I did not relise it was such an extensive list. I do remeber they did say they could shuffle monies around to pay for them. Here is what I found so far.

PUEA THAI PARTY

Policy pledges include:

- Guarantee a uniform daily minimum wage of 300 baht ($10) throughout the country; this would rise to 1,000 baht by 2020.

- Raise salaries of civil servants and state workers

- Universal medical care; patients pay 30 baht ($0.97) per visit 65 billion year

- Credit cards for farmers to buy fertilizer and other things needed for production; rice intervention scheme with a guaranteed 15,000-20,000 baht per tonne for unmilled rice. 450 billion a year (just for the rice)

- Three-year household debt moratorium for those with up to 500,000 baht in debt, focusing on teachers, farmers and civil servants; debt restructuring for those with more than 500,000 baht.

- Starting monthly salary of 15,000 baht ($500) for new university graduates, up from the current 10,640 baht.

- Free tablet computers for about 800,000 new school children each year. Puea Thai says these would cost 5,000 baht ($160) each and operate with open-source software. 4 billion a year

- Corporate tax cut from 30 percent to 23 percent in first year, 20 percent in second year. 150 billion a year

- Tax cuts for buyers of first homes and first cars

- A flat 20 baht fare for all 10 mass transit rail lines in Bangkok

- Promote Bangkok's Suvarnabhumi airport as regional hub. I think it already is 0

- High-speed rail lines linking key cities in the north, northeast, east and upper south regions. Trains to link with outskirts of Bangkok and eastern tourism, industrial hubs. At least 3 trillion (150billion a year over 20 years)

- Annual rural village development funds of between 300,000 and two million baht for each of Thailand's 73,000 villages. 55 billion a year (750,000 per average)

- Monthly welfare allowance of 600 baht for elderly citizens of over 60, rising to 700 baht at 70, 800 baht at 80, and 1,000 baht at 90. 17 billion year

- Free Wi-Fi and Internet connections in public places.

- Build 30-km (18-mile) anti-flooding levees to protect Bangkok and satellite towns from tide surges around the Gulf of Thailand

- Special administrative status for southern Muslim provinces

- Campaign to wipe out illicit drugs

Everything in Thai Baht. All numbers came from fact checks on the net. Not sure how accurate. This is all I could find so far. If anybody can find missing price tags, please add to.

Total so far 891 Billion THB a year.

Thailands GDP 2 trillion THB

Nice to see some facts instead of rhetoric, and just how much of this will get implemented, I think not that much.

As you said in a previous post, what is needed is education but unfortunately that will not put food in hungry bellies this year or next.

[ballpoint]

If a man earning 200 baht a day feels underpaid he may work at half speed.....a 50% increase may galvanise him into working twice as hard, production increases 100% for an increased cost of 50%.........better increase the minimum wage right away eh?

If a man is paid 200 baht a day to do a specific job and works twice as hard for 300 baht a day he'll finish the job in half the time and only earn 75% of what he would have had he done it for 200 baht a day at half speed.

on the production line his output doubles, company take on an extra salesman to go out and sell the increased output; company profits increase; customers are impressed with the decreased delivery time for orders, they increase their order level, the company is on the up......

But the raw material comes from a man operating a machine that can't go any faster, so the supplier ups the cost to compensate for the increased wages. The factory is working at double speed, leading to half the time between maintenance of its own machinery. There simply isn't the demand to take up the increased production. A mountain of widgets builds up along side the knackered machinery, that the service company is charging double fo repair in order to pay its own staff. Meanwhile the boss's wife is complaining about the housekeeping money, because the maid must be paid extra, and all the shops have put their prices up because their staff must be paid more, but are physically unable to double their sales. The boss starts spending more time down the massage parlour to get away from the nagging, but the girls there want double the money, and the only effects of their working at twice the speed is that he spends half the time there, but pays more, and ends up with a nasty rash on a sensitive part of the body due to the increased vigour of the happy ending. The doctor charges him more to compensate for the increased price of paying the nurse and receptionist, and the blackmailer who hears about it wants a bigger payoff for not telling the wife. So annoyed with it all, the boss doesn't notice a red light while driving back and ends up having to pay double the tea money to the BIB who nabs him. He decides to end it all. The monks charge the wife double for the funeral. She sells the factory to make the payment. The workers are out on their respective ears. Welcome to Thaksin's Thailand.

[tlansford]

Well, the article spurred some interesting comments on minimum wages and economics.

...

However, the real objective (of the article) is fear-mongering from the FTI business lobby to slow-down or prevent any change *perceived as detrimental to business interests* , albeit this article is quite tame compared to the norm in the USA.

So who out there feels that the minimum wage will start to change before the end of this year, or will it be next year, or will it be "never"??

First off I dont agree with the "Fear mongering" statement from this article.

I think they could raise it this year, but only 20 baht at the most. Next year another 20 baht and so on. If they do it any other way it would be another one of those policies that no buisness, (other than foriegn manufacturers) would abide bye. Seems however if this works out it will be a disaster. Just as all there other promices are going to be a disaster, or dissapointment.

Computer tablets for all primary students. Thats a joke. isint it? pretty worthless without the internet, and kids that actually want to learn.

150 billion baht high speed train to Chiang Mai. That will never happen. not in my lifetime anyway.

I dont know about this rice sceme if that goes through, not even sure how that will work,but it will be expensive.

This new sea wall or new city to protect BKK from sea level rise. Thats another one that will never happen. That one would cost several trillion baht.

I think the only ones gonna be without dissapoinment are the big coorporations. 10% reduction in taxes will be great for them. Of course there is going to cause a serious revenue issue for the government to opperate.

Is Thailand the only country in the world where politicians cant lie to get elected?

Thanks -

20 bhat /year increments? That's pretty tame...

Fear-mongering starts in the title of the article...

It seems like the drop in the corporate tax-rate, meant to offset the increase in the minimum wage, should be targeted as best as possible to those impacted by the minimum wage changes.

[TAWP]

If a man earning 200 baht a day feels underpaid he may work at half speed.....a 50% increase may galvanise him into working twice as hard, production increases 100% for an increased cost of 50%.........better increase the minimum wage right away eh?

Doesn't that mean that he could already show that he worked twice as hard as his co-worker and already be earning above minimum wage?

[TAWP]

If a man earning 200 baht a day feels underpaid he may work at half speed.....a 50% increase may galvanise him into working twice as hard, production increases 100% for an increased cost of 50%.........better increase the minimum wage right away eh?

If a man is paid 200 baht a day to do a specific job and works twice as hard for 300 baht a day he'll finish the job in half the time and only earn 75% of what he would have had he done it for 200 baht a day at half speed.

on the production line his output doubles, company take on an extra salesman to go out and sell the increased output; company profits increase; customers are impressed with the decreased delivery time for orders, they increase their order level, the company is on the up......

This sounds amazing. I truly hope this is done. Even better, I hope they government raise the minimum wage to 2500B per day. Imagine how rich all companies now will be when their output will ten-fold, with the same number of employees!

[Crushdepth]

In other countries, calling a government policy "populist" is seen as a kind of insult.

[dcutman]

If a man earning 200 baht a day feels underpaid he may work at half speed.....a 50% increase may galvanise him into working twice as hard, production increases 100% for an increased cost of 50%.........better increase the minimum wage right away eh?

If a man is paid 200 baht a day to do a specific job and works twice as hard for 300 baht a day he'll finish the job in half the time and only earn 75% of what he would have had he done it for 200 baht a day at half speed.

on the production line his output doubles, company take on an extra salesman to go out and sell the increased output; company profits increase; customers are impressed with the decreased delivery time for orders, they increase their order level, the company is on the up......

This sounds amazing. I truly hope this is done. Even better, I hope they government raise the minimum wage to 2500B per day. Imagine how rich all companies now will be when their output will ten-fold, with the same number of employees!

Actually the promise made was a 1000THB a day by 2020. That would be an initial 40 to 90% raise and an average of about 15% raise for the remaining 8 years.

[dcutman]

I have found the cost of some of these PT promises. Of course niether party mentioned the cost or where the money is going to come from. I did not relise it was such an extensive list. I do remeber they did say they could shuffle monies around to pay for them. Here is what I found so far.

PUEA THAI PARTY

Policy pledges include:

- Guarantee a uniform daily minimum wage of 300 baht ($10) throughout the country; this would rise to 1,000 baht by 2020.

- Raise salaries of civil servants and state workers

- Universal medical care; patients pay 30 baht ($0.97) per visit 65 billion year

- Credit cards for farmers to buy fertilizer and other things needed for production; rice intervention scheme with a guaranteed 15,000-20,000 baht per tonne for unmilled rice. 450 billion a year (just for the rice)

- Three-year household debt moratorium for those with up to 500,000 baht in debt, focusing on teachers, farmers and civil servants; debt restructuring for those with more than 500,000 baht.

- Starting monthly salary of 15,000 baht ($500) for new university graduates, up from the current 10,640 baht.

- Free tablet computers for about 800,000 new school children each year. Puea Thai says these would cost 5,000 baht ($160) each and operate with open-source software. 4 billion a year

- Corporate tax cut from 30 percent to 23 percent in first year, 20 percent in second year. 150 billion a year

- Tax cuts for buyers of first homes and first cars

- A flat 20 baht fare for all 10 mass transit rail lines in Bangkok

- Promote Bangkok's Suvarnabhumi airport as regional hub. I think it already is 0

- High-speed rail lines linking key cities in the north, northeast, east and upper south regions. Trains to link with outskirts of Bangkok and eastern tourism, industrial hubs. At least 3 trillion (150billion a year over 20 years)

- Annual rural village development funds of between 300,000 and two million baht for each of Thailand's 73,000 villages. 55 billion a year (750,000 per average)

- Monthly welfare allowance of 600 baht for elderly citizens of over 60, rising to 700 baht at 70, 800 baht at 80, and 1,000 baht at 90. 17 billion year

- Free Wi-Fi and Internet connections in public places.

- Build 30-km (18-mile) anti-flooding levees to protect Bangkok and satellite towns from tide surges around the Gulf of Thailand

- Special administrative status for southern Muslim provinces

- Campaign to wipe out illicit drugs

Everything in Thai Baht. All numbers came from fact checks on the net. Not sure how accurate. This is all I could find so far. If anybody can find missing price tags, please add to.

Total so far 891 Billion THB a year.

Thailands GDP 2 trillion THB

Nice to see some facts instead of rhetoric, and just how much of this will get implemented, I think not that much.

As you said in a previous post, what is needed is education but unfortunately that will not put food in hungry bellies this year or next.

Like I said before there is going to be some serious dissapointment if they dont. As you can see there will have to be some serious revenues generated to just pay the promises and still run the rest of the country.

Yeh. Thailand was not paying attention to some of their Asian counterparts. Japan and Korea for example, these countries invested alot in education for the future. It payed off

Everybody learns a trade or profession.

It is never to late to start but it takes a significant amount time, money, and willpower.