Use The Minimum Wage Rise To Rethink Strategy: Thai Opinion

[webfact]

EDITORIAL

Use the minimum wage rise to rethink strategy

The Nation

BANGKOK: -- With labour costs increasing, Thai companies need to start thinking innovatively in order to remain competitive as Asean integrates

The rise in the minimum wage should be perceived as a blessing in disguise if it can urge Thai workers to upgrade their production levels and industries to move away from cheap labour.

During a recent seminar, Japanese investors admitted that the Thai wage hike would certainly affect Japanese companies, which are the biggest investors in this country. If some factories cannot bear the sudden rise in wage costs, they may have to go to other countries with cheaper labour such as Cambodia, Laos or Myanmar.

The wage rise should help improve the living standard of blue-collar workers. But industries will almost certainly feel the pinch. The 40-per-cent jolt in labour costs will be too drastic for some businesses to cope with, especially small and medium-sized enterprises. The big corporations, which say they are ready for the steep wage increase, are already mostly running on machinery. Therefore, they will not have to pay too much extra as a result of the wage increase.

Industries predict that the number of migrant workers will increase because these workers do not have much bargaining power compared to Thai workers, who generally earn more than the minimum wage level. In short, low-skilled workers will face the greater possibility of unemployment if they are unable to upgrade their skills to make them more attractive to potential employers.

At the same time, industries will have to adjust if they are to survive too. The downside of the wage rise is that a number of small and medium-sized enterprises will find it too difficult to cope with the sudden rise in labour costs and they will go out of business quickly. The service sector is also likely to be affected. But those in the manufacturing sector should find ways to survive by upgrading production and product quality to a higher level where skilled labour is required and the minimum wage is not so much of a factor.

The wage rise should encourage a restructuring in industries by prompting manufacturers to adopt a new attitude to running their businesses. Otherwise, they may share the fate of the ailing Japanese electronics industry.

The Japanese electronics industry has failed to compete with South Korea because it has generally maintained the same business structure. South Korean brands such as Samsung, meanwhile, have managed to snatch market share from Japanese brands by focusing on building an image of hi-tech, innovative products to compete with American brands such as Apple. The company has successfully built up its name even though it may not be technologically superior to Japanese brands.

Thai industries thus have to think outside the box and perceive the wage rise as a need for them to redefine their business strategy and reposition their products.

Business winners these days are those who can keep up with the fast-changing needs of customers. The same old way of doing business becomes obsolete fast.

Unfortunately, Thai decision-makers, especially Deputy Prime Minister Kittiratt Na-Ranong, still think that the best way to boost exports is to weaken the level of the baht. But by focusing on the cheaper cost of production alone, Thai industries will not be able to sustain their competitiveness in the face of greater competition from rising neighbouring countries such as Vietnam and Cambodia.

Instead, the focus should be on how to add value to Thai products. The story of the late Red Bull founder Chaleo Yoovidhya should inspire aspiring entrepreneurs because he showed that the combination of the right formula and innovative marketing can make an ordinary Thai product become a phenomenal international success.

It is thus time for business leaders to rethink their strategies instead of hanging on desperately to the same model of business that depends on cheap labour. Now that the minimum wage increase has been applied, there is no choice but to accept it while at the same time embracing new ideas.

-- The Nation 2012-04-07

[JeffreyMcCollum]

"no choice but to accept it . . .

Or they could simply close down or move else where !

[tomross46]

The minimum wage has increased, because of election promises. Also the cost of electricity, cooking gas, food and other item necessary for the well being og the workers. The inflation will eat up any increase.

[sparebox2]

"no choice but to accept it . . .

Or they could simply close down or move else where !

300 Baht is too much for a normal Somchai/Somsri on the street.

Food only cost 30 baht a meal, and water comes free.

100 baht a day, and our Somchai/Somsri will already have spare for saving.

[jonclark]

"no choice but to accept it . . .

Or they could simply close down or move else where !

300 Baht is too much for a normal Somchai/Somsri on the street.

Food only cost 30 baht a meal, and water comes free.

100 baht a day, and our Somchai/Somsri will already have spare for saving.

Rent, transport, bills, clothing??

[Bengt]

I tried to manage my economy at 10.000 THB for a few months and I make it work....but it was hard but as long I own my apartment I havge a low fee and eat and drinks for about 150 THB per day it works but it was boring.

The best was that I saved a lot of money during thoose months.

if Thais got some social security as public health insurance that works 100% and cheap way of transportations they can made a living for 300 THB per day but then the best is to stay away frpm cigarrettes and alcohol and have some boring times from and on.

The most important is to stay healthy.

[noitom]

Where does The Nation get its information that Japanese brands are technologically superior to Samsung's? The editors also ineptly point out that Thai industry should be inspired by the Red Bull story without telling the full story. That it was Western marketing genius that made Red Bull something more than just an obscure brand on a dusty hidden shelf of a Thai convenience store. The editors should be truthful enough to point out that Chaleo was smart enough to "team up" with a European partner rather than dismissing Western expertise.

[rheinwiese]

The owner of my apartment building applied a new strategy.

As a result of the 300 Baht minimum wage hike he has canceled the contract with the security company.

They were asking 50% more and he could not shoulder the extra expenses.

No more security guards as of April 1st.

3 guys lost their job.

[bigbamboo]

Get real! The 'wage increase' will barely cover the steep rise of the cost of the basics most poor Thais need every day.

[takatukaland]

"no choice but to accept it . . .

Or they could simply close down or move else where !

300 Baht is too much for a normal Somchai/Somsri on the street.

Food only cost 30 baht a meal, and water comes free.

100 baht a day, and our Somchai/Somsri will already have spare for saving.

how much u think would be ok?if u work 30days a month,u make 9000bt,who can work 30days without a holiday?how long u can do that?before the minimum wage was about 220bt per day in bkk,lets say u rent a room for 1500 u eat everyday for 60bt,then 3300 are away already,u need to go to work and abck to room,sometimes u need clothes,most thais must send money home,so u really think 300 a day is to much?Bkk is not really cheap ,why don't u try for 1 month to live with 9000bt?

[soundman]

Get real! The 'wage increase' will barely cover the steep rise of the cost of the basics most poor Thais need every day.

What came first, the chicken or the egg...... Most businesses I know have been slowly hiking their prices in anticipation of the big hit they are going to cop this month.

[pengythai]

The owner of my apartment building applied a new strategy.

As a result of the 300 Baht minimum wage hike he has canceled the contract with the security company.

They were asking 50% more and he could not shoulder the extra expenses.

No more security guards as of April 1st.

3 guys lost their job.

I doubt that they lost their jobs, more than likely they were transferred to another site that was suffering from shortages. The security market is short of security guards, so when customers like this cancel because they really cannot afford the price increase that has been enforced on security providers the guards are sent to other sites to reduce the credit notes that security companies have to give customers often at a substantially higher charge than the cost of the missing security guard.

[bigbamboo]

I tried to manage my economy at 10.000 THB for a few months and I make it work....but it was hard but as long I own my apartment I havge a low fee and eat and drinks for about 150 THB per day it works but it was boring.

The best was that I saved a lot of money during thoose months.

if Thais got some social security as public health insurance that works 100% and cheap way of transportations they can made a living for 300 THB per day but then the best is to stay away frpm cigarrettes and alcohol and have some boring times from and on.

The most important is to stay healthy.

Are you Belgian?

[Rosco911]

The simple facts are the increase is to much in one go. Our company now pays our tea lady/cleaner nearly as much as our semi-skilled engineers and this causing problems because Thai's do not like to see anyone else getting something they are not.

Anyone thinking that this rise will benefit Thailand is very mistaken. The job losses have already started and the actual figures will never be published.

[horsewell]

There will be businesses that will not survive the wage hike, others will go to neighbouring countries that cost less, others will fire some staff and others will bring in cheaper staff from neighbouring countries, others will automate the process.

It seems that what is likely is that there will be job losses coupled with the price of goods and services increase more than the wage increase, especially for those in areas where the living expenses are already high.

Hope it works out well.

[geriatrickid]

"no choice but to accept it . . .

Or they could simply close down or move else where !

300 Baht is too much for a normal Somchai/Somsri on the street.

Food only cost 30 baht a meal, and water comes free.

100 baht a day, and our Somchai/Somsri will already have spare for saving.

try 40-60 baht for basic noodle or rice dish. Work, and you need 3 meals and water and subsistence is 200 baht a day. That's 6000 baht/mo. Add in basic room costs with water &electricity and its 5-6,000 baht/mo. Add in clothes &toiletries and that's a minimum 4000 baht/month. Don't get sick because you have no money. Those are the costs in phuket.

Now try and live on 300 baht a day.

[geriatrickid]

The owner of my apartment building applied a new strategy.

As a result of the 300 Baht minimum wage hike he has canceled the contract with the security company.

They were asking 50% more and he could not shoulder the extra expenses.

No more security guards as of April 1st.

3 guys lost their job.

Not necessarily. The security company, just might have redeployed elsewhere.

[Tanaka]

"no choice but to accept it . . .

Or they could simply close down or move else where !

300 Baht is too much for a normal Somchai/Somsri on the street.

Food only cost 30 baht a meal, and water comes free.

100 baht a day, and our Somchai/Somsri will already have spare for saving.

try 40-60 baht for basic noodle or rice dish. Work, and you need 3 meals and water and subsistence is 200 baht a day. That's 6000 baht/mo. Add in basic room costs with water &electricity and its 5-6,000 baht/mo. Add in clothes &toiletries and that's a minimum 4000 baht/month. Don't get sick because you have no money. Those are the costs in phuket.

Now try and live on 300 baht a day.

My sister in law does that. She works in a Japanese factory 30 days a month and much overtime at that.

[geriatrickid]

"no choice but to accept it . . .

Or they could simply close down or move else where !

300 Baht is too much for a normal Somchai/Somsri on the street.

Food only cost 30 baht a meal, and water comes free.

100 baht a day, and our Somchai/Somsri will already have spare for saving.

try 40-60 baht for basic noodle or rice dish. Work, and you need 3 meals and water and subsistence is 200 baht a day. That's 6000 baht/mo. Add in basic room costs with water &electricity and its 5-6,000 baht/mo. Add in clothes &toiletries and that's a minimum 4000 baht/month. Don't get sick because you have no money. Those are the costs in phuket.

Now try and live on 300 baht a day.

My sister in law does that. She works in a Japanese factory 30 days a month and much overtime at that.

30 days a month, plus overtime. Nice.

Not much of a life is it?

Are you happy that she gets to work every day?

Do you think she's happy?

How's her health?

Personnel that work under conditions like that have a tendency to kill themselves. Not to worry though, slaves are expendable.

[bigbamboo]

"no choice but to accept it . . .

Or they could simply close down or move else where !

300 Baht is too much for a normal Somchai/Somsri on the street.

Food only cost 30 baht a meal, and water comes free.

100 baht a day, and our Somchai/Somsri will already have spare for saving.

try 40-60 baht for basic noodle or rice dish. Work, and you need 3 meals and water and subsistence is 200 baht a day. That's 6000 baht/mo. Add in basic room costs with water &electricity and its 5-6,000 baht/mo. Add in clothes &toiletries and that's a minimum 4000 baht/month. Don't get sick because you have no money. Those are the costs in phuket.

Now try and live on 300 baht a day.

My sister in law does that. She works in a Japanese factory 30 days a month and much overtime at that.

Christ!........ is she building a railway?

[kawaiimomo]

"no choice but to accept it . . .

Or they could simply close down or move else where !

300 Baht is too much for a normal Somchai/Somsri on the street.

Food only cost 30 baht a meal, and water comes free.

100 baht a day, and our Somchai/Somsri will already have spare for saving.

The cheapest noodles are 30 baht, but usually one person eats 3 times per day.

So, this 300 a day is too much for the average Thai... What about you? Do you eat 1 time per day and drink tap water? I guess not

Maybe your 30 baht is for cooking yourself. Still not possible (Have you checked food prices?) and most people work far from home and have 1 hour to eat

[rakman]

I can see much more automation employed where possible. Fewer manual jobs by relatively unskilled labor.

Everytime a government raises the minimum wage, less of the unskilled (typically younger people) are employed in the "startup" jobs.

This makes it harder for the "less educated" person to get that entry job, gain a skill and rise up the labor wage chain.

Effects in the US of the economy and the minimum wage law that went into effect May 2007: http://www.bls.gov/news.release/empsit.t04.htm

[oggie911]

The owner of my apartment building applied a new strategy.

As a result of the 300 Baht minimum wage hike he has canceled the contract with the security company.

They were asking 50% more and he could not shoulder the extra expenses.

No more security guards as of April 1st.

3 guys lost their job.

I doubt that they lost their jobs, more than likely they were transferred to another site that was suffering from shortages. The security market is short of security guards, so when customers like this cancel because they really cannot afford the price increase that has been enforced on security providers the guards are sent to other sites to reduce the credit notes that security companies have to give customers often at a substantially higher charge than the cost of the missing security guard.

The owner of my apartment building applied a new strategy.

As a result of the 300 Baht minimum wage hike he has canceled the contract with the security company.

They were asking 50% more and he could not shoulder the extra expenses.

No more security guards as of April 1st.

3 guys lost their job.

I doubt that they lost their jobs, more than likely they were transferred to another site that was suffering from shortages. The security market is short of security guards, so when customers like this cancel because they really cannot afford the price increase that has been enforced on security providers the guards are sent to other sites to reduce the credit notes that security companies have to give customers often at a substantially higher charge than the cost of the missing security guard.

mabey he got some alco got him a uniform gave him a few bath every week for his whiskey n beer and a shed to sleep in and food problem solved

[louse1953]

"no choice but to accept it . . .

Or they could simply close down or move else where !

300 Baht is too much for a normal Somchai/Somsri on the street.

Food only cost 30 baht a meal, and water comes free.

100 baht a day, and our Somchai/Somsri will already have spare for saving.

Your all heart sb.