Minimum Daily Wage: Nationwide Extension Spark Concerns

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MINIMUM DAILY WAGE

Nationwide extension spark concerns

PETCHANET PRATRUANGKRAI,

PRANEE MEUNPANGWAREE

THE NATION

BANGKOK: -- Private-sector organisations have called on the government to review its plan to extend the Bt300 minimum daily wage nationwide early next year amid uncertainty over global economic growth, which would result in the double whammy of reduced sales for exporters amid higher production costs.

They also urged the government to set up a standard for increasing wages systematically, saying ambiguous policy would encourage more Thai and foreign investors to shift their investment to other countries, especially less developed neighbouring nations.

Thai Chamber of Commerce (TCC) vice chairman Bhumindr Harinsult said the government should not rush to increase wages next year while the global economy is fluctuating because of the euro-zone financial crisis, which will affect Thai export growth and employment.

"More labour layoffs will be seen next year if the government carries on with its policy to raise the [minimum] wage nationwide. Many enterprises, particularly small and medium-sized firms, will need to close down or lay off employees as they cannot shoulder higher operating costs amid sluggishness trading," he said.

According to the TCC, about 7 per cent of SMEs have closed down this year because of higher labour costs. The unemployment rate has risen from 0.7 per cent before April to 1.1 per cent now. A consistent opponent of higher wages for labourers, the chamber claims unemployment will rise even further if the government persists with its policy.

Sukij Kongpiyacharn, president of the Thai Garment Manufacturers Association, said Thai exports next year would be severely hit by double trouble from the euro crisis and higher wages.

"Small firms upcountry will be greatly affected by the higher wage. Thai enterprises will be unable to increase prices easily amid lower purchasing power. If Thai traders increase prices, we may lose buyers to rivals. However, if we do not increase prices, we must shoulder higher production costs and face business losses because of higher wages," Sukij said.

He also called on the government to set clearer standards on wage-increase policy; doing otherwise would affect investor confidence, he claimed. He pointed out that higher labour costs would force enterprises to adjust their operations for the whole supply chain.

Somsak Srisuponvanit, chairman of the National Federation of Thai Textile Industries, said a nationwide Bt300 minimum wage would accelerate the relocation of Thai enterprises to poorer Asean countries, mainly to Myanmar because of lower labour costs and a high supply of workers.

He also called on the government to seek measures to help reduce costs of production and reduce value-added tax for importing machinery to offset higher labour costs.

Somsak claimed it was inevitable that some enterprises would close down next year, unless they turn to employing foreign labourers.

Prokchon Promgungwahn, managing director of Promgungwahn, a Chiang Mai producer and exporter of organic longan, said the higher wage had caused difficulties for his company since early this year. He said he had to increase the daily wage from Bt200-Bt250 to Bt300 in April, even though the higher minimum came into force in only seven provinces that month, because labourers insisted on enjoying the same increase immediately without having to wait for the nationwide policy.

He said the company would need to increase wages again next year after the expanded policy goes into effect. Yet at the same time, the firm cannot easily increase its prices for trading partners amid the slowing global economy.

Prokchon called on the government to implement measures to relieve the financial burden on SMEs to prevent more of them closing down next year.

Thai Autoparts Manufacturers Association spokesman Tawon Chalatsatien said the nationwide rise in the minimum wage would not seriously affect the auto-parts industry given that it is a high-value business. Businesses in this sector already pay daily wages of at least Bt300.

He added that raw materials, not wages, were the key cost in this sector, especially the cost of steel.

-- The Nation 2012-09-06

[Thait Spot]

Unemployment is rocketing up this year. I think it went up 100,000 last quarter. If that increases in Q3 then the heat will be on

[Jim walker]

Unemployment will not increase because of the miniscule wage increase an employer will just build this into his price to his customer, so it’s the customer who will pay the increase in wages at the end of the day not the employer

[hellodolly]

Unemployment will not increase because of the miniscule wage increase an employer will just build this into his price to his customer, so it’s the customer who will pay the increase in wages at the end of the day not the employer

Well you are probably rite the employer will give his workers a raise and then raise the cost of his product. It is called inflation.

The price will be to high on some of the extra things in life that are over and above the necessities that people will not be able to afford them. So some companies will go out of business thereby causing unemployment.

Congratulation's to the government. In one bit of action they have caused unemployment and inflation.

[chrisinth]

Unemployment will not increase because of the miniscule wage increase an employer will just build this into his price to his customer, so it’s the customer who will pay the increase in wages at the end of the day not the employer

Unfortunately its not that simple, or rather it is that simple. Companies have to remain competitive with their pricing; that is business. The larger companies will be able to offset a proportion of the money spent on the wage rise on reduced profit for their product (due to bulk buying of materials, discounts from manufacturer, etc) but the smaller companies will price themselves out of the system.

It will be the SME's that suffer through this 'one-step' pay increase, which according to results in the trial 7 provences is leading to businesses shuting down and unemployment increasing. Everybody want to see a reasonable minimum wage for their workers, but when it comes to the lower paid provences and the increase to 300 baht may mean a 100% pay raise, a lot of the smaller companies will fold.

Mark my words on that one............

Edit: Jim, you call it a miniscule wage increase, which it would be in the West. It can mean a massive increase in this country/region.

@ hellodolly, agree entirely with your previous post.

Edited September 6, 2012 by chrisinth

[Pib]

Businesses always resist wage increases and sing the sky is falling song. Sure, when wage and benefits get too high it can definitely hurt competitiveness, profits, and even the ability of a business to stay open in some cases....and no doubt some of that will happen with these wages increases. Heck, many businesses go out of business in the greatest of times simply due to not enough people wanting to buy their product/service...got nothing to do with wages/benefits. But on a big picture scale raising the minimum wage to 300 baht across Thailand won't have a big impact on business profits and ability to stay in business IMHO. Plus, so many mom-and-pop/small businesses which employ many people across Thailand have always paid less than the minimum wage and will continue to do so....I see it happening right now with Thai friends who work here in Bangkok.

[Jim walker]

If the employer wants to be more competitive he needs to negotiate better terms with his suppliers or wholesalers when purchasing his materials, and if a contractor goes bust there will always be someone else to take his place, it’s frequently miss management that takes companies down not the labour rates.

[Thai at Heart]

Unemployment will not increase because of the miniscule wage increase an employer will just build this into his price to his customer, so it’s the customer who will pay the increase in wages at the end of the day not the employer

Well you are probably rite the employer will give his workers a raise and then raise the cost of his product. It is called inflation.

The price will be to high on some of the extra things in life that are over and above the necessities that people will not be able to afford them. So some companies will go out of business thereby causing unemployment.

Congratulation's to the government. In one bit of action they have caused unemployment and inflation.

In my mates agribusiness export, the increase added 1 percent to cost. The customer ate the increase

[Nickymaster]

Unemployment will not increase because of the miniscule wage increase an employer will just build this into his price to his customer, so it's the customer who will pay the increase in wages at the end of the day not the employer

Well you are probably rite the employer will give his workers a raise and then raise the cost of his product. It is called inflation.

The price will be to high on some of the extra things in life that are over and above the necessities that people will not be able to afford them. So some companies will go out of business thereby causing unemployment.

Congratulation's to the government. In one bit of action they have caused unemployment and inflation.

In my mates agribusiness export, the increase added 1 percent to cost. The customer ate the increase

Could easily be many more percent and then hard choices have to be made.

[dcutman]

Unemployment will not increase because of the miniscule wage increase an employer will just build this into his price to his customer, so it’s the customer who will pay the increase in wages at the end of the day not the employer

Unfortunately its not that simple, or rather it is that simple. Companies have to remain competitive with their pricing; that is business. The larger companies will be able to offset a proportion of the money spent on the wage rise on reduced profit for their product (due to bulk buying of materials, discounts from manufacturer, etc) but the smaller companies will price themselves out of the system.

It will be the SME's that suffer through this 'one-step' pay increase, which according to results in the trial 7 provences is leading to businesses shuting down and unemployment increasing. Everybody want to see a reasonable minimum wage for their workers, but when it comes to the lower paid provences and the increase to 300 baht may mean a 100% pay raise, a lot of the smaller companies will fold.

Mark my words on that one............

Edit: Jim, you call it a miniscule wage increase, which it would be in the West. It can mean a massive increase in this country/region.

@ hellodolly, agree entirely with your previous post.

It has been tried, tested, and is has accomplished what most experts and people with common sense predicted when this was just a campaign promise. Companies have closed, went to other countries to do business, raised inflation as well as unemployment.

It is always fun to read the posts of those, that will argue basic economics. I am sure Tom will be along soon.

[Lite Beer]

SMEs under pressure after nationwide wage hike

BANGKOK, Sept 6 – Ninety per cent of Thailand’s small and medium enterprises (SMEs) will be affected by the countrywide increase of the daily minimum wage to Bt300, tentatively scheduled for launch next January, a prominent academic said today.

Rector Saowanee Thairungroj of the University of the Thai Chamber of Commerce said the Bt300 daily minimum wage approved by the National Wage Committee Wednesday pending Cabinet approval, will lead to higher rates of consumption for those workers receiving the higher wages.

Other may well lose their jobs, if employers feel they can't afford the higher salaries.

The private sector wants the government to strengthen the skills and efficiency of the Thai labour pool, she said, adding that SMEs have requested the government’s assistance in pushing for financial liquidity and realistic commodity prices instead of the state intervention given the higher wage and oil price.

Kobkarn Wattanavarangkul, chairperson of Toshiba Thailand, said the minimum wage rise will compel most entrepreneurs to turn to machinery and new innovations in their productions. (MCOT online news)

-- TNA 2012-09-06

[bhakta]

This wage increase has no benefit to anyone in the long term. As the labor costs go up, the factories must raise their prices on everything at every stage to compensate, hence the prices of everything needed to live peacefully also increase. Thailand has not been competitive with many other places in a long time, and this only exacerbates the situation.

[MaxLee]

Standards??? What standards???? The Thai government implements without any accountability.

[Thai at Heart]

Unemployment will not increase because of the miniscule wage increase an employer will just build this into his price to his customer, so it's the customer who will pay the increase in wages at the end of the day not the employer

Well you are probably rite the employer will give his workers a raise and then raise the cost of his product. It is called inflation.

The price will be to high on some of the extra things in life that are over and above the necessities that people will not be able to afford them. So some companies will go out of business thereby causing unemployment.

Congratulation's to the government. In one bit of action they have caused unemployment and inflation.

In my mates agribusiness export, the increase added 1 percent to cost. The customer ate the increase

Could easily be many more percent and then hard choices have to be made.

Depends on the industry. I saw the cost breakdown. But increasing to 300 baht a day, added that, when you are exporting in the thousands of tonnes at 5 USD/kilo, the increase in oil, causing increases in transportation costs, electricity increases, and general inflation all contribute every year to a price increase. In his specific industry, which I used to work in for many years, his customers ate the increase.

Of course it has an effect, but, that's business.

Edited September 6, 2012 by Thai at Heart

[whybother]

the countrywide increase of the daily minimum wage to Bt300, tentatively scheduled for launch next January

Tentatively??

But the government promised ... not long after reneging on their original promise.

[rixalex]

the countrywide increase of the daily minimum wage to Bt300, tentatively scheduled for launch next January

Tentatively??

But the government promised ... not long after reneging on their original promise.

Didn't you hear, they didn't renege, they never promised to implement this policy when they took power, they promised to implement it at sometime between now and the end of time. The process of "phasing in" has begun and on these grounds, we can say it has all been a raring success!

[rubl]

I have to do some searching, but one of our more 'knowledgable' members had stated a while ago that if a company can't afford a small increase in wages they shouldn't be in business anyway. Haven't seen him posting on this topic yet

[Thai at Heart]

I have to do some searching, but one of our more 'knowledgable' members had stated a while ago that if a company can't afford a small increase in wages they shouldn't be in business anyway. Haven't seen him posting on this topic yet

Well, this, entire discussion would be moot, if it was simply passed into law that minimum wages have to go up by inflation. Simple, done, dusted, removes all the political aspects to it, smoothes out the shocks, allows companies to plan, seems fair at first look,

Any massive downsides, instead of keeping increases below inflation for 10 years, and then loading them all into the market at once as a shock? Could be put in with a couple of caveats such as the country being in official recession etc etc.

[ramrod711]

People need a living wage, period. How can a family raise and educate their children, keep a motorbike and pay rent on less than 300 baht a day. I'm no economist, but one thing I do know is that people who have disposable income spend it. They buy things, go to restaurants and movies, thereby driving the economy and creating jobs.

[phiphidon]

This wage increase has no benefit to anyone in the long term. As the labor costs go up, the factories must raise their prices on everything at every stage to compensate, hence the prices of everything needed to live peacefully also increase. Thailand has not been competitive with many other places in a long time, and this only exacerbates the situation.

So were their prices proportionately lower during the period that the workforces minimum wage was not increased or did they take the extra profits themselves? For 10 consecutive years? Don't you think that businesses would have forecast that eventually the minimum wage had to be increased?

[phiphidon]

I have to do some searching, but one of our more 'knowledgable' members had stated a while ago that if a company can't afford a small increase in wages they shouldn't be in business anyway. Haven't seen him posting on this topic yet

Do you agree with him or are you all for encouraging exploitation of the workforce? Do you get paid local rates or foreigner rates, assuming you work?

[Bagwan]

Didn't Yingluck say recently that the economic future was rosy and that the Euro crisis would not affect Thailand? And now we have guys at the sharp end bleating that it will and industry can't afford to pay more. Maybe (55555) if corruption was suspended there would be enough in the kitty to raise incomes?

Some may ask why bring her nibs into the discussion. The quick answer is because the buck stops on her desk - or one in Dubai.

[rubl]

I have to do some searching, but one of our more 'knowledgable' members had stated a while ago that if a company can't afford a small increase in wages they shouldn't be in business anyway. Haven't seen him posting on this topic yet

Do you agree with him or are you all for encouraging exploitation of the workforce? Do you get paid local rates or foreigner rates, assuming you work?

I'm not as knowledgeble on these types of economical issues as your acolite, but I fear I have to disagree. 72% of Thai workers are employed by SMEs, but no breakdown on wage/salary scales. I would love to have some info on the relation between salary scales, number of employees in salary scales, number of companies. With that I would be able to make some more studied comment.

I do live and work in Thailand since 1994. Obviously not as English teacher, I'm not a native speaker As for my salary level, very politely, none of your bloody business

[phiphidon]

the countrywide increase of the daily minimum wage to Bt300, tentatively scheduled for launch next January

Tentatively??

But the government promised ... not long after reneging on their original promise.

Didn't you hear, they didn't renege, they never promised to implement this policy when they took power, they promised to implement it at sometime between now and the end of time. The process of "phasing in" has begun and on these grounds, we can say it has all been a raring success!

Will you at least accept that this coming January, is on the face of it nearer the present day than "the end of time" unless of course you are a believer in the Mayan Phrophecy?

I don't recall the PTP "promised to implement it at sometime between now and the end of time" as part of their election policy so I'll just put that down to the usual hyperbole expressed by the frothers at any government action.

Seeing that the usual subjects original rant was that the PTP were criminally negligent in proposing to raise the minimum wage (after 10 years of zero increase) in one hit, one would have thought they would be pleased at this "phasing in" , but here you are complaining against it.

Guess there's no pleasing some people...........................

[rubl]

begin removed ...

Seeing that the usual subjects original rant was that the PTP were criminally negligent in proposing to raise the minimum wage (after 10 years of zero increase) in one hit, one would have thought they would be pleased at this "phasing in" , but here you are complaining against it.

Guess there's no pleasing some people...........................

"after 10 years of zero increase" is incorrect. There used to be a yearly adjustment, at least uptil begin of 2011

[phiphidon]

I have to do some searching, but one of our more 'knowledgable' members had stated a while ago that if a company can't afford a small increase in wages they shouldn't be in business anyway. Haven't seen him posting on this topic yet

Do you agree with him or are you all for encouraging exploitation of the workforce? Do you get paid local rates or foreigner rates, assuming you work?

I'm not as knowledgeble on these types of economical issues as your acolite, but I fear I have to disagree. 72% of Thai workers are employed by SMEs, but no breakdown on wage/salary scales. I would love to have some info on the relation between salary scales, number of employees in salary scales, number of companies. With that I would be able to make some more studied comment.

I do live and work in Thailand since 1994. Obviously not as English teacher, I'm not a native speaker As for my salary level, very politely, none of your bloody business

Didn't need to know how much rubl, just which payment method. You see I would regard any foreigner working in Thailand and getting foreigner rates would be hypocritical at the very least on commenting in a negative way on any local thai being able to earn a miminum wage of 300 baht a day

[phiphidon]

begin removed ...

Seeing that the usual subjects original rant was that the PTP were criminally negligent in proposing to raise the minimum wage (after 10 years of zero increase) in one hit, one would have thought they would be pleased at this "phasing in" , but here you are complaining against it.

Guess there's no pleasing some people...........................

"after 10 years of zero increase" is incorrect. There used to be a yearly adjustment, at least uptil begin of 2011

Any links for this, I'm always willing to learn............

[rubl]

The Pheu Thai party had this 'campaign only'(?) promise:

[phiphidon]

The Pheu Thai party had this 'campaign only'(?) promise:

Sorry what has that to with an annual increase that you told me about?

[rubl]

begin removed ...

Seeing that the usual subjects original rant was that the PTP were criminally negligent in proposing to raise the minimum wage (after 10 years of zero increase) in one hit, one would have thought they would be pleased at this "phasing in" , but here you are complaining against it.

Guess there's no pleasing some people...........................

"after 10 years of zero increase" is incorrect. There used to be a yearly adjustment, at least uptil begin of 2011

Any links for this, I'm always willing to learn............

Some people seem to need to learn time and time again as links and tables have been posted here with some frequency.

Just a few to help you get started (again), for the rest may I suggest either the 'not-so-execellent' TV search engine of yahoo/google? Maybe http://www.mol.go.th (Thai only)?

2008

http://www.bangkokba...ailand-bangkok/

January, 2010

http://thailand.prd....php?id=4673&a=2

December, 2010

http://thailand-busi...es-minimum-wage