New wage means fall in income, workers complain

The Nation

BANGKOK: -- A number of workers at Molnlycke Health Care (Thailand) found their monthly income falling after the government's policy to raise the daily minimum wage to Bt300 took effect in April 1, because their employer had stopped paying performance-based incentives.

"We used to earn more than Bt17,000 a month, but now our monthly income stands at around only Bt13,000," Natnapas Kaewthong said yesterday in her capacity as chair of the company's labour union.

Molnlycke Health Care (Thailand) has hired more than 1,000 people at its two factories, one in Samut Prakan and the other in Chon Buri. It is a manufacturer of surgical gowns.

Natnapas said the company had pressured 96 per cent of its workers to sign their consent for the cut in performance-based incentives.

"Those who refused have been transferred to other divisions or a new work shift. Those who've given their consent get a one-month bonus," Natnapas said when she showed up at the Labour Protection and Welfare Department to ask for help yesterday. She was accompanied by 21 other workers.

According to Natnapas, the Labour Protection Act requires the company must have discussions with its labour union when it wants or needs to change employment conditions or reduce workers' welfare.

"But the company's management has not followed the law. It has summoned the workers one by one to demand they sign the consent form," Natnapas said.

She said 22 executives and members of the labour union were suspended from work after they spoke up against the company's move they said was unfair."

The company must stop harassing the workers who have refused to give their consent to the change in their welfare conditions," Natnapas said. "The company must abide by laws".

She also demanded the employer allow the suspended workers to go back to work and stop using pressure tactics.

The executives of the Labour Protection and Welfare Department have promised to talk to the management of the Molnlycke Health Care (Thailand) to settle the dispute.

-- The Nation 2012-06-12

So what have we learned from this boys and girls ?...be careful what you wish for, or vote for...you might just get it...

It appears the company has acted in an inappropriate manner,but how did the goverment think all this minimum wage thing was going to be paid for ?....someone has to pay the piper...

The really stupid thing here though is that normally when a company offers performance related pay or bonuses, it means the workers....well..perform! If you take that pay principle away, they will find that the workers stop performing. What's the point of going the extra mile for an employer who takes the reward away. The company will go downhill in the longterm.

"The company will go downhill in the longterm"

You have hit the nail on the head but since when do most businesses in this country look to the long term? When sales are down, raise prices to maintain profits. When sales are up, raise prices to make more, until they start down again and then raise prices again. Stick it to the employees to raise profits. I work in construction.It is very common for companies to hire people for 89 days and dump them to avoid severance pay. In the end, poor quality work and delays which cost the company money but they don't seem to care since they made a profit last month.

They've just implemented a version of Parkinson's Law - work expands to fill the time of day.

"The company will go downhill in the longterm"

You have hit the nail on the head but since when do most businesses in this country look to the long term? When sales are down, raise prices to maintain profits. When sales are up, raise prices to make more, until they start down again and then raise prices again. Stick it to the employees to raise profits. I work in construction.It is very common for companies to hire people for 89 days and dump them to avoid severance pay. In the end, poor quality work and delays which cost the company money but they don't seem to care since they made a profit last month.

But you reallise that Molnycke is not a Thai company,do you?

Wow, who would have thought?....

'Government interference in business brings negative unforseen consequences'....

Thailand is not fundamentally strong enough to move away from a low wage model. The country is playing with fire now that the English speaking sleeping giant of Burma is awakening.

The really stupid thing here though is that normally when a company offers performance related pay or bonuses, it means the workers....well..perform! If you take that pay principle away, they will find that the workers stop performing. What's the point of going the extra mile for an employer who takes the reward away. The company will go downhill in the longterm.

NO...the company will just relocate to Myanmar.

At the AEC 2015 Conference yesterday Sampan Silapanad, president of the Electronics and Computer Employers' Association and Vice-president of Western Digital, said

"Thailand has lost its competitiveness in skilled human resources. In addition, the minimum wage hike to 300 baht per day in April has made Thai wages uncompetitive with Malaysia."

and noted that the Sector currently employs 200,000 people but that could shrink by half in the next 3 years.

As someone already said, Government interference is business is very dangerous, usually legislators have no experience of actual Business. Anyone in business here could see that the huge increase in the Minimum Wage would have serious knock-on effects.

Patrick

At the AEC 2015 Conference yesterday Sampan Silapanad, president of the Electronics and Computer Employers' Association and Vice-president of Western Digital, said

"Thailand has lost its competitiveness in skilled human resources. In addition, the minimum wage hike to 300 baht per day in April has made Thai wages uncompetitive with Malaysia."

and noted that the Sector currently employs 200,000 people but that could shrink by half in the next 3 years.

As someone already said, Government interference is business is very dangerous, usually legislators have no experience of actual Business. Anyone in business here could see that the huge increase in the Minimum Wage would have serious knock-on effects.

Patrick

At the risk of being accused of veering off topic the converse is also true. US politics is run by Big Business and a crappy foreign policy is one of the results.

"The company will go downhill in the longterm"

You have hit the nail on the head but since when do most businesses in this country look to the long term? When sales are down, raise prices to maintain profits. When sales are up, raise prices to make more, until they start down again and then raise prices again. Stick it to the employees to raise profits. I work in construction.It is very common for companies to hire people for 89 days and dump them to avoid severance pay. In the end, poor quality work and delays which cost the company money but they don't seem to care since they made a profit last month.

But you reallise that Molnycke is not a Thai company,do you?

They may be Swedish but they are acting a lot like most Thai companies, as do many foreign owned companies in this and many other Asian countries. One set of standards for their home country and another for overseas operations. You can bet they would not get away with intimidating workers into signing away their payment conditions and transferring out people who didn't sign in Seden, UK, US or where ever else they operate in the Western world.

minimum wage hikes by our beloved Czar Obama, have kept teenage unemployment at about 40% in the States. Good job, boy.

but it also have kept full 100 % employment in China.

Just what the PTP wanted to happen, less of a divide between the haves and the have nots.

"The company will go downhill in the longterm"

You have hit the nail on the head but since when do most businesses in this country look to the long term? When sales are down, raise prices to maintain profits. When sales are up, raise prices to make more, until they start down again and then raise prices again. Stick it to the employees to raise profits. I work in construction.It is very common for companies to hire people for 89 days and dump them to avoid severance pay. In the end, poor quality work and delays which cost the company money but they don't seem to care since they made a profit last month.

But you reallise that Molnycke is not a Thai company,do you?

They may be Swedish but they are acting a lot like most Thai companies, as do many foreign owned companies in this and many other Asian countries. One set of standards for their home country and another for overseas operations. You can bet they would not get away with intimidating workers into signing away their payment conditions and transferring out people who didn't sign in Seden, UK, US or where ever else they operate in the Western world.

Had companies wanted to operate under the rules of their home country, thay would not be here.

Just what the PTP wanted to happen, less of a divide between the haves and the have nots.

I.E. no one has anything...

With exception of course

The missing figure here is how much would the wage be if the company still pays the performance related incentives.

The really stupid thing here though is that normally when a company offers performance related pay or bonuses, it means the workers....well..perform! If you take that pay principle away, they will find that the workers stop performing. What's the point of going the extra mile for an employer who takes the reward away. The company will go downhill in the longterm.

It is all about the dollar and cents. Can’t expect companies pay more in expenses when the income don’t change. Government motivation was for vote at the expense of employees. the results are simple, they cut cost where they can. Even paragon has fewer parking attendants after the wage hike

Several of the local businesses have solved the wage increase by cutting the number of employees (my personal oberservation is, about 1 in 4 reduction or in some cases replaced by family). Reducing incentive pay is another way to hold the salary expense down. Those astute business people have been finding ways to reduce salaries since the wage increase was announced.

Those who forcast additional money being put into circulation, raise in standard of living, etc, due to mandated wage increases, are just demonstrating how little they know/understand about the real business world. This should be expected when you consider that most of those who proposed this vote getter have been living off of ill gotten money most of their lives.

let's wait and see when this happens to many thousands of other companies

election promises, the same in every country... when the vote is in, the lying can stop and you can face the music

It takes a highly unethical company to turn a wage hike into lower labor costs in this fashion.

Companies breaking the labor laws - such as this one - should be charged and held accountable.

Period.

It takes a highly unethical company to turn a wage hike into lower labor costs in this fashion.

Companies breaking the labor laws - such as this one - should be charged and held accountable.

Period.

You are missing the point. This is less about companies breaking labour laws and more about companies relocating to other Asian Countries not encumbered with such legislation.

This is one of the straws that will break the back of manufacturing. Happened in the UK after the second World WAR, when the socialists decided that labour was too cheap, the UK lost it's great manufacturing base to overseas Countries who were desperate for the work.

Edited June 12, 201214 yr by rodentwarrior

It takes a highly unethical company to turn a wage hike into lower labor costs in this fashion.

Companies breaking the labor laws - such as this one - should be charged and held accountable.

Period.

When the government tells you to raise wages and then follows with "do not increase prices. as this is inflationary" the businesses are going to find ways to benifet themselves somehow. I know a few companies who were paying college graduates more than the mandated 15,000/month, but not in straight salary. They will figure away to delete some cash benifits and go with what they are told to do. Pay 15,000. That is the nature of many businesses thinking, when someone (government) makes mandates with no background/experience to forcast potential problems.

It takes a highly unethical company to turn a wage hike into lower labor costs in this fashion.

Companies breaking the labor laws - such as this one - should be charged and held accountable.

Period.

You are missing the point. This is less about companies breaking labour laws and more about companies relocating to other Asian Countries not encumbered with such legislation.

This is one of the straws that will break the back of manufacturing. Happened in the UK after the second World WAR, when the socialists decided that labour was too cheap, the UK lost it's great manufacturing base to overseas Countries who were desperate for the work.

Actually, no, I am not missing the point.

The article is about companies who break the law, and the workers who suffer.

It takes a highly unethical company to turn a wage hike into lower labor costs in this fashion.

Companies breaking the labor laws - such as this one - should be charged and held accountable.

Period.

When the government tells you to raise wages and then follows with "do not increase prices. as this is inflationary" the businesses are going to find ways to benifet themselves somehow. I know a few companies who were paying college graduates more than the mandated 15,000/month, but not in straight salary. They will figure away to delete some cash benifits and go with what they are told to do. Pay 15,000. That is the nature of many businesses thinking, when someone (government) makes mandates with no background/experience to forcast potential problems.

That some businesses are more greedy than ethical is perfectly clear - but that is what you are describing.

It could be that the company you describe is not breaking the law, but that is not the case for the company discussed in this article.

It takes a highly unethical company to turn a wage hike into lower labor costs in this fashion.

Companies breaking the labor laws - such as this one - should be charged and held accountable.

Period.

The company switched from performance-based incentives to average wage model.

We can suppose that before the minimum wage was introduced, about 50% of workers had average performance, 25% lower than average and 25% better than average.

Now everybody gets the same, the good workers are unhappy and will eventually move on, and the company is stuck with the low-performers who are now over-paid.

As far I have experienced, no one is ever satisfied. Every one always wants more. Owning and operating a small business in this age is fraught with difficulty.

While I think cutting worker benefits generally sucks, at 13,000 baht their reduced wage is still more than double the 300 baht/day minimum.

I would not be surprised if this cut was the company's reaction to having to pay their worst paid workers (not mentioned in the article) more, ie. it could be seen as a redistribution of salary benefits. Of course, I would also not be surprised if it was just the management being pigs, but the article is somewhat one-sided.

How many people have owned a business in Thailand and dealt with the labor laws, labor department, labor courts? It is really very very difficult. Thailand is not competitive with most of its neighbors in so many ways.

Wow, who would have thought?....

'Government interference in business brings negative unforseen consequences'....

Thailand is not fundamentally strong enough to move away from a low wage model. The country is playing with fire now that the English speaking sleeping giant of Burma is awakening.

Interesting you should say that. I have noticed recently that the standard of English amongst some Burmese people was surprisingly good. A student of mine even conversed with Burmese in English on a trip to Rangoon. I kind of thought the remnants of their British heritage had been washed away but as with French speakers in Laos and Vietnam it seems not to be the case.

Edited June 12, 201214 yr by bigbamboo

It takes a highly unethical company to turn a wage hike into lower labor costs in this fashion.

Companies breaking the labor laws - such as this one - should be charged and held accountable.

Period.

The company switched from performance-based incentives to average wage model.

We can suppose that before the minimum wage was introduced, about 50% of workers had average performance, 25% lower than average and 25% better than average.

Now everybody gets the same, the good workers are unhappy and will eventually move on, and the company is stuck with the low-performers who are now over-paid.

The OP states clearly that the company coerced the employees illegally into changing their contracts.

Basta.