Employers Warned On Wage Hike: Thailand

[siampolee]

The company my wife's youngest sister works for has already laid off a number of staff as they maintain they are unable to meet the wage demand with the size of the then current workforce.

Seem as as if overtime will increase which of course is a cheaper labour rate than paying another member of staff, the repercussions of this senseless policy are going to be felt by the most vulnerable sections of Thai society.

People lose their jobs = no income. Those left in employment take up the slack at around a 20% increase in full time labour costs, company saves money, unemployed lose all.

Great policy so well thought out wasn't it ?. .

As an aside i am well aware from personal experiences that prices for goods upcountry are often marginally higher due to claimed transportation costs etc.

Surely the wage increase should have been an across the board matter rather than selective in its implementation.

Armchair economists who have the means to support themselves need to get a touch of reality rather than saying they will join the pilgrimage to see Brother no.1.

However staying in the German House and be content to read a book and I presume eating and drinking costs will indeed amount to far more than the 300 baht a day minimum wage, those on lesser pay scales would indeed be hard pressed no doubt to pay the bill with a weeks labour.

.

"Let them eat cake' is the traditional translation to English of the French phrase "Qu'ils mangent de la brioche", supposedly spoken by "a great princess" upon learning that the peasants had no bread. Since brioche was enriched, as opposed to normal bread, the quote supposedly would reflect the princess's obliviousness to the condition of the people.

Perhaps our armchair economists are in the same frame of mind, they would indeed do well to ponder the comment and the subsequent fate of the lady in question

Edited April 6, 2012 by siampolee

[hyperdimension]

Any company claiming to go out of business because some percentage of their labor cost will go up by 60B/day/person is either lying or already dead.

Why do you think it's a flat 60 baht per day increase? In many cases it will be more than that. Can you show us your calculations that supports your view that the overall effects of this minimum wage increase will be small?

As has already been pointed out, employers will also have to pay more to employees who earn above 300 baht per day in order to maintain a fair wage heirarchy.

I think the fairest way would be to use a percentage sliding scale up to a maximum wage ceiling, above which there is no increase. e.g. if the minimum wage was previously 200 baht, then give employees who were earning that a 50% increase to 300 baht. If you set the wage ceiling to be 500 baht, then those who were earning between 200 and 500 can get an increase of somewhere between 50% and 0 based on a mathematical formula.

Mathematically, the % increase using a sliding scale with previous minimum wage at 200 baht and ceiling set at 500 baht would be:

increase = (100 * ((-0.1 / 60) * old daily wage + 5 / 6))%

Putting this into a spreadsheet, we can see what new daily wages would be using this sliding scale:

Old daily wage Increase New daily wage
200		 50%	  300.00
250		 42%	  354.17
300		 33%	  400.00
350		 25%	  437.50
400		 17%	  466.67
450		 8%	   487.50
500		 0%	   500.00

Edited April 6, 2012 by hyperdimension

[Thaddeus]

That is called "information"

I agree, but it is neither new or news.

I'll make this easy for you.

Thailand has one of the lowest unemployment rates in the world, why?

I'll answer it for you, it's a factor of two things, the first being, three people employed to do a job that only needs one person to do it, and I'm being conservative saying three. The second being there is no welfare handout system here for the unemployed, therefore who counts the heads, no one.

I would estimate that at least 20% of the young males in the town I live don't have a job, don't wan't a job, and couldn't care less as they are supported by the ones that do work.

Now imagine a system were there are twenty people working for 150B a day and they are supporting four people who earn nothing, so that is 3k B per day to support twenty four people, so that is 125B per day for all of them.

But then the employer is forced to increase the basic to 300B, he can no longer afford to employ so many people, at 3 to 1 it would be catastrophic to his business, even at two to one it means this, ten people earning 300B a day, so the same 3k per day to support the same twenty four people, nothing changes, absolutely nothing, apart from the inflation created as not all businesses will be able to work with less staff and prices will rise accordingly, so the 125B per day in everyone's pocket is worth much less.

Governments should not mess about with basic economic principles, end of.

Now please go away.

When you get elected as god, I will.

Edited April 6, 2012 by Thaddeus

[rubl]

That is called "information"

I agree, but it is neither new or news.

I'll make this easy for you.

Thailand has one of the lowest unemployment rates in the world, why?

I'll answer it for you, it's a factor of two things, the first being, three people employed to do a job that only needs one person to do it. The second being there is no welfare handout system here for the unemployed, therefore who counts the heads, no one.

I would estimate that at least 20% of the young males in the town I live don't have a job, don't wan't a job, and couldn't care less as they are supported by the ones that do work.

Now imagine a system were there are twenty people working for 150B a day and they are supporting four people who earn nothing, so that is 3k B per day to support twenty four people, so that is 125B per day for all of them.

But then the employer is forced to increase the basic to 300B, he can no longer afford to employ so many people, at 3 to 1 it would be catastrophic to his business, even at two to one it means this, ten people earning 300B a day, so the same 3k per day to support the same twenty four people, nothing changes, absolutely nothing, apart from the inflation created as not all businesses will be able to work with less staff and prices will rise accordingly, so the 125B per day in everyone's pocket is worth much less.

Governments should not mess about with basic economic principles, end of.

Now please go away.

When you get elected as god, I will.

It doesn't work that way. One is or isn't, but one is not elected as such

Back to the OP a minor increase, mmmh? Even after not reading Keynes I still wonder about the statement from four days ago

"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."

Edit: add: The statement of k. boonchai seems to not even include the effect of a 39.5% raise of the base daily wage which is set for outside the seven provinces where the wage is put on 300B/d.

Edited April 6, 2012 by rubl