Entrepreneurs Ask Thai Govt To Postpone Minimum Wage Rise

[webfact]

Entrepreneurs ask gov't to postpone minimum wage rise

By Digital Media

BANGKOK, Nov 5 – The Federation of Thai Industries (FTI) petitioned the labour ministry to review and postpone the minimum wage rise, set to be applied countrywide in January.

FTI vice chairman Thanit Sorat, before meeting with Labour Minister Phadermchai Sasomsub on Monday, said that they would discuss the likely impact of the minimum wage rise.

According to an employer-funded study, small-scale factories and small- and medium-size enterprises (SMEs) with about 200 labourers will have increased labour costs by 25-28 per cent when the 300 baht minimum wage rise takes effect. Each factory is likely to face losses of about Bt6-7 million per month.

Meanwhile, the government’s tax moves to reduce corporate income tax doesn't help SME entrepreneurs in the provinces, particularly those factories depending on a large number of workers.

Mr Thanit said that if the minimum wage rise continues from Jan 1, SME businesses will gradually close. He asked for the government to postpone the minimum wage rise to the next two or three years.

If the government cannot do that, he said, it should prepare measures to support funding affected businesses to boost their liquidity. A rehabilitation measure is needed to offset the margin of the increase wage and to cut social welfare contributions, he said.

Nearly 60 FTI entrepreneur representatives went to the labour ministry, seeking a meeting with the minister to delay the implementation of minimum wage rise for the whole country for another two to three years. (MCOT online news)

-- TNA 2012-11-05

[bigbamboo]

Are these 'entrepreneurs' aware of the term inflation....... something that hits employees as well as entrepreneurs. The cost of living especially with regard to basics has risen significantly since PTP announced it's promise over a year ago.

Any business which cannot afford a small (in baht terms) rise that should have been factored in for some time now won't last long, government support or not.

[mic6ard]

Are these 'entrepreneurs' aware of the term inflation....... something that hits employees as well as entrepreneurs. The cost of living especially with regard to basics has risen significantly since PTP announced it's promise over a year ago.

Any business which cannot afford a small (in baht terms) rise that should have been factored in for some time now won't last long, government support or not.

The minimum wage here are WAYYYYY below the minimum required to have a some what comfortable life.

However looking at the problem from the industries POV, increase wage will definitely increase cost of operation, and cut into profit margin. What do you think these industries will do? INCREASE prices. This lead back to inflation. It's a vicious circle. Unless the gov't can come up with a way to co-ordinate the wage with inflation, there will not be a pretty way out of this mess.

[asiawatcher]

In 2000 the going rate for carpenters and construction workers was about 7,000 a month, living on site. Last year when handling another site the rate was 7,000 baht. At CPI alone this is long overdue. And when building billion Baht properties it will not be hard to justify.

[bigbamboo]

Are these 'entrepreneurs' aware of the term inflation....... something that hits employees as well as entrepreneurs. The cost of living especially with regard to basics has risen significantly since PTP announced it's promise over a year ago.

Any business which cannot afford a small (in baht terms) rise that should have been factored in for some time now won't last long, government support or not.

The minimum wage here are WAYYYYY below the minimum required to have a some what comfortable life.

However looking at the problem from the industries POV, increase wage will definitely increase cost of operation, and cut into profit margin. What do you think these industries will do? INCREASE prices. This lead back to inflation. It's a vicious circle. Unless the gov't can come up with a way to co-ordinate the wage with inflation, there will not be a pretty way out of this mess.

There is another way. The company pays the minimum wage and the government compensates them by reducing their tax bill. After all they did reduce corporate tax from 30 per cent to 23 per cent almost immediately so why not do the same for SMEs.

Assuming of course their owners ARE paying their taxes...........................?

[waza]

No wonder these businesses are afraid of the minimum wage rise, they have no skills in arithmetics.

"According to an employer-funded study, small-scale factories and small- and medium-size enterprises (SMEs) with about 200 labourers will have increased labour costs by 25-28 per cent when the 300 baht minimum wage rise takes effect. Each factory is likely to face losses of about Bt6-7 million per month".

Thats an icrease in wages of 30,000 baht per employee per month, I guess thats Thakonomics.

[Fozfromoz]

In 2000 the going rate for carpenters and construction workers was about 7,000 a month, living on site. Last year when handling another site the rate was 7,000 baht. At CPI alone this is long overdue. And when building billion Baht properties it will not be hard to justify.

From what you say, if the quoted prices have been increasing over that time, and the wages have remained, then someone has been enjoying slightly wider margins for a while?

[jonclark]

Gotta say 300 baht a day is a merge amount to have to live on, especially for a family. Imagine trying to feed your family on that and put some aside for rent, schooling and clothing expenses.

No wonder there are so many people in the clutches of loan sharks, debt and addiction, they live with constant, unrelenting grinding cycle of poverty from birth until death. A cycle which provides a fertile breeding ground for criminality and corruption.

If you can lift people from poverty and give them hope, this will have a big impact on many of the ills which currently blight Thailand today.

So I think employers should stop winging and cough up, personally I think it should be 500 baht a day.

[jonclark]

In 2000 the going rate for carpenters and construction workers was about 7,000 a month, living on site. Last year when handling another site the rate was 7,000 baht. At CPI alone this is long overdue. And when building billion Baht properties it will not be hard to justify.

And what was the starting price of English Teachers (Agency work) on 2000 = 30'000 baht and in 2012 = 30'000 baht

[MunterHunter]

All that's going to happen is the SME's will fire 30-50% of their staff, increase salary to meet minimum wage and force everyone to work harder and/or cut costs elsewhere. Then watch the unemployment figures rise.

[Ricardo]

Funny, but i don't recall much lobbying by the employers, to delay their tax-cut immediately after the formation of the current government ? Not that they're hypicritical, or anything !

[MaxLee]

The SME association of Thailand, is kidding themselves when they believe that this government is ever going to listen to them. For Yingluck and co., it's just another fart in the wind. .... unimportant, and a waste of their sorry effort

[angsta]

These guys are taking the pi$$.

If you can't run a business with such a small increase in labour costs then you shouldn't be in business in the first place.

[Halion]

This is just rediculous. Did the Government not fully study the overall implications of this election manifesto before implementation. Nothing has changed especially their ignornce and ineptness. The have delayed their party promise for over one year now and are desperately looking for a fall back plan as once they implement this overall profits are going to fall and the fat cats will get less.

This increase is vital and long overdue for the Thai working people but the culture of greed and graft are not going to want to loose their pound of flesh. Why should they as this is a culture where only the low income and poor should suffer. Perish the thought that the elite may loose margin and be reduced to a one Ferrari per family status.

[bigbamboo]

This is just rediculous. Did the Government not fully study the overall implications of this election manifesto before implementation. Nothing has changed especially their ignornce and ineptness. The have delayed their party promise for over one year now and are desperately looking for a fall back plan as once they implement this overall profits are going to fall and the fat cats will get less.

This increase is vital and long overdue for the Thai working people but the culture of greed and graft are not going to want to loose their pound of flesh. Why should they as this is a culture where only the low income and poor should suffer. Perish the thought that the elite may loose margin and be reduced to a one Ferrari per family status.

Some would say one Ferrari per family is too many.

[Colabamumbai]

If they cannot afford to pay the minimum wage hike to 300 Baht they should get out of business, not ask the government to help them. They should come up with innivative ideas to bring more money into their businesses, and not look for handouts, or blame it on the workers.

[skills32]

This is just rediculous. Did the Government not fully study the overall implications of this election manifesto before implementation.

Can you name me any government , anywhere that has?

[rubl]

Meanwhile, the government's tax moves to reduce corporate income tax doesn't help SME entrepreneurs in the provinces, particularly those factories depending on a large number of workers.

For a long time already I have wondered if the Corporate tax reduction from 30 to 23% might have helped larger corporations only. Mind you the argument was to help 'companies' offset the minimum wage increase with a lesser tax burden.

Now it might just be that the Corporate tax thingy is just similar to the trickle down effect of THB 280 billion spent to mostly middlemen and large farms to help poor farmers get a few Baht as well. The efficiency of the scheme may need to be explain to me again one of these days ...

Note, I'm not against minimum wage level increases, just doubt the way to do so really helps

[Thai at Heart]

No wonder these businesses are afraid of the minimum wage rise, they have no skills in arithmetics.

"According to an employer-funded study, small-scale factories and small- and medium-size enterprises (SMEs) with about 200 labourers will have increased labour costs by 25-28 per cent when the 300 baht minimum wage rise takes effect. Each factory is likely to face losses of about Bt6-7 million per month".

Thats an icrease in wages of 30,000 baht per employee per month, I guess thats Thakonomics.

Indeed, and extra 100 baht a day, times 200 workers, times 30 days, is 600k. If they are planning to pay 6mn, no doubt they will be out of business pretty sharpish.

Of course, there is little or no tax benefit for the company if they pay every single family member within 2 generations 15k per month and pocket it into a kitty, to reduce the tax bill, and then plan to buy a couple of properties for the company and a new merc every year. Then fill up the LTF/RTF of every family member to the hilt and there is no profit left for anything to be taxed upon.

Tough titties, I know far too many so called family owned companies that diddle the tax man year after year. It is all well and good that they are successful, but when the government gets not even the VAT that should be paid on this business, but they then bitch about paying their labour 300 baht a day.

Edited November 5, 2012 by Thai at Heart

[MEL1]

Oh! Such a shame!

The Benz will have to be downgraded to a Camry, so others can eat well.

Very sad indeed! A grim day for the reapers!

-mel.

[Fozfromoz]

Oh! Such a shame!

The Benz will have to be downgraded to a Camry, so others can eat well.

Very sad indeed! A grim day for the reapers!

-mel.

Top end Camry of course, with all the options.

[stoli]

If you have never owned your own business, but just worked for some else, this increase sounds like nothing. Remember, you are now in a different country. You can not expect to come here and dictate what they should pay employees based on what you earn in other countries. That is not a reasonable expectation. If Thailand is not competitive with it's neighboring countries, it will lose jobs to them. Do you really believe that an unemployed Thai worker is better off than a employed worker? Until you have had to meet a payroll weekly, keep your thoughts on how to run a business to yourself, or step up to the plate an actually employ people. Employers do more for providing for their employess, more than employees that just accept a wage or salary. Money for salaries does not just fall out of the sky. You were lucky if someone else was smart enough, and in the right industry, to provide for you. You also must have added value. The employers have asked that at least the employees getting the maximum minimum wage have at least a 4th grade education, and that was rejected. What more do you want?

[Thai at Heart]

http://farm8.staticflickr.com/7117/7061455311_412f83762b_o.jpg

If you have never owned your own business, but just worked for some else, this increase sounds like nothing. Remember, you are now in a different country. You can not expect to come here and dictate what they should pay employees based on what you earn in other countries. That is not a reasonable expectation. If Thailand is not competitive with it's neighboring countries, it will lose jobs to them. Do you really believe that an unemployed Thai worker is better off than a employed worker? Until you have had to meet a payroll weekly, keep your thoughts on how to run a business to yourself, or step up to the plate an actually employ people. Employers do more for providing for their employess, more than employees that just accept a wage or salary. Money for salaries does not just fall out of the sky. You were lucky if someone else was smart enough, and in the right industry, to provide for you. You also must have added value. The employers have asked that at least the employees getting the maximum minimum wage have at least a 4th grade education, and that was rejected. What more do you want?

What has 300 baht a day got to do with what people are paid in our home countries. Yes, what you are talking about is simple economics and movement of investment. However, the issue is a hell of a lot more complicated when you understand that literally thousands of these so called SME i.e family owned companies continually diddle the books and have ridden below inflation rate increases in the minimum wage for nearly 15 years.

Industry lobbied for years that they couldn't afford to pay larger increases, so they have ridden this advantage for donkeys years, now unfortunately, it comes as a big shock. I don't agree that it should have come in one fell swoop, but the 300 baht a day, 6GBP or 10 USD PER DAY, is affordable for many companies also. This will cause some grief for some companies and others will live with it, but it cannot be that companies continually get to hire at ever decreasing real rates. Next, they have to stop companies filling themselves up legally with imported labour so that they can largely get around paying the 300 by paying accomodation and food in kind to the immigrant employees, and maybe, just maybe, Thai people can get paid 300 baht a day MINIMUM for a day's work.

http://farm8.staticflickr.com/7117/7061455311_412f83762b_o.jpg

Edited November 5, 2012 by Thai at Heart

[asiawatcher]

In 2000 the going rate for carpenters and construction workers was about 7,000 a month, living on site. Last year when handling another site the rate was 7,000 baht. At CPI alone this is long overdue. And when building billion Baht properties it will not be hard to justify.

From what you say, if the quoted prices have been increasing over that time, and the wages have remained, then someone has been enjoying slightly wider margins for a while?

No question about that...

[asiawatcher]

In 2000 the going rate for carpenters and construction workers was about 7,000 a month, living on site. Last year when handling another site the rate was 7,000 baht. At CPI alone this is long overdue. And when building billion Baht properties it will not be hard to justify.

And what was the starting price of English Teachers (Agency work) on 2000 = 30'000 baht and in 2012 = 30'000 baht

Hey Jon, yes but I understand run with International Schools and that substantially increases. But Thai's still get crappy wages as teachers as well and that also has not increased.

[stoli]

Next, they have to stop companies filling themselves up legally with imported labour so that they can largely get around paying the 300 by paying accomodation and food in kind to the immigrant employees, and maybe, just maybe, Thai people can get paid 300 baht a day MINIMUM for a day's work

Unfortunately, this makes my point. For the larger companies in Thailand that employ a vast amount of Thai employees, it will make it easier for them to move to another country to set up shop. Those tax dollars, paid to Thailand, will go to other countries, as well as the jobs. Simple economics. I, like you, would love to see every worker earn a wage that allows them to live above the basic necessities in life, but losing their job will not help with that goal. I can not speak about the companies that are cooking their books, because that is just speculation, but probably correct. I have no desire to see Thailand price it products to a point where companies are forced to let their employess go,and to move to neighboring countries, or even China. Why use imported labor if you can just go to that country and employ them there? I wish the answer was simpler, but it isn't.

[Thai at Heart]

Next, they have to stop companies filling themselves up legally with imported labour so that they can largely get around paying the 300 by paying accomodation and food in kind to the immigrant employees, and maybe, just maybe, Thai people can get paid 300 baht a day MINIMUM for a day's work

Unfortunately, this makes my point. For the larger companies in Thailand that employ a vast amount of Thai employees, it will make it easier for them to move to another country to set up shop. Those tax dollars, paid to Thailand, will go to other countries, as well as the jobs. Simple economics. I, like you, would love to see every worker earn a wage that allows them to live above the basic necessities in life, but losing their job will not help with that goal. I can not speak about the companies that are cooking their books, because that is just speculation, but probably correct. I have no desire to see Thailand price it products to a point where companies are forced to let their employess go,and to move to neighboring countries, or even China. Why use imported labor if you can just go to that country and employ them there? I wish the answer was simpler, but it isn't.

There is a wealth of research about it, look at bangkok pundit.

Basically, it will effect those in informal employment quite signicificantly, i.e restaurants cash in hand. It will also effect agriculture. In terms of manufacturing and many other parts of industry, the wages are already above minimum anyway. So don't expect to hear too many stories about MNC's packing up and leaving any time particularly soon, they are already above the minimum by quite a way, but astonishingly, the average wages in industrial production are already higher in China than they are in Thailand.

The issue is companies SME's which flout the rule because they can. and the odds that they will all of a sudden start paying minimum at 300, when they don't even pay it now, will be a continuing problem.

http://asiancorrespondent.com/49706/minimum-wages-and-thailand/

http://asiancorrespondent.com/40261/monthly-wages-for-manufacturing-workers-in-thailand-now-lower-than-in-china/

Companies stay in countries for many many reasons. Just look at the stories about the car industry investing heavily in the last month or so, despite the floods and all the political mess. I enjoyed reading this site above, because it gave a lot of interesting balances analysis of the REAl situation in Thailand with some precise interpretation of reality, instead of knee jerk responses to minimum wages on an ideological level. They shouldn't have done it in one fell swoop to 300, which is a shock to the market, but likewise, companies have benefited from this below inflation level of increase for 10 years.

If in 5 years or so, the minimum wage has caused some companies to move on, it isn't as though, the Thai economy is standing still in the meantime. Lets hope those that do lose jobs move onto other things, because to be honest, as others mentioned, if 300 baht is beyond a company, it really should look at its entire business.

[steveG]

Its a very free market in Thailand. something we lost a long time ago in the west - now the east will rule the world economy soon.

I dont beleive the Comunist system worked and I see the Democratic system is on the out as well.

Anarchy?

[Thai at Heart]

Its a very free market in Thailand. something we lost a long time ago in the west - now the east will rule the world economy soon.

I dont beleive the Comunist system worked and I see the Democratic system is on the out as well.

Anarchy?

It is the new anomoly that assumed y that if an economy had capitalism that democracy automatically followed, and that single party systems couldn't deliver consistent gains in prosperity.

Russia any better of since the fall of communism in comparison with say China?

Western ideology on democracy and pure capitalism being the only way to deliver prosperity, needs a bit of a rethink.

[waza]

Next, they have to stop companies filling themselves up legally with imported labour so that they can largely get around paying the 300 by paying accomodation and food in kind to the immigrant employees, and maybe, just maybe, Thai people can get paid 300 baht a day MINIMUM for a day's work

Unfortunately, this makes my point. For the larger companies in Thailand that employ a vast amount of Thai employees, it will make it easier for them to move to another country to set up shop. Those tax dollars, paid to Thailand, will go to other countries, as well as the jobs. Simple economics. I, like you, would love to see every worker earn a wage that allows them to live above the basic necessities in life, but losing their job will not help with that goal. I can not speak about the companies that are cooking their books, because that is just speculation, but probably correct. I have no desire to see Thailand price it products to a point where companies are forced to let their employess go,and to move to neighboring countries, or even China. Why use imported labor if you can just go to that country and employ them there? I wish the answer was simpler, but it isn't.

Thats just what is happening, Japanese companies are moving their operations from China to SEA countries due to the dispute between the two governments over the sovereignty of Diaoyu Islands. Thailand is gaining more automotive plants at China's expense.

Confirmation of the costly economic consequences of the continuing spat between Japan and China over who owns a tiny string of remote uninhabited rocky islets in the East China Sea came with the publication of Japan's September trade figures. They showed an unprecedented deficit of $7 billion as exports dropped by 10.3 percent, thanks to the global slowdown and to Beijing's determination to teach Tokyo a lesson.............In the medium term, China also stands to lose both directly and indirectly, and Japan may gain from reassessing and redirecting its supply chains. But the real danger is not merely to the two protagonists but to Asian growth and stability, as well as to the whole global economy as growth slows, if antagonism between the world's second and third biggest economies remains the order of the day. http://www.japantimes.co.jp/text/eo20121102a1.html

Edited November 5, 2012 by waza