Businesses Opting For Migrant Workers To Keep Their Costs Low: Bt300 Daily Wage

[pisico]

I get the impression you live between the pages of a textbook, written (while drunk I assume) by a left-leaning philosopher...

Not at all, minimum wages have been introduced all over the world, by countries left and right leaning. As for being drunk, well, a little early in the day, but a rather poor attempt at a personal attack it would appear.

Minimum wages are a way to stop exploitation of workers. Even Henry Ford worked that out a long time ago. The effects of moving large populations of under minimum wage workers into countries has been studied for a long time, and the problems about what to do with this "new" population has been studied for ages and it does present difficulties. I would suggest that if the companies want to use Cambodian or Burmese labour, they should relocate over there.

Thailand and many other countries have a minimum wage, and have had for many decades, so I don't know why you are suggesting that preventing exploitation in and of itself is a bad thing. As for the effects, if you allow the minimum to be circumvented legally by importing labour, I would suggest that the increase in unemployment and social problems associated with this outweighs the overall economic benefits of compelling companies to pay the local labour force, rather than resorting to importing labour.

Why not import all foreign labourers into the country, for all jobs, so that the Thai's can sun themselves on their deck having a beer whilst all the jobs are done by others? Oh of course, that would mean the country would have to provide for 100 million people.

We are forever told that Thailand is for Thai's, unless of course you are a minimum wage worker, where you face unemployment because your job will be taken by an import. Hardly the point of the policy at all.

I was not arguing with what you said, per se, but rather with the way you said it... whenever someone says "companies should" and follows that with non profit related objectives, I get slightly confused...

Do not be confused. You are dealing with people who want to do good while using other people's money and assets. That way they feel so good about themselves!

I live in a building where most of the janitorial services are provided by Khmer people earning low wages, lower than what a Thai would get. The owner of the building is Thai. I know in Chonburi several restaurants where most of the employees doing the cleaning, cooking and waitressing are Khmer and Burmese. They make less than their Thais counterparts. The owners are Thai. Speaking with a Khmer cashier I learned that she gets paid 1,500 Baht less a month because she is Khmer and not Thai. The owner of her restaurant is Thai.

They all are happy: the Khmer and Burmese have jobs that otherwise they would not have in their respective countries. The Thai business owners are happy because they pay less wages (and presumably less taxes) to the employes thus boosting the bottom line.

Thailand has never done the right thing, voluntarily, to keep up with international standards. It has been forced to do it. I.E. copyrights of tangible and intangible property, human rights violations, human trafficking, child pornography and so on. This time it will no be an exception. Thailand will be forced to pay decent minimum wages to all workers after it enters full force into the Asean Community.

Add to that the xenophobic character of Thais and their lack of self-awareness.

The history books proudly claim that Thailand never has lost a war: Of course, Thailand always switched to the wining side in the end. World War II (or how their historians rewriting history call it: "The Great War of the Orient when allies bombed Bangkok".) is a prime example of that facet of their character. Students in school know nothing factual about the history of their country. It's all about the fairy tale of a mythical country once upon a time called Siam.

For those do-gooders I have these questions:

Where do you think those taxes paid by factory owners and employers go to?

Why does it take 4 months to process a work permit if one pays the posted government fee and not the bribe to the local official? Exploitation?

Why when paying the price that the current market bears it is called exploitation?

I worked and lived for 3 years in the defunct Soviet Union. Worked in Cuba for 2 years.

They are being exploited to kingdom come under the guise of equality. The only equality during those years I witnessed first hand was the sharing of misery. I can give hundreds of examples. Just ask.

Edited May 8, 2012 by pisico

[Thai at Heart]

Where do you think those taxes paid by factory owners and employers go to?

Why does it take 4 months to process a work permit is one pays the posted government fee rate?

Why when paying the price that the current market bears it is called exploitation?

I worked and lived for 3 years in the defunct Soviet Union. Worked in Cuba for 2 years.

They are being exploited to kingdom come under the guise of equality. The only equality during those years I witnessed first hand was the sharing of misery. I can give hundreds of examples. Just ask.

a. The profits for exporters are transfer priced out of the country via hong kong. The taxes of the employees are negligible because the wages are below the threshold, and the food that they consume is usually classed as a free benefit. If you work in a restaurant they will pay less, but give you food for nothing. Give a Thai 300 baht, and 295 gets spent in Thailand, give a Cambodian 175 baht, free accomodation and free food, 100 gets spent in Thailand.

b. It appears it is only called exploitation if you underpay a Thai.

c. Equality has nothing to do with minimum wages. Giving wages lower than minimum to foreign workers hurts Thai's, and the Thai economy since the wages are exported out of the country.

[gand]

"Businesses Opting For Migrant Workers To Keep Their Costs Low" is a bad business model as history has proved. Bad for the citizens and the country as well.

[kerryk]

"Businesses Opting For Migrant Workers To Keep Their Costs Low" is a bad business model as history has proved. Bad for the citizens and the country as well.

What history are you talking about?

[kerryk]

I get the impression you live between the pages of a textbook, written (while drunk I assume) by a left-leaning philosopher...

Not at all, minimum wages have been introduced all over the world, by countries left and right leaning. As for being drunk, well, a little early in the day, but a rather poor attempt at a personal attack it would appear.

Minimum wages are a way to stop exploitation of workers. Even Henry Ford worked that out a long time ago. The effects of moving large populations of under minimum wage workers into countries has been studied for a long time, and the problems about what to do with this "new" population has been studied for ages and it does present difficulties. I would suggest that if the companies want to use Cambodian or Burmese labour, they should relocate over there.

Thailand and many other countries have a minimum wage, and have had for many decades, so I don't know why you are suggesting that preventing exploitation in and of itself is a bad thing. As for the effects, if you allow the minimum to be circumvented legally by importing labour, I would suggest that the increase in unemployment and social problems associated with this outweighs the overall economic benefits of compelling companies to pay the local labour force, rather than resorting to importing labour.

Why not import all foreign labourers into the country, for all jobs, so that the Thai's can sun themselves on their deck having a beer whilst all the jobs are done by others? Oh of course, that would mean the country would have to provide for 100 million people.

We are forever told that Thailand is for Thai's, unless of course you are a minimum wage worker, where you face unemployment because your job will be taken by an import. Hardly the point of the policy at all.

Nothing to do with political philosophy left or right, just basic humanitarian common decency. Why not just take it to it's logical conclusion, Cambodian workers on fishing boats washed up after being thrown overboard to save paying them. Cambodians on construction sites working for weeks and then not being paid even their pitiful wages when the contractor does a runner, or more usually throws them in to immigration, and then imports another bunch of poor mugs. But hey, this is just market forces at work. In the world KerryK inhabits, nothing wrong with slave labour just as long as he can have cheap hotel rooms and cheap shirts. Classy!

Yup me and Henry Ford. Classy! BTW Henry just opened a new Plant in Rayong that will produce 500,000 new cars a year and employ thousands of Thai skilled and unskilled workers. But common decency. Henry never had a lick of it. OH BTW how many thousands of Thai nationals do you support as opposed to good old Henry? Yes folks Henry Ford is the reason Ford is in business in Thailand. Henry was not a nice guy and neither was Henry Ford II. I knew them both and speaking from personal experience they were both JERKS with capital letters.

[Thai at Heart]

Yup me and Henry Ford. Classy! BTW Henry just opened a new Plant in Rayong that will produce 500,000 new cars a year and employ thousands of Thai skilled and unskilled workers. But common decency. Henry never had a lick of it. OH BTW how many thousands of Thai nationals do you support as opposed to good old Henry? Yes folks Henry Ford is the reason Ford is in business in Thailand. Henry was not a nice guy and neither was Henry Ford II. I knew them both and speaking from personal experience they were both JERKS with capital letters.

Irony is that the car industry is one of the few with semi-militant unions in Thailand. Would like to see how far Ford would get if they decided to import 1000 workers of equally well qualified Cambodians but pay them under minimum.

[kerryk]

Yup me and Henry Ford. Classy! BTW Henry just opened a new Plant in Rayong that will produce 500,000 new cars a year and employ thousands of Thai skilled and unskilled workers. But common decency. Henry never had a lick of it. OH BTW how many thousands of Thai nationals do you support as opposed to good old Henry? Yes folks Henry Ford is the reason Ford is in business in Thailand. Henry was not a nice guy and neither was Henry Ford II. I knew them both and speaking from personal experience they were both JERKS with capital letters.

Irony is that the car industry is one of the few with semi-militant unions in Thailand. Would like to see how far Ford would get if they decided to import 1000 workers of equally well qualified Cambodians but pay them under minimum.

No way and that is another benefit of having a robber baron for a founder of your company. You also have strong unions. The unions don't care about minimum wage. They are way above it anyway.

[Thai at Heart]

Yup me and Henry Ford. Classy! BTW Henry just opened a new Plant in Rayong that will produce 500,000 new cars a year and employ thousands of Thai skilled and unskilled workers. But common decency. Henry never had a lick of it. OH BTW how many thousands of Thai nationals do you support as opposed to good old Henry? Yes folks Henry Ford is the reason Ford is in business in Thailand. Henry was not a nice guy and neither was Henry Ford II. I knew them both and speaking from personal experience they were both JERKS with capital letters.

Irony is that the car industry is one of the few with semi-militant unions in Thailand. Would like to see how far Ford would get if they decided to import 1000 workers of equally well qualified Cambodians but pay them under minimum.

No way and that is another benefit of having a robber baron for a founder of your company. You also have strong unions. The unions don't care about minimum wage. They are way above it anyway.

Well, to some peoples logic on here, why should it be limited to undercutting minimum wage workers, why not just free it all up, and allow companies to hire whoever they want at whatever "the market" dictates on a given day. The car companies pay well, with guaranteed bonuses and good benefits. Bet thousands of Cambodians and Burmese would do the jobs perfectly adequately for less. Why should a chicken factory be able to do it, but not a car company?

So I still fail to see why companies should be able to import legally, foreign workers and pay them below minimum. I can't see the benefit for the country or the Thai people one bit.

Edited May 8, 2012 by Thai at Heart

[kerryk]

Yup me and Henry Ford. Classy! BTW Henry just opened a new Plant in Rayong that will produce 500,000 new cars a year and employ thousands of Thai skilled and unskilled workers. But common decency. Henry never had a lick of it. OH BTW how many thousands of Thai nationals do you support as opposed to good old Henry? Yes folks Henry Ford is the reason Ford is in business in Thailand. Henry was not a nice guy and neither was Henry Ford II. I knew them both and speaking from personal experience they were both JERKS with capital letters.

Irony is that the car industry is one of the few with semi-militant unions in Thailand. Would like to see how far Ford would get if they decided to import 1000 workers of equally well qualified Cambodians but pay them under minimum.

No way and that is another benefit of having a robber baron for a founder of your company. You also have strong unions. The unions don't care about minimum wage. They are way above it anyway.

Well, to some peoples logic on here, why should it be limited to undercutting minimum wage workers, why not just free it all up, and allow companies to hire whoever they want at whatever "the market" dictates on a given day. The car companies pay well, with guaranteed bonuses and good benefits. Bet thousands of Cambodians and Burmese would do the jobs perfectly adequately for less. Why should a chicken factory be able to do it, but not a car company?

So I still fail to see why companies should be able to import legally, foreign workers and pay them below minimum. I can't see the benefit for the country or the Thai people one bit.

Water seeks it's own level. If there are extra skilled Thai workers they will go to Australia and make more money and send that money to help the Thai economy. It is how a free market economy works. If you have the lowest prices people will buy your goods. You don't need governments interfering with the forces of a free market. The new French President does not understand this so you will next see a Greek recovery system implemented in France. Greece has not recovered? Oh, yea.

[Thai at Heart]

Water seeks it's own level. If there are extra skilled Thai workers they will go to Australia and make more money and send that money to help the Thai economy. It is how a free market economy works. If you have the lowest prices people will buy your goods. You don't need governments interfering with the forces of a free market. The new French President does not understand this so you will next see a Greek recovery system implemented in France. Greece has not recovered? Oh, yea.

Of course the market eventually evens itself out. If there is one thing we have seen is that the theoretical mobility of labour isn't nearly as much as thought. There are myriad reasons why people aren't 100% free to move around for jobs irrespective of legislation, one of the more simple one's being that they like it where they are. The problems being faced in Europe have absolutely zero to do with minimum wage policy, but yes overblown social and tax systems need modification to keep countries competitive. Greece's only hope is to get out of Europe, go back to the drachma, and attract investment.

Having worked there a while though and when you realise that still today 80% of actual exports from Greece are still physically inspected, government offices clock off at 2, and state employees still expect to retire at 58 on final salary pensions, this is absolutely nothing to do with Thailand implementing 300 baht a day for minimum wage. Hourly rates in Greece are probably double already.

Lowest prices don't always win anyway, just look at Apple. Massive margins do however make you very very profitable, and I just to see the efforts they are making to clean up their supply chain does show that sometimes, the monetary benefit of paying minimum outweighs the social benefits of paying more. Just look at how Foxconn gave away massive pay increases without batting an eyelid when they came under pressure.

Labor costs are still a small part of the overall cost structure at between 2 percent and 5 percent of sales price.

http://news.cnet.com/8301-17938_105-57382995-1/iphone-manufacturing-costs-revealed/

I see absolutely nothing wrong with a reasonable mandated minimum, which keeps up with inflation and making ALL the companies within a given economy stick to that figure. We can debate the maxim of 300 baht, versus 280, versus 250, but the other party initially wanted 250, now Yingluck has given 300. Get used to it, the market will sort it out as long as ALL the players are playing by the rules. The system only works if the supply of labour is largely finite. Why only allow minimum wage workers to be undercut, just throw the doors open? Why disadvantage those absolutely at the bottom of the pile?

This is why allowing imported labour at less jigs the game in the hand of the employers and the foreign labour to the detriment of the very people it was supposed to benefit, so in essence they may as well do away with the policy completely and just let in whoever employers want to employ at whatever price they want, and screw the local population completely, instead of just screwing those on the newly increased 300 baht?

I have a mate with a medium construction company in Bangkok, building apartments for his family ownership and for sale, he employs exclusively illegally imported labour at below minimum. His family is also extremely averse to paying any tax on anything they make.

To say that his family business couldn't afford to pay minimum is absolute nonsense, judging by the raft of Mercs at home, but he does because he can, after paying off the necessary people.

Companies should have to advertise all their requirements and fill up with local labour first, then and only when they can prove they can't fill up, be allowed to import the required number of labour from overseas at the same price.

Edited May 8, 2012 by Thai at Heart

[kerryk]

Water seeks it's own level. If there are extra skilled Thai workers they will go to Australia and make more money and send that money to help the Thai economy. It is how a free market economy works. If you have the lowest prices people will buy your goods. You don't need governments interfering with the forces of a free market. The new French President does not understand this so you will next see a Greek recovery system implemented in France. Greece has not recovered? Oh, yea.

Of course the market eventually evens itself out. If there is one thing we have seen is that the theoretical mobility of labour isn't nearly as much as thought. There are myriad reasons why people aren't 100% free to move around for jobs irrespective of legislation, one of the more simple one's being that they like it where they are. The problems being faced in Europe have absolutely zero to do with minimum wage policy, but yes overblown social and tax systems need modification to keep countries competitive. Greece's only hope is to get out of Europe, go back to the drachma, and attract investment.

Having worked there a while though and when you realise that still today 80% of actual exports from Greece are still physically inspected, government offices clock off at 2, and state employees still expect to retire at 58 on final salary pensions, this is absolutely nothing to do with Thailand implementing 300 baht a day for minimum wage. Hourly rates in Greece are probably double already.

Lowest prices don't always win anyway, just look at Apple. Massive margins do however make you very very profitable, and I just to see the efforts they are making to clean up their supply chain does show that sometimes, the monetary benefit of paying minimum outweighs the social benefits of paying more. Just look at how Foxconn gave away massive pay increases without batting an eyelid when they came under pressure.

Labor costs are still a small part of the overall cost structure at between 2 percent and 5 percent of sales price.

http://news.cnet.com...costs-revealed/

I see absolutely nothing wrong with a reasonable mandated minimum, which keeps up with inflation and making ALL the companies within a given economy stick to that figure. We can debate the maxim of 300 baht, versus 280, versus 250, but the other party initially wanted 250, now Yingluck has given 300. Get used to it, the market will sort it out as long as ALL the players are playing by the rules. The system only works if the supply of labour is largely finite. Why only allow minimum wage workers to be undercut, just throw the doors open? Why disadvantage those absolutely at the bottom of the pile?

This is why allowing imported labour at less jigs the game in the hand of the employers and the foreign labour to the detriment of the very people it was supposed to benefit, so in essence they may as well do away with the policy completely and just let in whoever employers want to employ at whatever price they want, and screw the local population completely, instead of just screwing those on the newly increased 300 baht?

I have a mate with a medium construction company in Bangkok, building apartments for his family ownership and for sale, he employs exclusively illegally imported labour at below minimum. His family is also extremely averse to paying any tax on anything they make.

To say that his family business couldn't afford to pay minimum is absolute nonsense, judging by the raft of Mercs at home, but he does because he can, after paying off the necessary people.

Companies should have to advertise all their requirements and fill up with local labour first, then and only when they can prove they can't fill up, be allowed to import the required number of labour from overseas at the same price.

Well there you have it. Do you own the company or work for the company?

If you own the company of course the cheap labor is a good idea but you have to put another spin on it to sell the idea.

Watch Fox news for ideas. Yingluck is; or someone in the family.

But this one is going to be big. Burma is making it big. It is the sympathy angle. Can't dump them into the ocean this time.

Forgive my levity but we are really dealing with tiny tiny little countries. Australia has the same GNP or close to it as California I think. China could economically squish SEA in an afternoon if it was in the mood.

[pattayaorganic]

I get the impression you live between the pages of a textbook, written (while drunk I assume) by a left-leaning philosopher...

Not at all, minimum wages have been introduced all over the world, by countries left and right leaning. As for being drunk, well, a little early in the day, but a rather poor attempt at a personal attack it would appear.

Minimum wages are a way to stop exploitation of workers. Even Henry Ford worked that out a long time ago. The effects of moving large populations of under minimum wage workers into countries has been studied for a long time, and the problems about what to do with this "new" population has been studied for ages and it does present difficulties. I would suggest that if the companies want to use Cambodian or Burmese labour, they should relocate over there.

Thailand and many other countries have a minimum wage, and have had for many decades, so I don't know why you are suggesting that preventing exploitation in and of itself is a bad thing. As for the effects, if you allow the minimum to be circumvented legally by importing labour, I would suggest that the increase in unemployment and social problems associated with this outweighs the overall economic benefits of compelling companies to pay the local labour force, rather than resorting to importing labour.

Why not import all foreign labourers into the country, for all jobs, so that the Thai's can sun themselves on their deck having a beer whilst all the jobs are done by others? Oh of course, that would mean the country would have to provide for 100 million people.

We are forever told that Thailand is for Thai's, unless of course you are a minimum wage worker, where you face unemployment because your job will be taken by an import. Hardly the point of the policy at all.

Whoa there Nelly. Hold on a minute. I will refrain from going ad hominem on you, but I would like to give you a little reality check.

I think most will agree that we enjoy the freedoms of living in a free-market economy and a free society, and do not desire to live in a communist or socialist system. The basic tenet of free-markets, be it in goods or labor is that the market's invisible-hand will determine real market prices. Economics 101: increases in price reduce demand and the correlate is visa-versa. This works for labor as well. Increase the price of labor and the demand for labor will decrease. This is exactly the blow-back that I have been writing about since the inception of this silly policy on minimum wage. That companies are attempting to increase their numbers of immigrant workers and decreasing the numbers of Thai workers is just one micro-level mechanism by which the employers adapt to legally enforced minimum wage policy.

Please observe: for employers that are already paying above minimum wage, the minimum wage policy has zero effect. The point being that those jobs and those workers have equilibrated at a price above the legal minimum wage due to the productivity of the worker still allows a reasonable profit at that wage.

If you want to improve the lot of the poor Thai worker the one and only one non-inflationary solution is to improve the productivity of the worker (read that as EDUCATION).

The rhetoric that minimum wage helps exploited workers get their fair lot has been disproven in balanced and well executed studies (check my previous posts for references if you are interested).

If the Thai worker decided to obtain a skill where he can demand a price for his labor above the minimum wage, then he adds a net positive to the economic equation. As to your comment that companies which wish to use Myanmar workers should locate their operations in Myanmar, you fail to recognize the positive effects of a company which pays Thai taxes, buys raw materials, and other inputs in Thailand add a net positive to the Thai economy.

In my industry (shrimp farming), if we were to follow your brilliant advice, Thailand would be out of a multi-billion dollar export industry as nearly all laborers in shrimp processing/farms are non-Thais. At our farm, we have tried to pay higher than 300B in an attempt to attract a more loyal and better work ethic Thai worker, but this failed miserably (I believe has much to do with the current education's focus on testing and lack of standard discipline and manners education in the home).

Finally, living in an expat dominated resort town, where the typical Thai worker is simply incapable of saying "Kawb Khun" or "Khor Toht" (thank you and sorry), and look like they want to die when they are working, the import of smiling, hard working burmese is a welcome site. Let the market decide what is a fair price for labor and if you want a path out of poverty, minimum wage legislation is not a substitute for the necessary, but difficult improvement in education.

Edited May 8, 2012 by pattayaorganic

[kerryk]

I get the impression you live between the pages of a textbook, written (while drunk I assume) by a left-leaning philosopher...

Not at all, minimum wages have been introduced all over the world, by countries left and right leaning. As for being drunk, well, a little early in the day, but a rather poor attempt at a personal attack it would appear.

Minimum wages are a way to stop exploitation of workers. Even Henry Ford worked that out a long time ago. The effects of moving large populations of under minimum wage workers into countries has been studied for a long time, and the problems about what to do with this "new" population has been studied for ages and it does present difficulties. I would suggest that if the companies want to use Cambodian or Burmese labour, they should relocate over there.

Thailand and many other countries have a minimum wage, and have had for many decades, so I don't know why you are suggesting that preventing exploitation in and of itself is a bad thing. As for the effects, if you allow the minimum to be circumvented legally by importing labour, I would suggest that the increase in unemployment and social problems associated with this outweighs the overall economic benefits of compelling companies to pay the local labour force, rather than resorting to importing labour.

Why not import all foreign labourers into the country, for all jobs, so that the Thai's can sun themselves on their deck having a beer whilst all the jobs are done by others? Oh of course, that would mean the country would have to provide for 100 million people.

We are forever told that Thailand is for Thai's, unless of course you are a minimum wage worker, where you face unemployment because your job will be taken by an import. Hardly the point of the policy at all.

Whoa there Nelly. Hold on a minute. I will refrain from going ad hominem on you, but I would like to give you a little reality check.

I think most will agree that we enjoy the freedoms of living in a free-market economy and a free society, and do not desire to live in a communist or socialist system. The basic tenet of free-markets, be it in goods or labor is that the market's invisible-hand will determine real market prices. Economics 101: increases in price reduce demand and the correlate is visa-versa. This works for labor as well. Increase the price of labor and the demand for labor will decrease. This is exactly the blow-back that I have been writing about since the inception of this silly policy on minimum wage. That companies are attempting to increase their numbers of immigrant workers and decreasing the numbers of Thai workers is just one micro-level mechanism by which the employers adapt to legally enforced minimum wage policy.

Please observe: for employers that are already paying above minimum wage, the minimum wage policy has zero effect. The point being that those jobs and those workers have equilibrated at a price above the legal minimum wage due to the productivity of the worker still allows a reasonable profit at that wage.

If you want to improve the lot of the poor Thai worker the one and only one non-inflationary solution is to improve the productivity of the worker (read that as EDUCATION).

The rhetoric that minimum wage helps exploited workers get their fare lot has been disproven in balanced and well executed studies (check my previous posts for references if you are interested).

If the Thai worker decided to obtain a skill where he can demand a price for his labor above the minimum wage, then he adds a net positive to the economic equation. As to your comment that companies which wish to use Myanmar workers should locate their operations in Myanmar, you fail to recognize the positive effects of a company which pays Thai taxes, buys raw materials, and other inputs in Thailand add a net positive to the Thai economy.

In my industry (shrimp farming), if we were to follow your brilliant advice, Thailand would be out of a multi-billion dollar export industry as nearly all laborers in shrimp processing/farms are non-Thais. At our farm, we have tried to pay higher than 300B in an attempt to attract a more loyal and better work ethic Thai worker, but this failed miserably (I believe has much to do with the current education's focus on testing and lack of standard discipline and manners education in the home).

Finally, living in an expat dominated resort town, where the typical Thai worker is simply incapable of saying "Kawb Khun" or "Khor Toht" (thank you and sorry), and look like they want to die when they are working, the import of smiling, hard working burmese is a welcome site. Let the market decide what is a fair price for labor and if you want a path out of poverty, minimum wage legislation is not a substitute for the necessary, but difficult improvement in education.

My God that is a good post. You have so many things right. Great post. Once upon a time I used 100 Mexican women meat cutters in Texas for exactly the same reasons. Good on Ya. BTW when I lived in South Texas the Vietnamese boat people took over the shrimp fishing business from the Mexicans for the same reasons you mention.

[Thai at Heart]

Water seeks it's own level. If there are extra skilled Thai workers they will go to Australia and make more money and send that money to help the Thai economy. It is how a free market economy works. If you have the lowest prices people will buy your goods. You don't need governments interfering with the forces of a free market. The new French President does not understand this so you will next see a Greek recovery system implemented in France. Greece has not recovered? Oh, yea.

Of course the market eventually evens itself out. If there is one thing we have seen is that the theoretical mobility of labour isn't nearly as much as thought. There are myriad reasons why people aren't 100% free to move around for jobs irrespective of legislation, one of the more simple one's being that they like it where they are. The problems being faced in Europe have absolutely zero to do with minimum wage policy, but yes overblown social and tax systems need modification to keep countries competitive. Greece's only hope is to get out of Europe, go back to the drachma, and attract investment.

Having worked there a while though and when you realise that still today 80% of actual exports from Greece are still physically inspected, government offices clock off at 2, and state employees still expect to retire at 58 on final salary pensions, this is absolutely nothing to do with Thailand implementing 300 baht a day for minimum wage. Hourly rates in Greece are probably double already.

Lowest prices don't always win anyway, just look at Apple. Massive margins do however make you very very profitable, and I just to see the efforts they are making to clean up their supply chain does show that sometimes, the monetary benefit of paying minimum outweighs the social benefits of paying more. Just look at how Foxconn gave away massive pay increases without batting an eyelid when they came under pressure.

Labor costs are still a small part of the overall cost structure at between 2 percent and 5 percent of sales price.

http://news.cnet.com...costs-revealed/

I see absolutely nothing wrong with a reasonable mandated minimum, which keeps up with inflation and making ALL the companies within a given economy stick to that figure. We can debate the maxim of 300 baht, versus 280, versus 250, but the other party initially wanted 250, now Yingluck has given 300. Get used to it, the market will sort it out as long as ALL the players are playing by the rules. The system only works if the supply of labour is largely finite. Why only allow minimum wage workers to be undercut, just throw the doors open? Why disadvantage those absolutely at the bottom of the pile?

This is why allowing imported labour at less jigs the game in the hand of the employers and the foreign labour to the detriment of the very people it was supposed to benefit, so in essence they may as well do away with the policy completely and just let in whoever employers want to employ at whatever price they want, and screw the local population completely, instead of just screwing those on the newly increased 300 baht?

I have a mate with a medium construction company in Bangkok, building apartments for his family ownership and for sale, he employs exclusively illegally imported labour at below minimum. His family is also extremely averse to paying any tax on anything they make.

To say that his family business couldn't afford to pay minimum is absolute nonsense, judging by the raft of Mercs at home, but he does because he can, after paying off the necessary people.

Companies should have to advertise all their requirements and fill up with local labour first, then and only when they can prove they can't fill up, be allowed to import the required number of labour from overseas at the same price.

Well there you have it. Do you own the company or work for the company?

If you own the company of course the cheap labor is a good idea but you have to put another spin on it to sell the idea.

Watch Fox news for ideas. Yingluck is; or someone in the family.

But this one is going to be big. Burma is making it big. It is the sympathy angle. Can't dump them into the ocean this time.

Forgive my levity but we are really dealing with tiny tiny little countries. Australia has the same GNP or close to it as California I think. China could economically squish SEA in an afternoon if it was in the mood.

Well Burma is a very interesting one, because the bun fight there is going to be political as well as economic. If the Chinese get port and pipeline access into the Indian ocean the entire political situation of the South China sea changes. I do own a company these days, and pay on average above minimum to keep my experienced people. I have lost some business to China, but have also won bits of it back. That is the nature of business. There are a myriad of reasons why business is conducted that go way beyond the last decimal point on the invoice.

Wages in China in many industries aren't that cheap anymore anyway. I have friends in textiles who were terrified of China 5 years ago, but see full order books coming back rapidly. The issue is that the 300 baht was such a large increase following years of below inflation increases. Will I be seeking to import Cambodians to fill up my factory? Nope, the people I have have been here for several years and finally the place runs quite well, but can of course always be improved.

Will I face competition from everywhere in the world, yup, will my business survive and grow successfully? I believe so, since I don't have to rely on 240 baht a day wages as the denominator of my business success.

I have watched my fair share of Fox, and it is important to remember there is a massive difference between socialism and communism. The middle ground tends to deliver the right result more often than not.

[Exsexyman]

I get the impression you live between the pages of a textbook, written (while drunk I assume) by a left-leaning philosopher...

Not at all, minimum wages have been introduced all over the world, by countries left and right leaning. As for being drunk, well, a little early in the day, but a rather poor attempt at a personal attack it would appear.

Minimum wages are a way to stop exploitation of workers. Even Henry Ford worked that out a long time ago. The effects of moving large populations of under minimum wage workers into countries has been studied for a long time, and the problems about what to do with this "new" population has been studied for ages and it does present difficulties. I would suggest that if the companies want to use Cambodian or Burmese labour, they should relocate over there.

Thailand and many other countries have a minimum wage, and have had for many decades, so I don't know why you are suggesting that preventing exploitation in and of itself is a bad thing. As for the effects, if you allow the minimum to be circumvented legally by importing labour, I would suggest that the increase in unemployment and social problems associated with this outweighs the overall economic benefits of compelling companies to pay the local labour force, rather than resorting to importing labour.

Why not import all foreign labourers into the country, for all jobs, so that the Thai's can sun themselves on their deck having a beer whilst all the jobs are done by others? Oh of course, that would mean the country would have to provide for 100 million people.

We are forever told that Thailand is for Thai's, unless of course you are a minimum wage worker, where you face unemployment because your job will be taken by an import. Hardly the point of the policy at all.

Nothing to do with political philosophy left or right, just basic humanitarian common decency. Why not just take it to it's logical conclusion, Cambodian workers on fishing boats washed up after being thrown overboard to save paying them. Cambodians on construction sites working for weeks and then not being paid even their pitiful wages when the contractor does a runner, or more usually throws them in to immigration, and then imports another bunch of poor mugs. But hey, this is just market forces at work. In the world KerryK inhabits, nothing wrong with slave labour just as long as he can have cheap hotel rooms and cheap shirts. Classy!

Yup me and Henry Ford. Classy! BTW Henry just opened a new Plant in Rayong that will produce 500,000 new cars a year and employ thousands of Thai skilled and unskilled workers. But common decency. Henry never had a lick of it. OH BTW how many thousands of Thai nationals do you support as opposed to good old Henry? Yes folks Henry Ford is the reason Ford is in business in Thailand. Henry was not a nice guy and neither was Henry Ford II. I knew them both and speaking from personal experience they were both JERKS with capital letters.

You must be knocking on a bit if you knew Henry Ford and was old enough to make judgements on his character and business practices. He's been dead for 65 years. Respect.

[PattayaPhom]

I get the impression you live between the pages of a textbook, written (while drunk I assume) by a left-leaning philosopher...

Not at all, minimum wages have been introduced all over the world, by countries left and right leaning. As for being drunk, well, a little early in the day, but a rather poor attempt at a personal attack it would appear.

Minimum wages are a way to stop exploitation of workers. Even Henry Ford worked that out a long time ago. The effects of moving large populations of under minimum wage workers into countries has been studied for a long time, and the problems about what to do with this "new" population has been studied for ages and it does present difficulties. I would suggest that if the companies want to use Cambodian or Burmese labour, they should relocate over there.

Thailand and many other countries have a minimum wage, and have had for many decades, so I don't know why you are suggesting that preventing exploitation in and of itself is a bad thing. As for the effects, if you allow the minimum to be circumvented legally by importing labour, I would suggest that the increase in unemployment and social problems associated with this outweighs the overall economic benefits of compelling companies to pay the local labour force, rather than resorting to importing labour.

Why not import all foreign labourers into the country, for all jobs, so that the Thai's can sun themselves on their deck having a beer whilst all the jobs are done by others? Oh of course, that would mean the country would have to provide for 100 million people.

We are forever told that Thailand is for Thai's, unless of course you are a minimum wage worker, where you face unemployment because your job will be taken by an import. Hardly the point of the policy at all.

I was not arguing with what you said, per se, but rather with the way you said it... whenever someone says "companies should" and follows that with non profit related objectives, I get slightly confused...

Ah well, I don't expect a company to pay a penny more than they have to.

Its the world we live in..USA taking Mexicans, Greece taking Albanians, Europe with Eastern Europeans..the list goes on....why do you feel Thailand is so special....of course the bosses are the same worldwide so it will continue happening as it always has with Cambodians and Burmeese.

[Thai at Heart]

I get the impression you live between the pages of a textbook, written (while drunk I assume) by a left-leaning philosopher...

Not at all, minimum wages have been introduced all over the world, by countries left and right leaning. As for being drunk, well, a little early in the day, but a rather poor attempt at a personal attack it would appear.

Minimum wages are a way to stop exploitation of workers. Even Henry Ford worked that out a long time ago. The effects of moving large populations of under minimum wage workers into countries has been studied for a long time, and the problems about what to do with this "new" population has been studied for ages and it does present difficulties. I would suggest that if the companies want to use Cambodian or Burmese labour, they should relocate over there.

Thailand and many other countries have a minimum wage, and have had for many decades, so I don't know why you are suggesting that preventing exploitation in and of itself is a bad thing. As for the effects, if you allow the minimum to be circumvented legally by importing labour, I would suggest that the increase in unemployment and social problems associated with this outweighs the overall economic benefits of compelling companies to pay the local labour force, rather than resorting to importing labour.

Why not import all foreign labourers into the country, for all jobs, so that the Thai's can sun themselves on their deck having a beer whilst all the jobs are done by others? Oh of course, that would mean the country would have to provide for 100 million people.

We are forever told that Thailand is for Thai's, unless of course you are a minimum wage worker, where you face unemployment because your job will be taken by an import. Hardly the point of the policy at all.

Whoa there Nelly. Hold on a minute. I will refrain from going ad hominem on you, but I would like to give you a little reality check.

I think most will agree that we enjoy the freedoms of living in a free-market economy and a free society, and do not desire to live in a communist or socialist system. The basic tenet of free-markets, be it in goods or labor is that the market's invisible-hand will determine real market prices. Economics 101: increases in price reduce demand and the correlate is visa-versa. This works for labor as well. Increase the price of labor and the demand for labor will decrease. This is exactly the blow-back that I have been writing about since the inception of this silly policy on minimum wage. That companies are attempting to increase their numbers of immigrant workers and decreasing the numbers of Thai workers is just one micro-level mechanism by which the employers adapt to legally enforced minimum wage policy.

Please observe: for employers that are already paying above minimum wage, the minimum wage policy has zero effect. The point being that those jobs and those workers have equilibrated at a price above the legal minimum wage due to the productivity of the worker still allows a reasonable profit at that wage.

If you want to improve the lot of the poor Thai worker the one and only one non-inflationary solution is to improve the productivity of the worker (read that as EDUCATION).

The rhetoric that minimum wage helps exploited workers get their fair lot has been disproven in balanced and well executed studies (check my previous posts for references if you are interested).

If the Thai worker decided to obtain a skill where he can demand a price for his labor above the minimum wage, then he adds a net positive to the economic equation. As to your comment that companies which wish to use Myanmar workers should locate their operations in Myanmar, you fail to recognize the positive effects of a company which pays Thai taxes, buys raw materials, and other inputs in Thailand add a net positive to the Thai economy.

In my industry (shrimp farming), if we were to follow your brilliant advice, Thailand would be out of a multi-billion dollar export industry as nearly all laborers in shrimp processing/farms are non-Thais. At our farm, we have tried to pay higher than 300B in an attempt to attract a more loyal and better work ethic Thai worker, but this failed miserably (I believe has much to do with the current education's focus on testing and lack of standard discipline and manners education in the home).

Finally, living in an expat dominated resort town, where the typical Thai worker is simply incapable of saying "Kawb Khun" or "Khor Toht" (thank you and sorry), and look like they want to die when they are working, the import of smiling, hard working burmese is a welcome site. Let the market decide what is a fair price for labor and if you want a path out of poverty, minimum wage legislation is not a substitute for the necessary, but difficult improvement in education.

I am not saying that Burmese or Cambodians shouldn't be imported if it is absolutely necessary, I am discussing whether companies should be legally allowed to pay them less than minimum as a matter of course. As for the agriculture processing industry, there are myriad debates about the rights and wrongs and overall benefits.

http://www.twnside.org.sg/title/2117.htm

Clearly, the picture of employment in the farmed-shrimp industry in Thailand is not one of simple improvement in people’s livelihoods. There are complex and contradictory issues at play.

I worked for a private company in agriculture exports for many years, competing actually with a government organisation for supply. We had to go through yearly audits of costs incurred by farmers, prices paid per kilo to make sure we were paying more than the competing government organisation.

We still had to export to the world and compete against other crops, and today the factory looks very different from what it was 15 years ago. Headcounts are down, mechanisation is up, and wages there are way above the local minimum, and they will have to eat the increase pure and simple. Will they relocate? Hell no, with the margins they have they are enormously profitable, whilst still paying the farmers quite well in comparison with other crops.

[gand]

Economics 101: Supply & Demand only works when laws are not broken. Increase in the demand for labor and the price of labor increases. Increasing the number illegals causes the price of labor to fall ILLEGALLY.

[TAWP]

Minimum wages are a way to stop exploitation of workers.

No, they were introduced to placate voters that lack understanding of economics.

And watch how low-end salaries gyrate down towards minimum wage in places where it is introduced or increased upwards.

It has changed from 'negotiate with manager to get a salary' to 'you get minimum wage and the same salary will be paid by everyone else in the region'.

This isn't pro-worker, it is pro-corporatism. Sadly some of you don't understand this.

[Thai at Heart]

Minimum wages are a way to stop exploitation of workers.

No, they were introduced to placate voters that lack understanding of economics.

And watch how low-end salaries gyrate down towards minimum wage in places where it is introduced or increased upwards.

It has changed from 'negotiate with manager to get a salary' to 'you get minimum wage and the same salary will be paid by everyone else in the region'.

This isn't pro-worker, it is pro-corporatism. Sadly some of you don't understand this.

Even more so if the threat is that you get fired and replaced by Somchai from Cambodia. I hadn't considered the idea that it may lead to standard minimum wages in the region. That will surely take a very very long time.

[kerryk]

Economics 101: Supply & Demand only works when laws are not broken. Increase in the demand for labor and the price of labor increases. Increasing the number illegals causes the price of labor to fall ILLEGALLY.

Supply and demand is an economic law. It always works. Drugs are a prime example in case you need facts. Supply and demand has nothing to do with legality or illegality. That is Econ 101. For those of us who actually took the course.

[gand]

Economics 101: Supply & Demand only works when laws are not broken. Increase in the demand for labor and the price of labor increases. Increasing the number illegals causes the price of labor to fall ILLEGALLY.

Supply and demand is an economic law. It always works. Drugs are a prime example in case you need facts. Supply and demand has nothing to do with legality or illegality. That is Econ 101. For those of us who actually took the course.

Good to know you are OK with illegal trade & business practices like a monopoly, mafia criminal activity, corruption, nationalizing your business, but to name a few. How does your supply & demand work out for you then? Or is it only OK when you benefit from illegal activity that it is OK?

[mca]

To paraphrase an old saying where I'm from.

"You never see a factory owner on a bike"

[JurgenG]

Should is the key word in your post. Who says should? The company? It's stockholders? The politicians that are in the company's pocket? Of course the people who run Thailand want millions of migrant laborers in the country as it makes real wages lower. My hotel room was cheaper because of Burmese labor. My shirt is cheaper because of Burmese labor. My only question is when it will trickle down to the bar level. I would estimate currently only 10% of bar employees are Burmese.

And it will put millions of Thais out of jobs. If that is what is wanted, lets wait and see where Thailand ends up in 5 years time. We aren't talking about a country with massive social safety nets here. If millions of 300 baht a day workers are bid out of jobs by Burmese on 200 baht a day, what the hell is going to happen to society here? This isn't Saudi where the GDP per head is 30k+ USD per year.

I was in a chicken processing factory the other day, world class installation, 2 Japanese managers, maybe 20 Thai middle managers, and over 1000 Cambodians living in apartments specifically built for housing them. 95% of the product exported to Japan. The entire business model of the place was based around essentially exploiting Cambodian wage rates whilst securing investment under Thai law. All very well and good you could say, but after asking around, they never actually advertised the jobs for the local population to apply, so whilst a few middle guys get paid, the economic benefits of the investment fly their way across the border to Cambodia every month.

The problem is : will a Thai accept the job for the minimal wage ? Or just accept the job ?

The message I get from business people in Thailand is that there is no problem to hire sales girls for a 7/11 or an Amazon coffee shop. Light work, air cond ... no problem. But if you just need to find someone to load/unload a truck, a very basic task, you won't find anybody, even paying above the minimal wage.

In my village in Bangkok, everybody complain. It's impossible to find a Thai maid or a thai gardener. All the signs in the village are both in Thai and in Burmese.

It's clear that there are a number of jobs that Thai are no longer willing to do. That's the real problem, not the minimal wage.

[noitom]

Free for all. It will make Nike, Bristol Myers and all other foreign companies proud that the Thai facilities use cheap, below minimum wage workers with no benefits, health care, or social safety net. Let's run out and buy those sneakers and pharma products "made in Thailand."

[BigJohnnyBKK]

I don't understand some of the attitudes here. Why would anyone except Thai nationalists care about who is getting jobs?

If the Thais want the minimum wage to only apply to Thais, that's their business.

If the Burmese and Cambodians are willing to work for less, more power to them, they obviously need the money more and in many cases do a much better job than the Thais could. Let the money go where it's needed most and creates the most economic growth.

If this forces the Thai labor market to sharpen its game, upgrade their skills and work ethic, then ultimately that's great for Thailand too.

The trend worldwide is more and more equalization - those from wealthier countries will continue to face competition from the hungry, the poorer countries learn to compete in the global market and improve their standard of living. The US is already well on its way to becoming the world's best armed third-world country, som nam na.

[gand]

IMO, there is nothing a person will not do, when you pay them enough. There is also nothing a person will not do when you give them no other choice.

[kerryk]

Economics 101: Supply & Demand only works when laws are not broken. Increase in the demand for labor and the price of labor increases. Increasing the number illegals causes the price of labor to fall ILLEGALLY.

Supply and demand is an economic law. It always works. Drugs are a prime example in case you need facts. Supply and demand has nothing to do with legality or illegality. That is Econ 101. For those of us who actually took the course.

Good to know you are OK with illegal trade & business practices like a monopoly, mafia criminal activity, corruption, nationalizing your business, but to name a few. How does your supply & demand work out for you then? Or is it only OK when you benefit from illegal activity that it is OK?

You are talking about two different things. The law of supply and demand is not legal or not or immoral or not it simply is.

Illegal trade is another thing. And legal trade is another thing. Supply and demand works all the time not only when laws are not broken as you said in the above post. To recap; you said, "Supply & Demand only works when laws are not broken." That statement is false.

[kerryk]

Free for all. It will make Nike, Bristol Myers and all other foreign companies proud that the Thai facilities use cheap, below minimum wage workers with no benefits, health care, or social safety net. Let's run out and buy those sneakers and pharma products "made in Thailand."

You are joking right? Pride. There is profit and loss. Not pride and loss. Shareholders stock holders who have no idea what you are talking about they are Chinese anyway. I can see the Chinese stock holders calling up the board complaining about Thai minimum wages. Or the Saudis taking a minute out from beating the maid to make the phone call to Bristol Myers, asking why they are not paying minimum wage in Thailand.

[Thai at Heart]

Should is the key word in your post. Who says should? The company? It's stockholders? The politicians that are in the company's pocket? Of course the people who run Thailand want millions of migrant laborers in the country as it makes real wages lower. My hotel room was cheaper because of Burmese labor. My shirt is cheaper because of Burmese labor. My only question is when it will trickle down to the bar level. I would estimate currently only 10% of bar employees are Burmese.

And it will put millions of Thais out of jobs. If that is what is wanted, lets wait and see where Thailand ends up in 5 years time. We aren't talking about a country with massive social safety nets here. If millions of 300 baht a day workers are bid out of jobs by Burmese on 200 baht a day, what the hell is going to happen to society here? This isn't Saudi where the GDP per head is 30k+ USD per year.

I was in a chicken processing factory the other day, world class installation, 2 Japanese managers, maybe 20 Thai middle managers, and over 1000 Cambodians living in apartments specifically built for housing them. 95% of the product exported to Japan. The entire business model of the place was based around essentially exploiting Cambodian wage rates whilst securing investment under Thai law. All very well and good you could say, but after asking around, they never actually advertised the jobs for the local population to apply, so whilst a few middle guys get paid, the economic benefits of the investment fly their way across the border to Cambodia every month.

The problem is : will a Thai accept the job for the minimal wage ? Or just accept the job ?

The message I get from business people in Thailand is that there is no problem to hire sales girls for a 7/11 or an Amazon coffee shop. Light work, air cond ... no problem. But if you just need to find someone to load/unload a truck, a very basic task, you won't find anybody, even paying above the minimal wage.

In my village in Bangkok, everybody complain. It's impossible to find a Thai maid or a thai gardener. All the signs in the village are both in Thai and in Burmese.

It's clear that there are a number of jobs that Thai are no longer willing to do. That's the real problem, not the minimal wage.

This is an interesting problem. I know for example that one of the largest chicken processors for example has a policy not to use imported labour even though it will cost them money, they pay minimum for brand new workers and then increase accordingly, others simply employ imported labour from the very beginning.

There is a range of large industry near my town up country, and they are always struggling to get people, because of years of migration to the cities. One textiles business is going through a huge expansion though that I know of, and I would presume having to pay higher wages. There is a big movement from Ayuttaya to Kabin, Prachin and other up country areas at the moment, and the companies in those areas are bitching about how these companies are importing their higher wage rates to these areas. What I doubt will happen is that these companies will get around it by importing thousands of migrant workers.

I hear this sentiment all the time that there are jobs that Thai's aren't willing to do, some of it maybe true, some not, but I still don't see the rationale to allow companies to import completely foreign labour from start up as I have seen in one chicken processor. The relationship between geography, availability of work, and wages has basically encouraged millions to move to Bangkok from the provinces. This will probably start to be slowly reversed as costs of living in the cities rises, and companies start to decamp from the flood area to other areas.