Wage Rise Will Sink 10 pct Of SMEs: Thai Chamber Of Commerce

[tlansford]

TAWP if you want to say that the average salary for a basic job negotiated in the free market is implied to relate to the minimum wage, then I disagree. The minimum wage is by definition the floor. It is not set by the free market. All other wages above the minimum wage are set by the market / negotiation.

You acknowledge that wages hit the "floor" in every country. Like water, wages in unregulated capitalism seek the lowest level.

As for approaching zero, please look at the list provided. One country has a minimum wage that is around 27x lower than the old minimum wage in Thailand - that would put it under 10Bhat / day. I would call that "approaching zero bhat / day".

Yes, the minimum wage is the government intrusion into the free market and hence not set by the free market - but it is bad for completely different reason than you seem to think.

The wages don't hit the 'floor', that is nonsense.

Wages lands around the levels that companies offer and prospect employees accept them at.

If you think it is a one-side scenario, then I suggest you start your own company and try to hire people for peanuts and see how many applicants you get.

Your example is not relevant since the jobs that I hire for now do not pay minimum wage.

You ignore the effects of the "free market" completely, and you ignore the levels of the minimum wages around the world in the link I gave you. You ignore the fact that not all jobs are affected by the minimum wage. And yes, some jobs do "hit the floor". That much is obvious.

You ignore the fact that if the minimum wage were not raised in Thailand, then those people working in min-wage jobs would still be making the same wage... and why? because that is what the companies are allowed to pay, period. No other reason. If companies could pay less, they would. They would, because their 'function' is to maximize returns, not to pay a living wage. All of this you and I understand perfectly well.

And the last point regarding living wage is why gov'ts impose minimum wage requirements, so that people who work for a day, have some chance of surviving on that wage.

You call that gov't interference in the market.

So do I.

But I clearly feel that it is correct and justified. Just like laws against child labor or worker safety are correct and justified.

I understand that you do not like interference in the so called "free market" and you have every right to that opinion. You also defend it thoroughly.

[h90]

Lets talk %.

What would happen if you raiced workers-salary 30-50% in the US or in EU?

they would outsource the production to China and Thailand

[tlansford]

Thai workers need to be more productive. If the wage increases are not met with increased productivity, it will be bad for business. It's that simple. They need to stop the nonsense of having 4 or 5 people for the job that 1 should be able to do rather easily. Of course the SMEs are worried. As an SME (or large enterprise) in Thailand, you need to hire 500% more workers than you would in many, many other economies, and these workers or woefully inefficient. How do you compel them to move more quickly and to be more efficient after the arbitrary wage increase??

... can't argue with that ... but, some of the responsibility rests squarely on the shoulders of the SME owners themselves ... they reinvest nothing in their own businesses

... we looked at buying the NPL's of Thai manufacturing SME's and concluded that this class of Thai business was so hopeless we wouldn't venture even a 10 cents on the dollar risk ... I was just stunned ... it was like peering into 19th century industrial Europe ... Thai SME's are the worst of traditional family business meets lack of education meets corrupt/incompetent business practices ... one manufacturer ran his business on 40+ year old, obsolete, junked machines he 'smartly' bought by the kilo from defunct Taiwanese industries (who were then re-tooling and educating themselves for higher value-added manufacturing) and they put the junked machines back together with bailing wire ... his employees had no education and no training and no tools to be productive ... their workers were a tattered, pathetic lot, as pictured in the sweat shops of industrial Europe ... this was not an uncommon story.

... the bad news is that 10% of Thai SME's should go under, and that many hopelessly unskilled workers will be unemployed ... probably far more that 10% should go under, and good riddence to them ... the good news is that their failures will not even register on the overall economy and will punish bad economic behaviors of the SME owners, the 'barons' of Thailand's modern-day feudal system.

... so .. then ... the question is, what responsibiity does the succession of Thai governments (since forever) have for guiding the nation's economic development to create opportunities for the Thais who lose their jobs as a consequence of this healthy pruning of inept family-owned SME's.

... Thai government policy has long favored cheap labor export manufacturing and agriculture ... meanwhile, young Thais are graduating in unprecedented numbers with college degrees for which there is no demand ... ("Welcome to Somchai na Ayudtaya' s House of Noodles, may I take you order?") ... and unskilled, uneducated laborers and farmers (40+% of the Thai workforce) still suffer lives of desperation without hope of a better future for themselves, their children, or their nation ... the benefits of this system inure only to the privileged, elite ruling Thai families.

... Thai economic policy has been based (still is) upon exploiting cheap labor to benefit the Thai elitists, who ... want ... no ... change ... this part is important: resisting change is a fundamental Thai cultural value ... it protects their positions at the top and freezes in place any challenge to their privileged status.

... Thailand, hub of education? ... Thailand, hub of technology? ... Thailand, hub of higher level anything? ... oh, pul-leaze!

... change is surrounding Thailand, and it is happening fast ... the Thai SME's and unfortunately the Thai working class will be the victims of Thailand's failure as an enlightened, spiritual nation.

... it appears to me that the values Thai practice and the society they have built for themselves is really best suited for agriculture ... in the long term, being an nation of farmers might be Thailand's best and highest use and its saving grace ... but without land reform, it would benefit only the entited elites, as land continues to be hoarded by the wealthy feudal Thai families.

... the King's Sufficiency Economy Theory is a bit of prescience ... assuming, cultural enlightenment does not come to Thailand, this appears to me as the only way for poor, passified Thais to declare independence from feudal enslavement that is modern-day Thailand ... he knows much about what is possible in Thailand, and what is not possible.

... it is all really quite remarkable, Thai culture, and the society they have fashioned for themselves ... 'they' being the Thai privileged elite families (everyone else is thoroughly passified and along for the ride only) ... 'Amazing Thailand', yes, but not in an 'Amazing Thailand' good sort of way at all.

interesting post.

as for your statement,

"... Thai elitists, who ... want ... no ... change ... this part is important: resisting change is a fundamental ..."

I see exactly the same thing in every culture I have lived in. Resisting change by the elite is normal in every society...

This becomes 'don't rock the boat, keep the status quo, that is unless I can change it to benefit me even more...'

[xthAi76s]

Thai workers need to be more productive. If the wage increases are not met with increased productivity, it will be bad for business. It's that simple. They need to stop the nonsense of having 4 or 5 people for the job that 1 should be able to do rather easily. Of course the SMEs are worried. As an SME (or large enterprise) in Thailand, you need to hire 500% more workers than you would in many, many other economies, and these workers or woefully inefficient. How do you compel them to move more quickly and to be more efficient after the arbitrary wage increase??

... can't argue with that ... but, some of the responsibility rests squarely on the shoulders of the SME owners themselves ... they reinvest nothing in their own businesses

... we looked at buying the NPL's of Thai manufacturing SME's and concluded that this class of Thai business was so hopeless we wouldn't venture even a 10 cents on the dollar risk ... I was just stunned ... it was like peering into 19th century industrial Europe ... Thai SME's are the worst of traditional family business meets lack of education meets corrupt/incompetent business practices ... one manufacturer ran his business on 40+ year old, obsolete, junked machines he 'smartly' bought by the kilo from defunct Taiwanese industries (who were then re-tooling and educating themselves for higher value-added manufacturing) and they put the junked machines back together with bailing wire ... his employees had no education and no training and no tools to be productive ... their workers were a tattered, pathetic lot, as pictured in the sweat shops of industrial Europe ... this was not an uncommon story.

... the bad news is that 10% of Thai SME's should go under, and that many hopelessly unskilled workers will be unemployed ... probably far more that 10% should go under, and good riddence to them ... the good news is that their failures will not even register on the overall economy and will punish bad economic behaviors of the SME owners, the 'barons' of Thailand's modern-day feudal system.

... so .. then ... the question is, what responsibiity does the succession of Thai governments (since forever) have for guiding the nation's economic development to create opportunities for the Thais who lose their jobs as a consequence of this healthy pruning of inept family-owned SME's.

... Thai government policy has long favored cheap labor export manufacturing and agriculture ... meanwhile, young Thais are graduating in unprecedented numbers with college degrees for which there is no demand ... ("Welcome to Somchai na Ayudtaya' s House of Noodles, may I take you order?") ... and unskilled, uneducated laborers and farmers (40+% of the Thai workforce) still suffer lives of desperation without hope of a better future for themselves, their children, or their nation ... the benefits of this system inure only to the privileged, elite ruling Thai families.

... Thai economic policy has been based (still is) upon exploiting cheap labor to benefit the Thai elitists, who ... want ... no ... change ... this part is important: resisting change is a fundamental Thai cultural value ... it protects their positions at the top and freezes in place any challenge to their privileged status.

... Thailand, hub of education? ... Thailand, hub of technology? ... Thailand, hub of higher level anything? ... oh, pul-leaze!

... change is surrounding Thailand, and it is happening fast ... the Thai SME's and unfortunately the Thai working class will be the victims of Thailand's failure as an enlightened, spiritual nation.

... it appears to me that the values Thai practice and the society they have built for themselves is really best suited for agriculture ... in the long term, being an nation of farmers might be Thailand's best and highest use and its saving grace ... but without land reform, it would benefit only the entited elites, as land continues to be hoarded by the wealthy feudal Thai families.

... the King's Sufficiency Economy Theory is a bit of prescience ... assuming, cultural enlightenment does not come to Thailand, this appears to me as the only way for poor, passified Thais to declare independence from feudal enslavement that is modern-day Thailand ... he knows much about what is possible in Thailand, and what is not possible.

... it is all really quite remarkable, Thai culture, and the society they have fashioned for themselves ... 'they' being the Thai privileged elite families (everyone else is thoroughly passified and along for the ride only) ... 'Amazing Thailand', yes, but not in an 'Amazing Thailand' good sort of way at all.

interesting post.

as for your statement,

"... Thai elitists, who ... want ... no ... change ... this part is important: resisting change is a fundamental ..."

I see exactly the same thing in every culture I have lived in. Resisting change by the elite is normal in every society...

This becomes 'don't rock the boat, keep the status quo, that is unless I can change it to benefit me even more...'

One difference is that prior to the French Revolution, the Industrial Revolution and now the Information Age, there were no real solid ways for populaces to come to understanding about what opportunities other societies around the world had forged and fought for and what resultant rights they'd gained. You have Thailand sitting now in what academics like to call recently industrialized and with the world of information at their finger tips but with NO EVIDENCE at all (mai evidence luey) of any social movement and with no evidence that they even desire a more fair distribution of wealth in the country. And with no indications at all that they can learn anything from anyone or that it even matters at all.

If you look at the list of the elite in Thailand and the surnames of the the holders and controllers of the 90% of the country's wealth, you will find that Thailand is still among countries like those in Africa with a handful (literally a handful) of families and their kin owning nearly the entire country -- something close to 90%).

Of course the poor and regular people have always struggled against the elite, but impressive (almost uniquely impressive of the Thais) is how the Thais have been so perfectly pacified into their poverty even among this information age and globalization. The rich here have done an incredible job indeed.

Edited April 6, 2012 by xthAi76s

[TAWP]

TAWP if you want to say that the average salary for a basic job negotiated in the free market is implied to relate to the minimum wage, then I disagree. The minimum wage is by definition the floor. It is not set by the free market. All other wages above the minimum wage are set by the market / negotiation.

You acknowledge that wages hit the "floor" in every country. Like water, wages in unregulated capitalism seek the lowest level.

As for approaching zero, please look at the list provided. One country has a minimum wage that is around 27x lower than the old minimum wage in Thailand - that would put it under 10Bhat / day. I would call that "approaching zero bhat / day".

Yes, the minimum wage is the government intrusion into the free market and hence not set by the free market - but it is bad for completely different reason than you seem to think.

The wages don't hit the 'floor', that is nonsense.

Wages lands around the levels that companies offer and prospect employees accept them at.

If you think it is a one-side scenario, then I suggest you start your own company and try to hire people for peanuts and see how many applicants you get.

Your example is not relevant since the jobs that I hire for now do not pay minimum wage.

You ignore the effects of the "free market" completely, and you ignore the levels of the minimum wages around the world in the link I gave you. You ignore the fact that not all jobs are affected by the minimum wage. And yes, some jobs do "hit the floor". That much is obvious.

You ignore the fact that if the minimum wage were not raised in Thailand, then those people working in min-wage jobs would still be making the same wage... and why? because that is what the companies are allowed to pay, period. No other reason. If companies could pay less, they would. They would, because their 'function' is to maximize returns, not to pay a living wage. All of this you and I understand perfectly well.

And the last point regarding living wage is why gov'ts impose minimum wage requirements, so that people who work for a day, have some chance of surviving on that wage.

You call that gov't interference in the market.

So do I.

But I clearly feel that it is correct and justified. Just like laws against child labor or worker safety are correct and justified.

I understand that you do not like interference in the so called "free market" and you have every right to that opinion. You also defend it thoroughly.

You cannot claim that the proof that salaries would be pushed down is due to salaries not going above minimum levels when a minimum level exists. The perversion into the free market is already done and the damage is there - a minimum wage limit will guarantee that all salaries in the region will be adjusted towards this level, including down towards it. The jobs paying it is categorized as being a minimum wage job and no employer sees any reason to increase the wages above it - it is state and corporate collusion to keep the salaries at a specific level, at the loss of the employees.

Not only state, but it also guarantees that those with skill-handicaps, experience-gaps or performance-deficiencies will not be hired as no employer will hire a person that cannot produce the full required output. If a full negotiation was possible a person could be hired to a lower salary with the knowledge that their output was lower.

Since I, unlike you it seem, have actual experience of several years from the local job market I can tell you that I know of no jobs that gyrate towards zero.

Well, perhaps one, those that are self-employeed - but that doesn't really count.

But you are welcome to give me a few suggestions of jobs that have positions that gyrate towards zero when there is no legally mandated minimum wage.

Thanks in advance.