Bt300 Minimum Wage A Failure, Survey Says

[slapout]

Pitiful. This is the main problem with capitalism, its unequal distribution of wealth. The exploitation of Thai workers is an abomination which this law was intended to begin to correct. How can the business owners and corporate executives sleep at night knowing full well they are maintaining the poverty life-styles of their fellow Thais? Despicable, selfish, and cowardly.

It seems that many times we blame the system/idea (capitalism, demoracy, etc) when its the individuals involved, who take, and those who permit them to take advantage of the system. Some countries seem to have the where with all, to corrupt consipts which have proved successful, elsewhere. In Thailand, I have heard the word "Thaionized" used to describe this, whereas the more astute observor may note "they could break an anvil".

[rubl]

How does stating 80 Bhat / 2 € cause distortion?

Because when you quote a figure in Euros the natural thing to do is to imagine trying to spend this sum in Europe, not Thailand. The value of 2 Euros in France is much less in terms of what it can buy you, than the value of 80 Baht in Thailand.

For some 80 Baht is three noodle meals (barely nowadays with prices going upwards). Of course 80 Baht is peanuts to some others

Edited July 22, 2012 by rubl

[kimamey]

The worst thing about it is that all those people have to contend with higher prices because of the wage hike that they didn't get. 5000 odd people is also probably the tip of the ice burg. Probably the only people that get the full wage promised would be government workers that would mean the cost of the government would have to rise as well.

My Thai gf works in local government and although she isn't on the minimum wage her pay rise this year has been postponed. When I asked when she thought she would get her pay rise she said " Maybe have to wait for new government". I'm not sure if she was joking.

[kimamey]

Agree with JimGant, Lifer

Anyone with a basic education in economics would know, that the 300Baht minimum wage must fail.

Business owners who not comply with this - election pledge based - law just protecting the Thai economy.

Let's have a look on that from a macro economic view :

(might be a bit rough, to break this down to a single business, but since the law effects the whole economy)

Irving Fisher (1867 – 1947) formulated the quantity theory of money in terms of the "equation of exchange":

MV = PT

with:

-----

M = the total stock of money,

P = the price level,

T = the amount of transactions carried out using money (= all goods in a economy)

V = the velocity of circulation of money

Let's have a deeper look on this with focus on 300Baht minimum wage:

V = It's common sense that velocity of circulation of money is relatively constant in an economy. (So I will set this to "1" to simplify the equation):

M = PT

T = the amount of transactions carried out using money

Understandably changing the minimum wage will have no effect on the quantity of produced/available goods.

So T is also an constant value in such case.

Taking this into account M (the total stock of money) would be equal to P (the price level).

M = P

And that is what we see daily, while shopping, eating in a restaurant,...

Raising the total stock of money (e.g. by nearly double minimum wages) without measurements for a higher productivity (T - more goods) will raise the price level (P).

Raised price levels in such a construct will lead to a lower value of the money --> inflation.

On the other hand, this theory shows what happens if higher price levels can not be reached also.

If a business can't raise the price level (P), and cant raise the productivity (T - more goods), then the factor wich influences M (the total stock of money) needs to be influenced (this time not by government regulation but business reaction) - in other words, lay-offs, business closures, or shifting to a more favourable location.

Just a very simplified macro econonomic view, ...

PS:

I am not against higher wages, but there has to be productivity improvement in line. Policy based "gifts" make the situation just worst of everyone. (Higher prices for those who can get the policy based wage, and no money for those who loose their job or business, and reduced spending power for thoose who already had a higher income due to raised prices, but most likely no adaption of their salaries.)

Just to give a positive example:

I learned about a company which educates unskilled workers for their business needs within the first 2 years, pays them a salary which is much higher then a graduate may earn by this populistic law - and nothing is wrong with that. The output of this workforce is equal to the received salary. The company has a low fluctuation of employees, quality products, and they are successful while doing so.

nice theory.

Has, however, nothing to do with a successful 300B minimum wage. And the min wage must not fail. Another common mistake is that there must be a corresponding increase in productivity with a min-wage hike.

The point missed is that the min wage is a floor. If a job is to be done, then it needs to pay X amount. The very good reason for doing this is for the overall benefit of the society. This still leaves the market conditions in place to decide if a job should be done at X amount or not. It just cannot be done for less. Some here call that fiat - others call it limits. And businesses deal with limits all the time, so that is not new to them.

Enforcement of the labor laws is a good idea IMO. There seems to be some room to criticize the current situation for a lack of clear guidelines. But most of the blame should be placed on the businesses refusing to comply with the law.

Coming back to your equations and conclusions, this argument does not use real numbers. The implication of that is that if an increase to a 300B minimum wage must fail, then any increase in the minimum wage in the past must have failed, too. This is clearly not true.

I am not arguing that an increase in the minimum wage has no impact at all. It is that, on one hand, the increase will not be the catastrophe depicted here, and on the other, if it is properly implemented / enforced, it has the ability to improve the quality of life for a poor segment of society.

The economy is not a zero-sum game.

I think this policy was always going to fail for 2 reasons.

1. You can't just increase the minimum wage that quickly as it will pus up cost in a very short time. The way to do it is as other countries do by raising at a slower rate to reach the desired amount. Obviously the minimum will probably be more than 300 baht as the target will need to be increased as well to take account of normal inflation. The point being if you increase wages by a bit more than you would normally the wage will become fairer without causing as many problems for businesses.

2. The government will have known this policy was stupid when they proposed it but of course it's easier to promote than the more sensible and achievable slow method I mentioned before. They I am sure had no intention of forcing the issue as they knew it wouldn't work.

As it happens the policy was never implemented anyway so it is now being brought in more slowly which in some ways is better but the government should see that it is enforced and for all workers not just Thais as otherwise migrant workers will be used instead.

I'm all for a decent wage for workers in Thailand but I have a feeling this was never the PTP's motivation for the policy in the first place. This is the time for a credible opposition to press the government on the issue. This is the time for Abhisit to do his job for the sake of low paid Thais although I doubt he'll win much support from them if he tries to push the slow implementation of the minimum wage and including foreign migrants as well. The right thing isn't always the most popular.

To those companies with low skilled workers that are paying at least the minimum. Well done.

Just one other thing. Whilst I was in the UK and the rice needed to be cut my gf said she tried to get someone to help but she would only pay 250 baht a day and she had to wait as those she asked were getting 300baht elsewhere although her brother did help as far as I know for 250. I told her she should pay 300 baht but then what do I know and anyway I was only paying.

[tingtongfarang]

out of curiousity tonight i asked two ladies i know well how much they earn per day, The first (single mother) works as an accountant and her salery works out to 160bht per day, she trades on forex in her spare time to make enough to live and keep her daughter in school,

The second works as a supervisor in a resteraunt kitchen and earns 67bht per day but gets free accomodation which means she shares a wooden shack with many of the other staff both male and female.

No offence meant. I do not doubt what you write, I would only like to know the location. It is witihin the seven provinces the 300B/day minimum was declared, or outside?

Both work in the area of bangkapi and both are thai citizens. Edited July 22, 2012 by tingtongfarang

[rubl]

out of curiousity tonight i asked two ladies i know well how much they earn per day, The first (single mother) works as an accountant and her salery works out to 160bht per day, she trades on forex in her spare time to make enough to live and keep her daughter in school,

The second works as a supervisor in a resteraunt kitchen and earns 67bht per day but gets free accomodation which means she shares a wooden shack with many of the other staff both male and female.

No offence meant. I do not doubt what you write, I would only like to know the location. It is witihin the seven provinces the 300B/day minimum was declared, or outside?

Both work in the area of bangkapi and both are thai citizens.

Thanks for the reply.

BangKapi is Bangkok province, so 300 Baht /day wage would apply!

[Jawnie]

Pitiful. This is the main problem with capitalism, its unequal distribution of wealth. The exploitation of Thai workers is an abomination which this law was intended to begin to correct. How can the business owners and corporate executives sleep at night knowing full well they are maintaining the poverty life-styles of their fellow Thais? Despicable, selfish, and cowardly.

Most of the businesses in Thailand are small family enterprises, and quite often the nett income of the family workers does not equal the new minimum wage. Should we legislate fro minimum profits too, or simply allow the inflation caused by lump increases in wages to reduce the lifestyles of these people?

Other businesses have incomes that allow for the owners to have a reasonable income greater than the wage they pay their employees. They must be allowed earnings to compensate for their capital outlay and entrepreneurship, otherwise businesses will never be started. Why should they be penalised with a savage increase in labour costs, giving them the choice of reducing already slim margins or increasing costs so as to become uncompetitive?

The B300/day policy was not aimed at equal distribution of wealth but buying of votes from the uneducated and gullible who could not foresee the likely consequences.

It is not a "penalty" to require businesses with employees to pay employees a living wage. Yours is the same false "the sky is falling" scare tactic about lost jobs, businesses won't be started, etc., used by all pro-business people every time the topic of fair pay comes up. There is no proof of what you say, it is only rhetoric.

A business in not viable if it can not pay its employees a working wage. If a business can only exist by paying workers subsistence (or lower) pay, it isn't a viable business and it is taking more from society that it gives through the devaluation and de-humanization of its employees.

[OzMick]

Pitiful. This is the main problem with capitalism, its unequal distribution of wealth. The exploitation of Thai workers is an abomination which this law was intended to begin to correct. How can the business owners and corporate executives sleep at night knowing full well they are maintaining the poverty life-styles of their fellow Thais? Despicable, selfish, and cowardly.

Most of the businesses in Thailand are small family enterprises, and quite often the nett income of the family workers does not equal the new minimum wage. Should we legislate fro minimum profits too, or simply allow the inflation caused by lump increases in wages to reduce the lifestyles of these people?

Other businesses have incomes that allow for the owners to have a reasonable income greater than the wage they pay their employees. They must be allowed earnings to compensate for their capital outlay and entrepreneurship, otherwise businesses will never be started. Why should they be penalised with a savage increase in labour costs, giving them the choice of reducing already slim margins or increasing costs so as to become uncompetitive?

The B300/day policy was not aimed at equal distribution of wealth but buying of votes from the uneducated and gullible who could not foresee the likely consequences.

It is not a "penalty" to require businesses with employees to pay employees a living wage. Yours is the same false "the sky is falling" scare tactic about lost jobs, businesses won't be started, etc., used by all pro-business people every time the topic of fair pay comes up. There is no proof of what you say, it is only rhetoric.

A business in not viable if it can not pay its employees a working wage. If a business can only exist by paying workers subsistence (or lower) pay, it isn't a viable business and it is taking more from society that it gives through the devaluation and de-humanization of its employees.

Great - the business that WAS viable yesterday gets a wage hike of 50%+ and is no longer viable so it shuts down. The employees that WERE getting B200/day now get SFA as they are unemployed. I wonder which way they would vote in your little morals crusade.

Give me one good reason why the minimum wage couldn't be increased over a period of time, say 10% every 6 months, to allow businesses time to adapt.

[Jawnie]

Pitiful. This is the main problem with capitalism, its unequal distribution of wealth. The exploitation of Thai workers is an abomination which this law was intended to begin to correct. How can the business owners and corporate executives sleep at night knowing full well they are maintaining the poverty life-styles of their fellow Thais? Despicable, selfish, and cowardly.

Most of the businesses in Thailand are small family enterprises, and quite often the nett income of the family workers does not equal the new minimum wage. Should we legislate fro minimum profits too, or simply allow the inflation caused by lump increases in wages to reduce the lifestyles of these people?

Other businesses have incomes that allow for the owners to have a reasonable income greater than the wage they pay their employees. They must be allowed earnings to compensate for their capital outlay and entrepreneurship, otherwise businesses will never be started. Why should they be penalised with a savage increase in labour costs, giving them the choice of reducing already slim margins or increasing costs so as to become uncompetitive?

The B300/day policy was not aimed at equal distribution of wealth but buying of votes from the uneducated and gullible who could not foresee the likely consequences.

It is not a "penalty" to require businesses with employees to pay employees a living wage. Yours is the same false "the sky is falling" scare tactic about lost jobs, businesses won't be started, etc., used by all pro-business people every time the topic of fair pay comes up. There is no proof of what you say, it is only rhetoric.

A business in not viable if it can not pay its employees a working wage. If a business can only exist by paying workers subsistence (or lower) pay, it isn't a viable business and it is taking more from society that it gives through the devaluation and de-humanization of its employees.

Great - the business that WAS viable yesterday gets a wage hike of 50%+ and is no longer viable so it shuts down. The employees that WERE getting B200/day now get SFA as they are unemployed. I wonder which way they would vote in your little morals crusade.

Give me one good reason why the minimum wage couldn't be increased over a period of time, say 10% every 6 months, to allow businesses time to adapt.

I agree with a slow increase...as long as it is going up for grossly underpaid workers. Currently, they are being unabashedly cheated and robbed.

More to the point is the poor pay for college-educated although I disagree that they should get the first increases over others, such as service workers. Sounds like a recipe for accelerating the income gap. And, as soon as those higher-paid, educated workers get into management and ownership positions, they will scream the same "sky is falling" rhetoric when they are asked to raise wages. This is one of the main problems with capitalism.

[dazk]

Away from politics, Thais just don't want to work. Around here, many make less than 300 a day, yet trying to get some help offering 500 baht a day to help me move some dirt & sand , lay some grass, general tidy up and NO ONE wants to work.

The most common answer was I have enough money for now, maybe at the end of the month.

Incredible Thailand alright.

totally agree lazy work shy we paid staff well in the past and they leave as soon as they have enough money to last a month

[dazk]

is the minimum wage enforced anywhere in the world i know its not in the uk many still working for a fiver an hour or under

[Buchholz]

Energy expert: ฿300 minimum wage policy to raise oil production cost

BANGKOK, 11 September 2012 (NNT) – Mr. Manoon Siriwan, an energy expert, has warned that the 300-baht minimum wage policy that is to be enforced next year will result in a rise of oil production cost.

Mr. Manoon said that next year, the production costs of oil retailers will rise due to the government’s 300-baht minimum wage policy, which will come into effect nationwide on January 1st, 2013, as the oil business heavily relies on laborers.

Furthermore, since the oil marketing margin has remained unchanged at 1.50 baht per liter for several years, he viewed that retailers should consider increasing the rate soon in a bid to safeguard against losses even though oil prices will be affected.

The expert went on the say that the government should speedily conduct a research on the matter in order to adjust the marketing margin to a more appropriate level.

Additionally, Mr. Manoon also expressed worries over the government’s NGV price restructuring policy that is still under study. He noted that if no changes are made within this year, PTT Plc will have to continue bearing the burden from the retail NGV price that is lower than the production cost. As a consequence, the company will need to slow down in its NGV investment, which will eventually have an impact on consumers.

-- NNT 2012-09-11