Minimum Wage Hike Was Too Hastily Promised: Thai Editorial

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EDITORIAL

Minimum wage hike was too hastily promised

The Nation

BANGKOK: -- The rise in wages has not boosted the economy as the govt hoped; now it will have to face wider repercussions as the policy is applied nationwide

The government is wrong in hoping that the minimum wage rise will inflate the economy. The latest research by the Thai Chamber of Commerce shows that the wage rise, applied two months ago in seven provinces, has done little to boost the gross domestic product (GDP), as the government had hoped.

The government's plan was to use the minimum wage to drive the economy, but the actual GDP has risen by only 0.5 per cent. This is bad news. While the GDP figure did not rise as expected, labourers feared losing their jobs because employers might switch to using machinery to offset increased labour costs. Industries have complained that the wage rise affects the cost of production while productivity has not improved. Saha Group, for instance, has seen the costs of its companies rise by Bt1.5 billion per year because of the wage rise.

The Chamber of Commerce conducted the survey in the seven provinces that applied the minimum wage hike in April. Even in those provinces where the old minimum wage was closer to the new level, 13.25 per cent of the firms had reduced their workforce to cut costs that increased mainly due to the wage hike.

The big challenge will come when the new wage is applied nationwide, starting on January 1. The average wage upcountry is currently between Bt222 and Bt275. The new wage of Bt300 is therefore a big jump for many small employers.

The survey also showed that labourers have not enjoyed being able to spend extra money as a result of the higher wage. In fact, many felt negatively about future job prospects. Indeed, the wage rise has not resulted in higher economic growth because many labourers prefer to save their money for an uncertain future.

Labourers who depend on the minimum wage tend to be low-skilled workers who can often be replaced by machinery. The minimum wage hike was a popular issue during the election campaign last year, especially when politicians outdid their competitors by promising higher wages. But in reality these politicians need to consider other factors to ensure that the wage policy does not have more negative consequences than positive.

The Chamber of Commerce has shown, for instance, that the wage rise hurts small and medium-sized enterprises at a time when they should be strengthened. The big corporations, meanwhile, benefit from a corporate income-tax reduction.

Secondly, a rise in labour cost does not always result in increased productivity. Workers need to be trained to multi-task in order to raise their capacity in line with the increase in wages.

The government should have taken these factors into consideration before promising that the Bt300 minimum wage would be applied nationwide. It now has to go ahead with the wage hike to honour its election promise or be punished by the voters next time. Perhaps more importantly, the government now has to consider ways to prepare workers and private firms for the nationwide wage hike, which is only months away.

Training must be enhanced to improve the value of the workforce. Otherwise, corporations will readily switch to machinery, which is often cheaper than manpower. Technology and innovations should be promoted to create a competitive edge for Thai industries in the longer term. The country will not enjoy sustainable growth if it cannot move away from its current labour-intensive production base.

-- The Nation 2012-06-19

[Notstupid30]

not rocket science to work that one out also the same could be said about free tablets ...

Edited June 18, 2012 by Notstupid30

[theblether]

It was a nonsense idea from the start..........I'm not against wages rising but it's madness to impose this type of rise when the global economy is stagnating, the competition is getting fiercer, and the country is recovering from the floods.

Let the market find it's way, the market will pay higher for skilled workers, the market will pay higher to attract and retain the workforce in industrial production, and the market can share profits.

Governments shouldn't interfere, especially this one.........market forces will find their way, they always do.

[Notstupid30]

It was a nonsense idea from the start..........I'm not against wages rising but it's madness to impose this type of rise when the global economy is stagnating, the competition is getting fiercer, and the country is recovering from the floods.

Let the market find it's way, the market will pay higher for skilled workers, the market will pay higher to attract and retain the workforce in industrial production, and the market can share profits.

Governments shouldn't interfere, especially this one.........market forces will find their way, they always do.

High skilled workers just made me laugh really hard sorry ...

Edited June 18, 2012 by Notstupid30

[slapout]

The promised wage hike was made to secure votes, nothing more. The staging in of same and comments on stimulating the economy came after the votes were tallied and the government was called to fulfill their promises.

The real changes/promises that were made, have yet to be implemented, as the population were led to believe they would be.

[sirchai]

Why just in seven provinces? Yingluck's promises including free tablets, wireless at schools without electricity says it all....

[theblether]

It was a nonsense idea from the start..........I'm not against wages rising but it's madness to impose this type of rise when the global economy is stagnating, the competition is getting fiercer, and the country is recovering from the floods.

Let the market find it's way, the market will pay higher for skilled workers, the market will pay higher to attract and retain the workforce in industrial production, and the market can share profits.

Governments shouldn't interfere, especially this one.........market forces will find their way, they always do.

High skilled workers just made me laugh really hard sorry ...

Ehm........I walked into that one didn't I ?

[Notstupid30]

It was a nonsense idea from the start..........I'm not against wages rising but it's madness to impose this type of rise when the global economy is stagnating, the competition is getting fiercer, and the country is recovering from the floods.

Let the market find it's way, the market will pay higher for skilled workers, the market will pay higher to attract and retain the workforce in industrial production, and the market can share profits.

Governments shouldn't interfere, especially this one.........market forces will find their way, they always do.

High skilled workers just made me laugh really hard sorry ...

Ehm........I walked into that one didn't I ?

Sure did mate ...

[noitom]

Thai policy decisions - too hasty? Impossible. Every decision made in Thailand is well thought through, researched, and strategically implemented for the benefit of the Thai people always.

[Moruya]

They will plough on regardless.

Blindly

[SuneeTH]

If the poor becomes rich, who would be the newly poor? Us?

[Yunla]

If the poor becomes rich, who would be the newly poor? Us?

The only people becoming rich under the PTP administration are PTP members and their families and their friends. Thats what happens when you elect larcenous gangsters into office.

[Narratio]

Whinging rant time -

What depresses me is when reasonably smart politicians, who had a western education and have seen the effects of minimum wage levels in action - and western Europe / USA have been doing it for pretty much a century now - could have thought that minimum wages were a really good idea in a mainly agrarian society.

Forget the vote buying aspect for the moment. Minimum wages always drive prices up to correspond with that new minimum, nothing really changes.

Of course another pet peeve of mine is in levying taxes on corporations, they just add 1 penny to the cost of the widget, multiply it by selling a million widgets and, yep, the consumer pays the added tax..

End of whinging rant

[samjaidee]

It was a nonsense idea from the start..........I'm not against wages rising but it's madness to impose this type of rise when the global economy is stagnating, the competition is getting fiercer, and the country is recovering from the floods.

Let the market find it's way, the market will pay higher for skilled workers, the market will pay higher to attract and retain the workforce in industrial production, and the market can share profits.

Governments shouldn't interfere, especially this one.........market forces will find their way, they always do.

High skilled workers just made me laugh really hard sorry ...

Read it again. It doesn't say "high skilled workers", it clearly says "pay higher for skilled workers". What could possibly be funny about that?

The humour is in your mind, not on the screen.

[Moruya]

The minimum salary was always just an election tool - an advance bribe

Any serious politicians would have thoroughly researched a gradual increase in wages and would have discussed the implementation with business leaders.

[h90]

It was a nonsense idea from the start..........I'm not against wages rising but it's madness to impose this type of rise when the global economy is stagnating, the competition is getting fiercer, and the country is recovering from the floods.

Let the market find it's way, the market will pay higher for skilled workers, the market will pay higher to attract and retain the workforce in industrial production, and the market can share profits.

Governments shouldn't interfere, especially this one.........market forces will find their way, they always do.

Instead government could have slightly reduce the amount of Myanmar and Cambodia workers, or keep their numbers the same if the economic grows, so there is competition to snatch the best workers and there is pressure to do more work with the same amount of people. This gradually.

Alternative if they really want to increase the minimum salary (what I think is a stupid idea), than they should have done it in all areas and in small steps, every 3 month a few Baht more. So the companies can adjust to it. As well reduce the foreign workers at the same time.

[bigbamboo]

It would seem that the penny is dropping all over the place now...... even in the Thai Chamber of Commerce.

[MEL1]

It would seem that the penny is dropping all over the place now...... even in the Thai Chamber of Commerce.

I never knew 'the penny' was a synonym for 'the shit'.

-mel.

[tlansford]

The rise in wages has not boosted the economy as the govt hoped; now it will have to face wider repercussions as the policy is applied nationwide

... says The Nation and the Thai business lobby - these guys never give up.

1) they should know how little one can even measure the economy changes in the last 6 weeks. But that won't stop them from making pronouncements based on nil...

2) Thai CoC would be better off helping businesses comply with the law rather than trying to shoot it down. What has been reported are the businesses trying to cheat their employees.

3) This article is full of numbers out of context and typical pro-business conventional wisdom. But the objective is just to oppose a policy which is good for working people.

Typical BS Nation editorial.

[somtumlion]

The rise in wages has not boosted the economy as the govt hoped; now it will have to face wider repercussions as the policy is applied nationwide

... says The Nation and the Thai business lobby - these guys never give up.

1) they should know how little one can even measure the economy changes in the last 6 weeks. But that won't stop them from making pronouncements based on nil...

2) Thai CoC would be better off helping businesses comply with the law rather than trying to shoot it down. What has been reported are the businesses trying to cheat their employees.

3) This article is full of numbers out of context and typical pro-business conventional wisdom. But the objective is just to oppose a policy which is good for working people.

Typical BS Nation editorial.

And the obligatory red shirt tv denoucements of such. The good Lord loves consistency.

[somtumlion]

All sides in Thai politics are idiots. Why you "my side is right and yours is wrong" types haven't figured that out by now is beyond me.

Edited June 19, 2012 by somtumlion

[tlansford]

The rise in wages has not boosted the economy as the govt hoped; now it will have to face wider repercussions as the policy is applied nationwide

... says The Nation and the Thai business lobby - these guys never give up.

1) they should know how little one can even measure the economy changes in the last 6 weeks. But that won't stop them from making pronouncements based on nil...

2) Thai CoC would be better off helping businesses comply with the law rather than trying to shoot it down. What has been reported are the businesses trying to cheat their employees.

3) This article is full of numbers out of context and typical pro-business conventional wisdom. But the objective is just to oppose a policy which is good for working people.

Typical BS Nation editorial.

And the obligatory red shirt tv denoucements of such. The good Lord loves consistency.

Believing in worker rights, a decent wage, and employment laws is not a red shirt comment.

[tlansford]

It was a nonsense idea from the start..........I'm not against wages rising but it's madness to impose this type of rise when the global economy is stagnating, the competition is getting fiercer, and the country is recovering from the floods.

Let the market find it's way, the market will pay higher for skilled workers, the market will pay higher to attract and retain the workforce in industrial production, and the market can share profits.

Governments shouldn't interfere, especially this one.........market forces will find their way, they always do.

regarding minimum wage, the market, left to its own, is a race to the bottom. Always will be.