How Manufacturers In Thailand Are Coping With Minimum Wage Hike

[birdpooguava]

"The General Theory of Employment, Interest & Money

John Maynard Keynes

1935"

http://en.wikipedia....erest_and_Money

Yeah I know when it was written & where to access it. Could you then tell me which theory the recent massive stimulus spending around the world was based on?

[rubl]

"The General Theory of Employment, Interest & Money

John Maynard Keynes

1935"

http://en.wikipedia....erest_and_Money

Yeah I know when it was written & where to access it. Could you then tell me which theory the recent massive stimulus spending around the world was based on?

A misunderstanding here I think. I just copied the title info as found on scribd, a link on the wiki page, and I provided the wiki link itself. So far I have no comment on it at all.

[pattayaorganic]

Empirical evidence done by economists over the past 50 years has shown minimal correlation between increases in the minimum wage and increases in unemployment.

"..study after study shows that there is simply no evidence that raising the minimum wage has led to higher unemployment, and there is substantial evidence that a responsible minimum wage increase does not affect employment rates at all." Democratic Staff of the Committee on Health, Education, Labor and Pensions Committee, United States Senate, July 1, 2004,

Simply not true. It depends whether the minimum wage is below the equilibrium price level or not.

In a recent well balanced review of minimum wage effects in the US and other countries the findings were quite clear:

ABSTRACT

Minimum Wages and Employment

*

We review the burgeoning literature on the employment effects of minimum wages – in the

United States and other countries – that was spurred by the new minimum wage research

beginning in the early 1990s. Our review indicates that there is a wide range of existing

estimates and, accordingly, a lack of consensus about the overall effects on low-wage

employment of an increase in the minimum wage. However, the oft-stated assertion that

recent research fails to support the traditional view that the minimum wage reduces the

employment of low-wage workers is clearly incorrect. A sizable majority of the studies

surveyed in this monograph give a relatively consistent (although not always statistically

significant) indication of negative employment effects of minimum wages. In addition, among

the papers we view as providing the most credible evidence, almost all point to negative

employment effects, both for the United States as well as for many other countries. Two other

important conclusions emerge from our review. First, we see very few – if any – studies that

provide convincing evidence of positive employment effects of minimum wages, especially

from those studies that focus on the broader groups (rather than a narrow industry) for which

the competitive model predicts disemployment effects. Second, the studies that focus on the

least-skilled groups provide relatively overwhelming evidence of stronger disemployment

effects for these groups.

JEL Classification: J23, J38

Keywords: minimum wage, employment

Corresponding author:

David Neumark

Department of Economics

3151 Social Science Plaza

University of California-Irvine

Irvine, CA 92697-5100

USA

E-mail: [email protected]

[pattayaorganic]

I would suggest that anyone opposed to the 300B minimum wage try to live on 150B per day. The opponents of this proposal all live a lot better than that

You just don't get it. You are totally ignoring the powerful force of the market. Labor is the same as any other good in economic terms, decreased cost increases demand and visa versa. If you want to help the farmers and you think the price of rice is too low, you don't double the price of rice and use taxes to make up the difference. The market is already telling you that there is too much rice, if you increase the price signal, the result is even more unneeded rice. What Thai farmers need to do is diversify into other, higher value crops.

Similarly, if your goal is to improve the lot of the poorer workers, you don't just raise the mimimum wage (as those above economics 101, increased labor costs decrease labor demand). Please try to find me a peer reviewed economics paper that shows a clear overall benefit for increased minimum wage if you want to try to make this argument by looking at only one side of the equation.

If you want to improve the lot of the poor, study after study after study shows the same answer. You invest in EDUCATION which leads to higher PRODUCTIVITY and skills that are in demand can receive higher compensation for their work with a net overall economic benefit.

Just as it is futile for the government to go against market forces for rice prices, the same goes for labor. These mistakes have been repeated ad infinitum by many a government and the result is always the same.

So for those that want to poo poo about social fairness, the true social equity can ONLY come with EDUCATION and this means investment in exposing teachers to leading edge, proven education methods, infrastructure as libraries, a vocational education system to educate semi-skilled workers and the next generation of farmers, etc.

Then and ONLY THEN can Thailand enjoy true prosperity.

The sad thing is that the current government only pays lip service to helping the poor, but in the end, they get their votes and they couldn't care less about the true difficulties of the poor in this country. If I saw PT or even T taking sincere steps to addressing the real needs of the countries (esp. rural) poor, I would give them my full support.

Unfortunately that is not the case...

They probably don`t need your support so as your ideas. Let this alone, and see what happens. Anyone, who is a bit more intelligent knows that economic doctrines are options. Its don`t bring the same result in different environment. Nice idea to improve the education but I can hardly believe that Thailand will ever change their education system. The cost of living keeps rising, and have been rising sharply. How long should these people wait for higher salaries as their money worth far less then 2 years ago.

Well unfortunately we do not live in a centrally planned economy where we think we can just readjust the rules as we see fit. The real cause of cost of living increases is inflation and increasing minimum wages does not rectify inflation but exacerbates it. It is like throwing gas on the fire. Either you trust the market forces or you don't.

Again, if you want to earn more money, you CANNOT just change the rules as your bidding. You must increase the value of labor and thereby its productivity and then you have a win-win situation.

Regarding your allegations that minimum wage will work differently in Thailand, that is like saying the laws of physics will work differently in Thailand. Labor is a good and increased price will decrease demand. All good quality research shows this result.

[IsaanUSA]

I remember when I had a minimum wage job back when I was a teenager. Then US Congress decided to raise the minimum wage. It was great, we got a pretty good pay raise! Of course we had to raise prices for everything, we lost a few customers but the majority complained and still paid, so then it all went back to square one. Except there was an extra zero at the end now.

I think the only good thing about this is that they are doing it somewhat gradually. A raise to 300B overnight would have been disastrous.

[pattayaorganic]

Boonchai Charassangsomboon, executive director of the FPO's macroeconomic policy bureau, said the rise in the minimum wage to Bt300 per day for labourers and Bt15,000 per month for state officials would boost the inflation rate by a manageable level of about 0.7 percentage point. Meanwhile the wage policies will result in a 12-per-cent rise in overall income for the whole country, according to the office's calculation.

A 12% rise in overall income, but only a 0.7% increase in inflation. Maybe I should have studied Economics rather than Mathematics, but somehow this doesn't add up for me.

BTW I assume that the normal, yearly adjustment of the minimum wage has been done for all those not being lucky enough to work in one of the seven provinces where it's now 300B/day ?

Try reading The General Theory of Employment, Interest & Money then.

"The General Theory of Employment, Interest & Money

John Maynard Keynes

1935"

http://en.wikipedia....erest_and_Money

Yes just ask Japan after 20 years of Keynesian "pump priming" policies and now the US and EU how much credibility Keynesian theories hold in the modern fiat money, central bank controlled world.

After spending the equivalent of more than 2x annual GDP, which has burdened future generations with almost inexorable tax burden, Japan is the best example on earth of the fallacies of Keynesian theory. US and EU are well on their way to replicate Japan's experience.

(apologize if a bit off topic, but facts needed to be addressed)

[pattayaorganic]

FYI, this just released minutes ago...more than 50% of Thailand's population makes their livelihood directly or indirectly from primary industry. Food producers received a massive blow with this policy and Myanmar govt. seems quite happy about Thailand's boost in minimum wage...

April 2, 2012

Thailand

40% Increase in the Minimum Wage

On April 1, 2012, the minimum wage in seven Thai provinces increased by 40%, to $9.73 a day.

Pornsil Patcharintanakul, an executive at Charoen Pokphand Foods, the largest shrimp farming company in Thailand (hatcheries, farms, processing plants and international marketing), said the minimum wage hike was one factor driving Thai companies to neighboring countries, adding that with Myanmar opening up, more economic activity there could lead to fewer Myanmar workers coming to Thailand. Pornsil, also a vice-chairman of the Thai Chamber of Commerce, said the food industry would see costs rise by 10-20%. Even so, he does not anticipate massive layoffs.

Paiboon Ponsuwanna, chairman of the Thai National Shippers’ Council, said the 40% rise in the daily minimum wage would affect the shrimp farming industry. “Employers in these types of activities have paid wages below 300 baht, but they provided food and accommodation to staff for free,” he said. “...Their costs will be higher.”

Source: Bangkok Post. Business/Economics/Happy Trails/Thai Firms Weigh Pros and Cons of Shifting Production to Other Countries as Wages Rise. April 2, 2012.April 2, 2012

Thailand

Edited April 2, 2012 by pattayaorganic

[allan michaud]

Does the 300 Baht pay rise (with increased efficency) apply to bargirls too? Just asking

8% better BJ's maybe

[longway]

Empirical evidence done by economists over the past 50 years has shown minimal correlation between increases in the minimum wage and increases in unemployment.

"..study after study shows that there is simply no evidence that raising the minimum wage has led to higher unemployment, and there is substantial evidence that a responsible minimum wage increase does not affect employment rates at all." Democratic Staff of the Committee on Health, Education, Labor and Pensions Committee, United States Senate, July 1, 2004,

Is a 40% increase in some provinces now, and upto around 100% increase in all the other provinces in 8 months a responsible increase? I guess we will find out.

[kimamey]

I would suggest that anyone opposed to the 300B minimum wage try to live on 150B per day. The opponents of this proposal all live a lot better than that

I'm not opposed to it and I think people should have a decent wage. What I do disagree with is the apparent sudden increase. I'm not familiar with wages in Thailand but from what I've heard 300B a day is a big increase but then maybe this is for areas outside the capital who aren't seeing the increase yet. In other countries including my own (UK) the minimum wage is increased in relation to average wages slowly over a few years and then maintained. This enables businesses to absorb the extra cost over time whilst slowly raising productivity instead of trying to put undue pressure on workers or in some cases sacking them. The government has already had to back off from their promise to raise the minimum wage for everyone at the same time. It's also normal to have a minimum hourly rate not a daily one. This accommodates those who do not work standard hours.

Although I said I'm not familiar with Thai wages I have had one experience. Late last year when the time came to cut the rice on my gf's land (I don't live there yet) she tried to get people to cut it. She was offering 250B a day but couldn't get workers as someone else was paying 300B. Her brother did some for that money and then others came after the higher paying rice was cut. I did suggest that she pay more particularly to her brother but as far as I know she didn't and it's not as if she's a heartless person.I just have to let her get on with it. This is in Mahasarakham in Isaan by the way so not a high pay area. I don't know how well paid rice cutting usually is.

[louse1953]

Everyone who has had any experience in business knows the fastest way to reduce costs, is to reduce staff numbers. Knowing that this was coming surely most manufacturers in Thailand will already have figured out what this new basic wage is going to cost them and will have been implementing ways to combat it. It won't take long for Foreign companies to either up sticks and move to another manufacturing base or reduce staff and other costs to get the bottom line back in order. In the long term this will not benefit Thailand or the Thai people. Many of the working class folks will end up out of work or doing jobs with low pay outside of industries ring fenced by the new rate.

So what do you want Thai,s to do,starve,so you can have your cheap goods.Don't wages go up in west,mine did.When i go back to Oz,i'll get 5% more,equal to 380 baht more per day.My pay rise is more than a Thai's minimum wage.As far as moving offshore,there's not many countries left with a compliant workforce.When did this country ever have a general strike?

[louse1953]

We all know where artificial price floors regarding labour lead! A few factors that may be considered:

- An increase in the minimum wage by 50% causes an increase in prices of non discretionary items (food, gas, etc.)

- Real purchasing power of minimum wage workers increases, while purchasing power of the lower middle class decreases.

- Inflation will make the already expensive imported goods even more out of reach

- Will make Thailand less competitive on the global market leading to a decrease in Foreign Direct Investment

- Substantially higher rate of unemployed

- Decreased in government revenue:

- Those making less that 150,000 baht/year tax exempt. After the minimum wage increase these people will still be tax exempt (no additional tax revenue from this demographic)

- Reduced net profits of private organizations and High earning individuals (shareholders, etc.) will lead to lower government tax revenues.

- How much more productive can an Asian factory worker be????

I mean seriously! This is like Greece on Steroids!

Apparently also, the starting salary for government workers with bachelor degrees will rise from 8,000 baht/month to 15,000 baht/month

Where is the money coming from???

You must be joking,do you come from a country that pays $10 a day.The money comes from the exorbitant profits companys make off the back of the poor.The poor will spend money to keep their head above water,which will flow back in economy.

[OzMick]

We all know where artificial price floors regarding labour lead! A few factors that may be considered:

- An increase in the minimum wage by 50% causes an increase in prices of non discretionary items (food, gas, etc.)

- Real purchasing power of minimum wage workers increases, while purchasing power of the lower middle class decreases.

- Inflation will make the already expensive imported goods even more out of reach

- Will make Thailand less competitive on the global market leading to a decrease in Foreign Direct Investment

- Substantially higher rate of unemployed

- Decreased in government revenue:

- Those making less that 150,000 baht/year tax exempt. After the minimum wage increase these people will still be tax exempt (no additional tax revenue from this demographic)

- Reduced net profits of private organizations and High earning individuals (shareholders, etc.) will lead to lower government tax revenues.

- How much more productive can an Asian factory worker be????

I mean seriously! This is like Greece on Steroids!

Apparently also, the starting salary for government workers with bachelor degrees will rise from 8,000 baht/month to 15,000 baht/month

Where is the money coming from???

You must be joking,do you come from a country that pays $10 a day.The money comes from the exorbitant profits companys make off the back of the poor.The poor will spend money to keep their head above water,which will flow back in economy.

When you back to oz, you will pay B100 for a half litre of water. please don't compare apples with oranges. There is a wage system here which adjusts the minimum wage, but this hike is a politically driven vote-buy with no thought of the consequences.

Most people here running small businesses are not greedy tycoons reaping huge profits. The local bike shop owner works 6 days a week alongside her 3 employees and is far from wealthy. Her choice is to lay off one of 3 employees or put up her prices as neither she nor I can see any way to increase her employee's productivity.

Having a busy business with employees flat out most of the day, I see her prices going up. Those others not fully employed will reduce staff.

Inflation will eat away at the pay rise, while the newly unemployed suffer the double whammy.

[louse1953]

I would suggest that anyone opposed to the 300B minimum wage try to live on 150B per day. The opponents of this proposal all live a lot better than that

You just don't get it. You are totally ignoring the powerful force of the market. Labor is the same as any other good in economic terms, decreased cost increases demand and visa versa. If you want to help the farmers and you think the price of rice is too low, you don't double the price of rice and use taxes to make up the difference. The market is already telling you that there is too much rice, if you increase the price signal, the result is even more unneeded rice. What Thai farmers need to do is diversify into other, higher value crops.

Similarly, if your goal is to improve the lot of the poorer workers, you don't just raise the mimimum wage (as those above economics 101, increased labor costs decrease labor demand). Please try to find me a peer reviewed economics paper that shows a clear overall benefit for increased minimum wage if you want to try to make this argument by looking at only one side of the equation.

If you want to improve the lot of the poor, study after study after study shows the same answer. You invest in EDUCATION which leads to higher PRODUCTIVITY and skills that are in demand can receive higher compensation for their work with a net overall economic benefit.

Just as it is futile for the government to go against market forces for rice prices, the same goes for labor. These mistakes have been repeated ad infinitum by many a government and the result is always the same.

So for those that want to poo poo about social fairness, the true social equity can ONLY come with EDUCATION and this means investment in exposing teachers to leading edge, proven education methods, infrastructure as libraries, a vocational education system to educate semi-skilled workers and the next generation of farmers, etc.

Then and ONLY THEN can Thailand enjoy true prosperity.

The sad thing is that the current government only pays lip service to helping the poor, but in the end, they get their votes and they couldn't care less about the true difficulties of the poor in this country. If I saw PT or even T taking sincere steps to addressing the real needs of the countries (esp. rural) poor, I would give them my full support.

Unfortunately that is not the case...

They probably don`t need your support so as your ideas. Let this alone, and see what happens. Anyone, who is a bit more intelligent knows that economic doctrines are options. Its don`t bring the same result in different environment. Nice idea to improve the education but I can hardly believe that Thailand will ever change their education system. The cost of living keeps rising, and have been rising sharply. How long should these people wait for higher salaries as their money worth far less then 2 years ago.

Well unfortunately we do not live in a centrally planned economy where we think we can just readjust the rules as we see fit. The real cause of cost of living increases is inflation and increasing minimum wages does not rectify inflation but exacerbates it. It is like throwing gas on the fire. Either you trust the market forces or you don't.

Again, if you want to earn more money, you CANNOT just change the rules as your bidding. You must increase the value of labor and thereby its productivity and then you have a win-win situation.

Regarding your allegations that minimum wage will work differently in Thailand, that is like saying the laws of physics will work differently in Thailand. Labor is a good and increased price will decrease demand. All good quality research shows this result.

Where is the incentive to increase value of labor if you keep wages at a bare minimum?Inflation rises,wages rise,been happening in the west for decades.

[louse1953]

We all know where artificial price floors regarding labour lead! A few factors that may be considered:

- An increase in the minimum wage by 50% causes an increase in prices of non discretionary items (food, gas, etc.)

- Real purchasing power of minimum wage workers increases, while purchasing power of the lower middle class decreases.

- Inflation will make the already expensive imported goods even more out of reach

- Will make Thailand less competitive on the global market leading to a decrease in Foreign Direct Investment

- Substantially higher rate of unemployed

- Decreased in government revenue:

- Those making less that 150,000 baht/year tax exempt. After the minimum wage increase these people will still be tax exempt (no additional tax revenue from this demographic)

- Reduced net profits of private organizations and High earning individuals (shareholders, etc.) will lead to lower government tax revenues.

- How much more productive can an Asian factory worker be????

I mean seriously! This is like Greece on Steroids!

Apparently also, the starting salary for government workers with bachelor degrees will rise from 8,000 baht/month to 15,000 baht/month

Where is the money coming from???

You must be joking,do you come from a country that pays $10 a day.The money comes from the exorbitant profits companys make off the back of the poor.The poor will spend money to keep their head above water,which will flow back in economy.

When you back to oz, you will pay B100 for a half litre of water. please don't compare apples with oranges. There is a wage system here which adjusts the minimum wage, but this hike is a politically driven vote-buy with no thought of the consequences.

Most people here running small businesses are not greedy tycoons reaping huge profits. The local bike shop owner works 6 days a week alongside her 3 employees and is far from wealthy. Her choice is to lay off one of 3 employees or put up her prices as neither she nor I can see any way to increase her employee's productivity.

Having a busy business with employees flat out most of the day, I see her prices going up. Those others not fully employed will reduce staff.

Inflation will eat away at the pay rise, while the newly unemployed suffer the double whammy.

Yes,prices will go up,both big and small business.Welcome to the real world.So you recommend keeping people on subsistence wages,so you can maintain your lifestyle.If this happened in Oz 70 years ago,we wouldn't be here now.

[OzMick]

We all know where artificial price floors regarding labour lead! A few factors that may be considered:

- An increase in the minimum wage by 50% causes an increase in prices of non discretionary items (food, gas, etc.)

- Real purchasing power of minimum wage workers increases, while purchasing power of the lower middle class decreases.

- Inflation will make the already expensive imported goods even more out of reach

- Will make Thailand less competitive on the global market leading to a decrease in Foreign Direct Investment

- Substantially higher rate of unemployed

- Decreased in government revenue:

- Those making less that 150,000 baht/year tax exempt. After the minimum wage increase these people will still be tax exempt (no additional tax revenue from this demographic)

- Reduced net profits of private organizations and High earning individuals (shareholders, etc.) will lead to lower government tax revenues.

- How much more productive can an Asian factory worker be????

I mean seriously! This is like Greece on Steroids!

Apparently also, the starting salary for government workers with bachelor degrees will rise from 8,000 baht/month to 15,000 baht/month

Where is the money coming from???

You must be joking,do you come from a country that pays $10 a day.The money comes from the exorbitant profits companys make off the back of the poor.The poor will spend money to keep their head above water,which will flow back in economy.

When you back to oz, you will pay B100 for a half litre of water. please don't compare apples with oranges. There is a wage system here which adjusts the minimum wage, but this hike is a politically driven vote-buy with no thought of the consequences.

Most people here running small businesses are not greedy tycoons reaping huge profits. The local bike shop owner works 6 days a week alongside her 3 employees and is far from wealthy. Her choice is to lay off one of 3 employees or put up her prices as neither she nor I can see any way to increase her employee's productivity.

Having a busy business with employees flat out most of the day, I see her prices going up. Those others not fully employed will reduce staff.

Inflation will eat away at the pay rise, while the newly unemployed suffer the double whammy.

Yes,prices will go up,both big and small business.Welcome to the real world.So you recommend keeping people on subsistence wages,so you can maintain your lifestyle.If this happened in Oz 70 years ago,we wouldn't be here now.

What I recommend is pouring a lot more money into a decent education system, leading to higher wages for the new skilled workers and thus more taxpayers. Then they can afford a social security system like Australia's which assists those on minimum wage. At the moment vast slabs of the work force are engaged in inefficient small scale primary industry, and their education level allows them little else. Even if they had the drive, time and resources, where are the tech colleges providing adult education courses?

Quick fixes never work.

How far above subsistence is the Oz minimum wage at oz prices? Where would a min wage worker's family be without all the allowances and rebates they have available?

[belg]

"the need for further mechanisation to increase productivity"

so in fact, they are going to do as in western countries : fire the people working there

another shot in the foot.. ?

the people voting for these lying bastards to get their vote, will cost them their livelyhood at the end...

[Shantaram]

We all know where artificial price floors regarding labour lead! A few factors that may be considered:

- An increase in the minimum wage by 50% causes an increase in prices of non discretionary items (food, gas, etc.)

- Real purchasing power of minimum wage workers increases, while purchasing power of the lower middle class decreases.

- Inflation will make the already expensive imported goods even more out of reach

- Will make Thailand less competitive on the global market leading to a decrease in Foreign Direct Investment

- Substantially higher rate of unemployed

- Decreased in government revenue:

- Those making less that 150,000 baht/year tax exempt. After the minimum wage increase these people will still be tax exempt (no additional tax revenue from this demographic)

- Reduced net profits of private organizations and High earning individuals (shareholders, etc.) will lead to lower government tax revenues.

- How much more productive can an Asian factory worker be????

I mean seriously! This is like Greece on Steroids!

Apparently also, the starting salary for government workers with bachelor degrees will rise from 8,000 baht/month to 15,000 baht/month

Where is the money coming from???

Govt make a wrong policy.

Now many business will have to close, i.e. more lay off of poor workers.

After reading though various posts regarding this isuue, I can only come to one conclusion, namely that most of the posters on this forum are a heartless bunch of right wing capitalist nerds with absolutely no experience of working or surviving in the real world of low paid labour. What kind of person can justify low wages for "economic theory" reasons. Just remember the struggle of your forefathers for a decent working wage, pension rights, the 8 hour day, etc. Many died for this struggle and all you can do is pontificate on economic theory and competiveness. How dare you! I feel quite sick this morning after reading your comments and sick fascist ideas. Thank God for the Red shirt movement and the struggle for social justice here in Thailand, at least the poor have a glimmer of hope for a brighter future now. All you farang scrooges, skinflints and corporate greed justifiers need to go up country and do some rice farming for a year as reeducation, that's for sure.

[belg]

next elections, why you all expats with thai wifes, don't start a new political party, with the agenda to get us farang some rights, and promise the people 500 B of 1000 B of minimum daily wages ?

i am sure we would win and we could drive our agenda to get us some basic rigths in the process ?

[Johpa]

After spending the equivalent of more than 2x annual GDP, which has burdened future generations with almost inexorable tax burden, Japan is the best example on earth of the fallacies of Keynesian theory. US and EU are well on their way to replicate Japan's experience.

(apologize if a bit off topic, but facts needed to be addressed)

Not facts but world views, or in the words of Heilbroner, ecomomists are worldly philosophers. Facts need not apply and will often be contradictory. Or as the bard might say, economics is a tale told by idiots, full of sound and fury, signifying nothing. But who am I, a fan of Veblen, to say anything on the matter? So put on your wellingtons for these discussions.

But it is also good to remember that that raging socialist Henry Ford paid his assembly workers well above current wages for those times.

[nietzche]

We all know where artificial price floors regarding labour lead! A few factors that may be considered:

- An increase in the minimum wage by 50% causes an increase in prices of non discretionary items (food, gas, etc.)

- Real purchasing power of minimum wage workers increases, while purchasing power of the lower middle class decreases.

- Inflation will make the already expensive imported goods even more out of reach

- Will make Thailand less competitive on the global market leading to a decrease in Foreign Direct Investment

- Substantially higher rate of unemployed

- Decreased in government revenue:

- Those making less that 150,000 baht/year tax exempt. After the minimum wage increase these people will still be tax exempt (no additional tax revenue from this demographic)

- Reduced net profits of private organizations and High earning individuals (shareholders, etc.) will lead to lower government tax revenues.

- How much more productive can an Asian factory worker be????

I mean seriously! This is like Greece on Steroids!

Apparently also, the starting salary for government workers with bachelor degrees will rise from 8,000 baht/month to 15,000 baht/month

Where is the money coming from???

You must be joking,do you come from a country that pays $10 a day.The money comes from the exorbitant profits companys make off the back of the poor.The poor will spend money to keep their head above water,which will flow back in economy.

You completely missed the point of this discussion. Not one single person on this forum has said that the Thai worker does not deserve a higher wage and a higher quality of life. The argument is with the mechanism being used. This policy ignores the root of the problem and attempts to make superficial face value adjustments in an attempt to win popularity and buy votes. This policy will leave no-one better off.

Increasing the living standards of the countries poor is NOT something that can be delivered overnight by populist social policy. Back in the early 20th century, New York was rife with sweat shops and the quality of life of most was very poor at best. Today it is the wealthiest city in the world.

Only took 100 years! You get my point?

Theres no quick fix for this. Greater investment in education, eliminating corruption, etc. reduce economic inefficiency and make companies/workers more productive, and make Thai workers more desirable, increasing their wages and quality of life as a result of "Market demand" not "social engineering" is the only way to go.

[nietzche]

We all know where artificial price floors regarding labour lead! A few factors that may be considered:

- An increase in the minimum wage by 50% causes an increase in prices of non discretionary items (food, gas, etc.)

- Real purchasing power of minimum wage workers increases, while purchasing power of the lower middle class decreases.

- Inflation will make the already expensive imported goods even more out of reach

- Will make Thailand less competitive on the global market leading to a decrease in Foreign Direct Investment

- Substantially higher rate of unemployed

- Decreased in government revenue:

- Those making less that 150,000 baht/year tax exempt. After the minimum wage increase these people will still be tax exempt (no additional tax revenue from this demographic)

- Reduced net profits of private organizations and High earning individuals (shareholders, etc.) will lead to lower government tax revenues.

- How much more productive can an Asian factory worker be????

I mean seriously! This is like Greece on Steroids!

Apparently also, the starting salary for government workers with bachelor degrees will rise from 8,000 baht/month to 15,000 baht/month

Where is the money coming from???

Govt make a wrong policy.

Now many business will have to close, i.e. more lay off of poor workers.

After reading though various posts regarding this isuue, I can only come to one conclusion, namely that most of the posters on this forum are a heartless bunch of right wing capitalist nerds with absolutely no experience of working or surviving in the real world of low paid labour. What kind of person can justify low wages for "economic theory" reasons. Just remember the struggle of your forefathers for a decent working wage, pension rights, the 8 hour day, etc. Many died for this struggle and all you can do is pontificate on economic theory and competiveness. How dare you! I feel quite sick this morning after reading your comments and sick fascist ideas. Thank God for the Red shirt movement and the struggle for social justice here in Thailand, at least the poor have a glimmer of hope for a brighter future now. All you farang scrooges, skinflints and corporate greed justifiers need to go up country and do some rice farming for a year as reeducation, that's for sure.

Again, point completely missed. Idealism is no substitute for Realism.

[tlansford]

We all know where artificial price floors regarding labour lead! A few factors that may be considered:

- An increase in the minimum wage by 50% causes an increase in prices of non discretionary items (food, gas, etc.)

- Real purchasing power of minimum wage workers increases, while purchasing power of the lower middle class decreases.

- Inflation will make the already expensive imported goods even more out of reach

- Will make Thailand less competitive on the global market leading to a decrease in Foreign Direct Investment

- Substantially higher rate of unemployed

- Decreased in government revenue:

- Those making less that 150,000 baht/year tax exempt. After the minimum wage increase these people will still be tax exempt (no additional tax revenue from this demographic)

- Reduced net profits of private organizations and High earning individuals (shareholders, etc.) will lead to lower government tax revenues.

- How much more productive can an Asian factory worker be????

I mean seriously! This is like Greece on Steroids!

Apparently also, the starting salary for government workers with bachelor degrees will rise from 8,000 baht/month to 15,000 baht/month

Where is the money coming from???

You must be joking,do you come from a country that pays $10 a day.The money comes from the exorbitant profits companys make off the back of the poor.The poor will spend money to keep their head above water,which will flow back in economy.

You completely missed the point of this discussion. Not one single person on this forum has said that the Thai worker does not deserve a higher wage and a higher quality of life. The argument is with the mechanism being used. This policy ignores the root of the problem and attempts to make superficial face value adjustments in an attempt to win popularity and buy votes. This policy will leave no-one better off.

Increasing the living standards of the countries poor is NOT something that can be delivered overnight by populist social policy. Back in the early 20th century, New York was rife with sweat shops and the quality of life of most was very poor at best. Today it is the wealthiest city in the world.

Only took 100 years! You get my point?

Theres no quick fix for this. Greater investment in education, eliminating corruption, etc. reduce economic inefficiency and make companies/workers more productive, and make Thai workers more desirable, increasing their wages and quality of life as a result of "Market demand" not "social engineering" is the only way to go.

no one will wait 100 years...

http://www.thaivisa.com/forum/topic/541809-poor-no-longer-willing-to-be-told-to-sacrifice-by-wealthy-theerayuth/page__view__findpost__p__5145772

I agree with you that Thai workers at the lowest level deserve a living wage. (everywhere, not just Thailand).

I disagree about the impact / degree of the impact of this minimum wage increase.

I think it will - however - become the scapegoat for price increases from companies which in reality will be opportunistic price gouging rather than real cost-based increases.

[waza]

An increase in the minimum wage for all Thais is great as long as its a nett increase. Whats the point of increasing their wage then eroding it through increased taxes, inflation and decreased services. For example they increase the minimum wage but decrease company taxes to compensate. Then to replace the lost revenue from increased public servant wages and decreased company taxes they reduce the petrol, cooking oil ect subsidies.

[garrya]

We all know where artificial price floors regarding labour lead! A few factors that may be considered:

- An increase in the minimum wage by 50% causes an increase in prices of non discretionary items (food, gas, etc.)

- Real purchasing power of minimum wage workers increases, while purchasing power of the lower middle class decreases.

- Inflation will make the already expensive imported goods even more out of reach

- Will make Thailand less competitive on the global market leading to a decrease in Foreign Direct Investment

- Substantially higher rate of unemployed

- Decreased in government revenue:

- Those making less that 150,000 baht/year tax exempt. After the minimum wage increase these people will still be tax exempt (no additional tax revenue from this demographic)

- Reduced net profits of private organizations and High earning individuals (shareholders, etc.) will lead to lower government tax revenues.

- How much more productive can an Asian factory worker be????

I mean seriously! This is like Greece on Steroids!

Apparently also, the starting salary for government workers with bachelor degrees will rise from 8,000 baht/month to 15,000 baht/month

Where is the money coming from???

You must be joking,do you come from a country that pays $10 a day.The money comes from the exorbitant profits companys make off the back of the poor.The poor will spend money to keep their head above water,which will flow back in economy.

You completely missed the point of this discussion. Not one single person on this forum has said that the Thai worker does not deserve a higher wage and a higher quality of life. The argument is with the mechanism being used. This policy ignores the root of the problem and attempts to make superficial face value adjustments in an attempt to win popularity and buy votes. This policy will leave no-one better off.

Increasing the living standards of the countries poor is NOT something that can be delivered overnight by populist social policy. Back in the early 20th century, New York was rife with sweat shops and the quality of life of most was very poor at best. Today it is the wealthiest city in the world.

Only took 100 years! You get my point?

Theres no quick fix for this. Greater investment in education, eliminating corruption, etc. reduce economic inefficiency and make companies/workers more productive, and make Thai workers more desirable, increasing their wages and quality of life as a result of "Market demand" not "social engineering" is the only way to go.

And what if your brilliant ideas failed? What if the long term investment in education brought nothing. Why do we always inspect the economy in the favour of big companies? Why do not we start to build an economy that treats the workers fairly and give an acceptable wage. The economic doctrines have been changing and you can`t expect the same impact decades after decades. The world is changing rapidly. What did we do 1000 years ago? 500 years ago? 100 years ago? What will we do 100 years later? I think there is nothing more important then the lives of the people. My uni professor never forgot to mention that most of the economic doctrines are speculations and you can`t just rely on that. Countries are different with different lifestyle, tradition, methods et cetera. You shouldn`t believe blindly that all the economic doctrines that were applied 100 years ago would bring a fruitful economy in Thailand. Funny, how many brilliant minds are hanging around here.

[nietzche]

We all know where artificial price floors regarding labour lead! A few factors that may be considered:

- An increase in the minimum wage by 50% causes an increase in prices of non discretionary items (food, gas, etc.)

- Real purchasing power of minimum wage workers increases, while purchasing power of the lower middle class decreases.

- Inflation will make the already expensive imported goods even more out of reach

- Will make Thailand less competitive on the global market leading to a decrease in Foreign Direct Investment

- Substantially higher rate of unemployed

- Decreased in government revenue:

- Those making less that 150,000 baht/year tax exempt. After the minimum wage increase these people will still be tax exempt (no additional tax revenue from this demographic)

- Reduced net profits of private organizations and High earning individuals (shareholders, etc.) will lead to lower government tax revenues.

- How much more productive can an Asian factory worker be????

I mean seriously! This is like Greece on Steroids!

Apparently also, the starting salary for government workers with bachelor degrees will rise from 8,000 baht/month to 15,000 baht/month

Where is the money coming from???

You must be joking,do you come from a country that pays $10 a day.The money comes from the exorbitant profits companys make off the back of the poor.The poor will spend money to keep their head above water,which will flow back in economy.

You completely missed the point of this discussion. Not one single person on this forum has said that the Thai worker does not deserve a higher wage and a higher quality of life. The argument is with the mechanism being used. This policy ignores the root of the problem and attempts to make superficial face value adjustments in an attempt to win popularity and buy votes. This policy will leave no-one better off.

Increasing the living standards of the countries poor is NOT something that can be delivered overnight by populist social policy. Back in the early 20th century, New York was rife with sweat shops and the quality of life of most was very poor at best. Today it is the wealthiest city in the world.

Only took 100 years! You get my point?

Theres no quick fix for this. Greater investment in education, eliminating corruption, etc. reduce economic inefficiency and make companies/workers more productive, and make Thai workers more desirable, increasing their wages and quality of life as a result of "Market demand" not "social engineering" is the only way to go.

And what if your brilliant ideas failed? What if the long term investment in education brought nothing. Why do we always inspect the economy in the favour of big companies? Why do not we start to build an economy that treats the workers fairly and give an acceptable wage. The economic doctrines have been changing and you can`t expect the same impact decades after decades. The world is changing rapidly. What did we do 1000 years ago? 500 years ago? 100 years ago? What will we do 100 years later? I think there is nothing more important then the lives of the people. My uni professor never forgot to mention that most of the economic doctrines are speculations and you can`t just rely on that. Countries are different with different lifestyle, tradition, methods et cetera. You shouldn`t believe blindly that all the economic doctrines that were applied 100 years ago would bring a fruitful economy in Thailand. Funny, how many brilliant minds are hanging around here.

These "doctrines" are in effect today in every modern economy. You should look into how China transformed it's economy.

[h90]

An increase in the minimum wage for all Thais is great as long as its a nett increase. Whats the point of increasing their wage then eroding it through increased taxes, inflation and decreased services. For example they increase the minimum wage but decrease company taxes to compensate. Then to replace the lost revenue from increased public servant wages and decreased company taxes they reduce the petrol, cooking oil ect subsidies.

Beside that, they told already that they want to devalue the Baht. That nice combination will mostly help the big companies, it will partially compensate the poor and it will make the middle class poorer.

Basically it is moving money from the poor and middle class to the rich one. But not very surprising....

[nietzche]

We all know where artificial price floors regarding labour lead! A few factors that may be considered:

- An increase in the minimum wage by 50% causes an increase in prices of non discretionary items (food, gas, etc.)

- Real purchasing power of minimum wage workers increases, while purchasing power of the lower middle class decreases.

- Inflation will make the already expensive imported goods even more out of reach

- Will make Thailand less competitive on the global market leading to a decrease in Foreign Direct Investment

- Substantially higher rate of unemployed

- Decreased in government revenue:

- Those making less that 150,000 baht/year tax exempt. After the minimum wage increase these people will still be tax exempt (no additional tax revenue from this demographic)

- Reduced net profits of private organizations and High earning individuals (shareholders, etc.) will lead to lower government tax revenues.

- How much more productive can an Asian factory worker be????

I mean seriously! This is like Greece on Steroids!

Apparently also, the starting salary for government workers with bachelor degrees will rise from 8,000 baht/month to 15,000 baht/month

Where is the money coming from???

You must be joking,do you come from a country that pays $10 a day.The money comes from the exorbitant profits companys make off the back of the poor.The poor will spend money to keep their head above water,which will flow back in economy.

You completely missed the point of this discussion. Not one single person on this forum has said that the Thai worker does not deserve a higher wage and a higher quality of life. The argument is with the mechanism being used. This policy ignores the root of the problem and attempts to make superficial face value adjustments in an attempt to win popularity and buy votes. This policy will leave no-one better off.

Increasing the living standards of the countries poor is NOT something that can be delivered overnight by populist social policy. Back in the early 20th century, New York was rife with sweat shops and the quality of life of most was very poor at best. Today it is the wealthiest city in the world.

Only took 100 years! You get my point?

Theres no quick fix for this. Greater investment in education, eliminating corruption, etc. reduce economic inefficiency and make companies/workers more productive, and make Thai workers more desirable, increasing their wages and quality of life as a result of "Market demand" not "social engineering" is the only way to go.

no one will wait 100 years...

http://www.thaivisa....ost__p__5145772

I agree with you that Thai workers at the lowest level deserve a living wage. (everywhere, not just Thailand).

I disagree about the impact / degree of the impact of this minimum wage increase.

I think it will - however - become the scapegoat for price increases from companies which in reality will be opportunistic price gouging rather than real cost-based increases.

Interesting point. Will companies use this policy as an excuse to jack up prices and ultimately lay blame on government?

Could this all backfire?

[pattayaorganic]

We all know where artificial price floors regarding labour lead! A few factors that may be considered:

- An increase in the minimum wage by 50% causes an increase in prices of non discretionary items (food, gas, etc.)

- Real purchasing power of minimum wage workers increases, while purchasing power of the lower middle class decreases.

- Inflation will make the already expensive imported goods even more out of reach

- Will make Thailand less competitive on the global market leading to a decrease in Foreign Direct Investment

- Substantially higher rate of unemployed

- Decreased in government revenue:

- Those making less that 150,000 baht/year tax exempt. After the minimum wage increase these people will still be tax exempt (no additional tax revenue from this demographic)

- Reduced net profits of private organizations and High earning individuals (shareholders, etc.) will lead to lower government tax revenues.

- How much more productive can an Asian factory worker be????

I mean seriously! This is like Greece on Steroids!

Apparently also, the starting salary for government workers with bachelor degrees will rise from 8,000 baht/month to 15,000 baht/month

Where is the money coming from???

Govt make a wrong policy.

Now many business will have to close, i.e. more lay off of poor workers.

After reading though various posts regarding this isuue, I can only come to one conclusion, namely that most of the posters on this forum are a heartless bunch of right wing capitalist nerds with absolutely no experience of working or surviving in the real world of low paid labour. What kind of person can justify low wages for "economic theory" reasons. Just remember the struggle of your forefathers for a decent working wage, pension rights, the 8 hour day, etc. Many died for this struggle and all you can do is pontificate on economic theory and competiveness. How dare you! I feel quite sick this morning after reading your comments and sick fascist ideas. Thank God for the Red shirt movement and the struggle for social justice here in Thailand, at least the poor have a glimmer of hope for a brighter future now. All you farang scrooges, skinflints and corporate greed justifiers need to go up country and do some rice farming for a year as reeducation, that's for sure.

Unfortunately, there are people that actually believe that increasing minimum wage will help the poor. I have quoted above a very balanced and comprehensive research paper that shows overwhelmingly that minimum wage hurts the people that need it most. Please go back and read my posts. Last time I checked, Thailand, as most of the world is part of a free economy, not a socialist or communist system. You cannot adjust one side of an economic equation and get the expected result. If the blokes in Oz just sat around since childhood and drank whiskey everyday and never bothered to obtain any marketable skills, where do you think Australia would be today? Opposition to the increase in minimum is not equivalent to support for the oppression of Thailand's poor. Minimum wage is almost always a politically popular tool to promote populist policies and in the specific case of Thailand it can be argued quite effectively that is merely vote buying.

As for the question of what incentives to business owners have to increase productivity, profit, profit profit! Any increase in productivity will increase the owner's profit, and simultaneously reduce the demand for labor. However, if the worker has obtained marketable skills, and there are businesses that can exploit those skills for profit, then the system works in an overall positive way.

Thailand's population has about 50% of it in primary industry (farming) directly and indirectly. AEC is coming in a few short years. If Myanmar is open as it appears today, I would worry if I were Thai worker. In my experience, they speak more English, they have a better work ethic and will accept far lower wages than a similar Thai worker. Similarly, Lao farm workers will work for 1500B per month (I know because I employ them) and work 12h per day for that.

The workers that have already obtained some skills and are working in automotive or electronics industry are already making more than minimum wage so it is the farming sector and food processing industry, the true heartland of what is Thailand that will suffer the most. These are the exact people that PT purports to be helping.

I am involved in shrimp farming and aquaculture and I am seriously considering a move to Myanmar. Not today or tomorrow, but the labor situation in Thailand is horrendous. Just as the rice cutter stated above, it doesn't really matter how much you pay these workers these days. One of my farms has 120 workers last year. After New Year Holiday, only 60 returned. They just decided not to show up! And they are well taken care of, supplied with housing and food which if you count the monetary value of the total compensation package is way above minimum wage already.

The conclusion is that Thai workers are lazy and unreliable and getting worse. I don't blame them for this, but the current policy of the Red Shirts/PT is CERTAINLY exacerbating the situation. They just expect some hand outs without any desire to upgrade their skills or provide a valuable service to the business owner so he can afford to pay him a decent wage. This in combination with the terrible education system is the real heart of the problem.

Now if you want to spend loads of tax money training good teachers, providing a strong vocational infrastructure for educating the future generation of workers/farmers, then I am ALL FOR IT.

Increasing the minimum wage gets the politicians what they want, but doesn't get the poor anything. That is the reason for my vehement opposition.

Non-believers will soon have their proof in the pudding. You will see.

[tlansford]

We all know where artificial price floors regarding labour lead! A few factors that may be considered:

- An increase in the minimum wage by 50% causes an increase in prices of non discretionary items (food, gas, etc.)

- Real purchasing power of minimum wage workers increases, while purchasing power of the lower middle class decreases.

- Inflation will make the already expensive imported goods even more out of reach

- Will make Thailand less competitive on the global market leading to a decrease in Foreign Direct Investment

- Substantially higher rate of unemployed

- Decreased in government revenue:

- Those making less that 150,000 baht/year tax exempt. After the minimum wage increase these people will still be tax exempt (no additional tax revenue from this demographic)

- Reduced net profits of private organizations and High earning individuals (shareholders, etc.) will lead to lower government tax revenues.

- How much more productive can an Asian factory worker be????

I mean seriously! This is like Greece on Steroids!

Apparently also, the starting salary for government workers with bachelor degrees will rise from 8,000 baht/month to 15,000 baht/month

Where is the money coming from???

Govt make a wrong policy.

Now many business will have to close, i.e. more lay off of poor workers.

After reading though various posts regarding this isuue, I can only come to one conclusion, namely that most of the posters on this forum are a heartless bunch of right wing capitalist nerds with absolutely no experience of working or surviving in the real world of low paid labour. What kind of person can justify low wages for "economic theory" reasons. Just remember the struggle of your forefathers for a decent working wage, pension rights, the 8 hour day, etc. Many died for this struggle and all you can do is pontificate on economic theory and competiveness. How dare you! I feel quite sick this morning after reading your comments and sick fascist ideas. Thank God for the Red shirt movement and the struggle for social justice here in Thailand, at least the poor have a glimmer of hope for a brighter future now. All you farang scrooges, skinflints and corporate greed justifiers need to go up country and do some rice farming for a year as reeducation, that's for sure.

Unfortunately, there are people that actually believe that increasing minimum wage will help the poor. I have quoted above a very balanced and comprehensive research paper that shows overwhelmingly that minimum wage hurts the people that need it most. Please go back and read my posts. Last time I checked, Thailand, as most of the world is part of a free economy, not a socialist or communist system. You cannot adjust one side of an economic equation and get the expected result. If the blokes in Oz just sat around since childhood and drank whiskey everyday and never bothered to obtain any marketable skills, where do you think Australia would be today? Opposition to the increase in minimum is not equivalent to support for the oppression of Thailand's poor. Minimum wage is almost always a politically popular tool to promote populist policies and in the specific case of Thailand it can be argued quite effectively that is merely vote buying.

As for the question of what incentives to business owners have to increase productivity, profit, profit profit! Any increase in productivity will increase the owner's profit, and simultaneously reduce the demand for labor. However, if the worker has obtained marketable skills, and there are businesses that can exploit those skills for profit, then the system works in an overall positive way.

Thailand's population has about 50% of it in primary industry (farming) directly and indirectly. AEC is coming in a few short years. If Myanmar is open as it appears today, I would worry if I were Thai worker. In my experience, they speak more English, they have a better work ethic and will accept far lower wages than a similar Thai worker. Similarly, Lao farm workers will work for 1500B per month (I know because I employ them) and work 12h per day for that.

The workers that have already obtained some skills and are working in automotive or electronics industry are already making more than minimum wage so it is the farming sector and food processing industry, the true heartland of what is Thailand that will suffer the most. These are the exact people that PT purports to be helping.

I am involved in shrimp farming and aquaculture and I am seriously considering a move to Myanmar. Not today or tomorrow, but the labor situation in Thailand is horrendous. Just as the rice cutter stated above, it doesn't really matter how much you pay these workers these days. One of my farms has 120 workers last year. After New Year Holiday, only 60 returned. They just decided not to show up! And they are well taken care of, supplied with housing and food which if you count the monetary value of the total compensation package is way above minimum wage already.

The conclusion is that Thai workers are lazy and unreliable and getting worse. I don't blame them for this, but the current policy of the Red Shirts/PT is CERTAINLY exacerbating the situation. They just expect some hand outs without any desire to upgrade their skills or provide a valuable service to the business owner so he can afford to pay him a decent wage. This in combination with the terrible education system is the real heart of the problem.

Now if you want to spend loads of tax money training good teachers, providing a strong vocational infrastructure for educating the future generation of workers/farmers, then I am ALL FOR IT.

Increasing the minimum wage gets the politicians what they want, but doesn't get the poor anything. That is the reason for my vehement opposition.

Non-believers will soon have their proof in the pudding. You will see.

I am personally curious about shrimp aquaculture and it would be interesting to learn more about it.

Some industries, like yours, are more exposed to the minimum wage than others... in fact more than most industries. Still, it would be interesting to see the incremental cost increase of production for an industry like yours.

Also the article you referenced provided additional detail, but I noticed that, surprisingly, they didn't get the corporate tax rate right in their analysis, leaving it at 30% in Thailand vs 25% in Burma...

Cheers