Smaller Thai Industries Soon To Be Shaken By Minimum Wage Requirement

[Lite Beer]

Smaller Thai industries soon to be shaken by minimum wage requirement

By Digital Media

BANGKOK, Jan 2 – Five to ten per cent of Thailand's labour intensive businesses, unable to tolerate the new Bt300 daily minimum wage, will close down in the first quarter of this year, a leading industrialist said today.

Taweekit Chaturacharoenkhun, vice chairman of the Federation of Thai Industries (FTI), said small- and medium-sized enterprises which rely heavily on the labour force including the textile, service and agricultural sectors will be severely impacted by the Bt300 minimum wage, enforced nationwide from January 1, and the FTI has already informed the government of what it sees as the looming consequences.

Production costs will be much higher, making it almost impossible for those enterprises to compete in overseas markets, he said, adding that the impact of the minimum wage increase will be clearly seen in the second quarter.

Those who adjust and survive will be the real “heroes” but they will have to depend less on labour and turn to technology in their production, he said.

Mr Taweekit said some SME operators have moved their production bases to the Lao PDR, Cambodia and Vietnam while another imminent scenario is the closure of provincial factories now that the incentives of cheaper labour cost is terminated.

The upcountry daily minimum wage was formerly lower than in Bangkok and its suburban areas, but the government’s latest policy has entitled workers throughout the country to a Bt300 daily minimum wage.

He said some factories which had enjoyed lower minimum wages in the provinces will possibly relocate to Bangkok or to suburban areas to save logistics and other relevant costs.

Sommat Kunset, another FTI vice president, called on the government to urgently find measures to alleviate the SMEs’ woes and announce a concrete policy for labour intensive industries.

One example is the government’s back-up plan if it will go against the employment of migrant workers in the next five years, he said, adding that the government will also have to work out promotional measures for the relocation of labour intensive industries to neighbouring countries.

The government’s policy, particularly tax refunds for first-car buyers, was meant for the middle class, not the poor, while assistance for SMEs is vital to the country's economic well-being, he said. (MCOT online news)

-- TNA 2013-01-02

[bigbamboo]

So a year and half after the government announced these businesses would have to pay 300 baht a month they still haven't worked out how to pay their staff a living wage. Don't forget prices have increased considerably over that period too.

[Thai at Heart]

My mates textile company up country doesn't have enough capacity to keep up.

390 a day plus performance bonus.

[geriatrickid]

The issue isn't wages, but a shortage of labour.

Typicall, in a free market, when there is a shortage of production inputs, whether it is labour or raw goods, the cost of inputs increases. To date, many employers have benefited from a labour wage policy that was not reflective of capitalism but of central planning typical of communist states.

[MEL1]

Wait for ASEAN. Myanmar and Lao families will crease the market for 200 B a day.........

Problem slaved ........ ooops........solved in 2 years.

-mel.

[Thai at Heart]

Wait for ASEAN. Myanmar and Lao families will crease the market for 200 B a day.........

Problem slaved ........ ooops........solved in 2 years.

-mel.

That is what is happening now anyway.

[jerrysteve]

Juss pass on dem dam costs of doin biz bro likes da res of d folks does

Edited January 2, 2013 by jerrysteve

[RickBradford]

So, a policy designed to help lower-wage Thais will instead only help them to become unemployed.

Socialism in action.

[philw]

So, a policy designed to help lower-wage Thais will instead only help them to become unemployed.

Socialism in action.

Er......Capitalism in action.

[Thait Spot]

So, a policy designed to help lower-wage Thais will instead only help them to become unemployed.

Socialism in action.

Er......Capitalism in action.

One meets t'other.

Sent from my Nexus 7 using Thaivisa Connect App

[Thai at Heart]

So, a policy designed to help lower-wage Thais will instead only help them to become unemployed.

Socialism in action.

Er......Capitalism in action.

One meets t'other.

Sent from my Nexus 7 using Thaivisa Connect App

This reads like a previous notthenation exclusive.

Workers rejoice at a dollar per hour....

Edited January 2, 2013 by Thai at Heart

[noob7]

Thaveekij Jaturajaroenkhun (google him) is closing the company in Thailand, open up a new one in Cambodia.

300 Baht in Thailand, 125 Baht in Cambodia.

And soon, he can produce cheap enough for the worlds markets, again. Not only for Thailand, like the last years!

[Thai at Heart]

Thaveekij Jaturajaroenkhun (google him) is closing the company in Thailand, open up a new one in Cambodia.

300 Baht in Thailand, 125 Baht in Cambodia.

And soon, he can produce cheap enough for the worlds markets, again. Not only for Thailand, like the last years!

Some will go. That's life. I hope he finds it easy to establish his business in Cambodia. What i have heard, they are hedging their bets, keeping the operation in Thailand and adding more capacity in Cambodia or Vietnam.

[KhunOr]

The issue isn't wages, but a shortage of labour.

Typicall, in a free market, when there is a shortage of production inputs, whether it is labour or raw goods, the cost of inputs increases. To date, many employers have benefited from a labour wage policy that was not reflective of capitalism but of central planning typical of communist states.

I believe it is the opposite of what you say.

In a free market (capitalist) economy the labour costs of production are not fixed or stipulated by a central government, but allowed to fluctuate according to the relative supply of workers and skills required. Similarly the prices of goods sold will fluctuate according to market demand. That's pretty much what we had here before. In a socialist/communist/centrally manipulated economy wages (and or prices of finished goods) are fixed. Such as "300 baht minimum wage". This distorts the market and ultimately is folly.

[Thai at Heart]

The issue isn't wages, but a shortage of labour.

Typicall, in a free market, when there is a shortage of production inputs, whether it is labour or raw goods, the cost of inputs increases. To date, many employers have benefited from a labour wage policy that was not reflective of capitalism but of central planning typical of communist states.

I believe it is the opposite of what you say.

In a free market (capitalist) economy the labour costs of production are not fixed or stipulated by a central government, but allowed to fluctuate according to the relative supply of workers and skills required. Similarly the prices of goods sold will fluctuate according to market demand. That's pretty much what we had here before. In a socialist/communist/centrally manipulated economy wages (and or prices of finished goods) are fixed. Such as "300 baht minimum wage". This distorts the market and ultimately is folly.

Not at all. They are reporting for several years, unemployment rates under 1% but the companies have won/negotiated below inflation rate increases in the minimum wage for almost a decade.

Its time to give a little back.....

Edited January 2, 2013 by Thai at Heart

[KhunOr]

The issue isn't wages, but a shortage of labour.

Typicall, in a free market, when there is a shortage of production inputs, whether it is labour or raw goods, the cost of inputs increases. To date, many employers have benefited from a labour wage policy that was not reflective of capitalism but of central planning typical of communist states.

I believe it is the opposite of what you say.

In a free market (capitalist) economy the labour costs of production are not fixed or stipulated by a central government, but allowed to fluctuate according to the relative supply of workers and skills required. Similarly the prices of goods sold will fluctuate according to market demand. That's pretty much what we had here before. In a socialist/communist/centrally manipulated economy wages (and or prices of finished goods) are fixed. Such as "300 baht minimum wage". This distorts the market and ultimately is folly.

Not at all. They are reporting for several years, unemployment rates under 1% but the companies have won/negotiated below inflation rate increases in the minimum wage for almost a decade.

Its time to give a little back.....

But as you said above, which seems like a perfect example:

" My mates textile company up country doesn't have enough capacity to keep up.

390 a day plus performance bonus.'

Which I took to mean that the owners are choosing to pay more than the new minimum due to excess demand and shortage of labour. This is just as it should be. The opposite also applies: when market demand falls below the existing capacity the owner will eventually (if persistent) be forced to cut capacity (lay off workers) or offer lower wages (or manufacture new products altogether, but let's keep this simple). If he does not, the business will go bust.

If the government meddles in the free market by stipulating a minimum wage it diminishes the entrepreneurs' ability to adjust to suit market forces as and when required. This is one reason I say that it is ultimately economic folly.

When labour is cheap relative to other nations, business flows into Thailand and everyone benefits from that by having full employment. When Thailand labour rates are much higher, you'll see some of those businesses close and move elsewhere and there will be unemployment. This is simple economics, not fogged by political expediency.

[Thai at Heart]

The issue isn't wages, but a shortage of labour.

Typicall, in a free market, when there is a shortage of production inputs, whether it is labour or raw goods, the cost of inputs increases. To date, many employers have benefited from a labour wage policy that was not reflective of capitalism but of central planning typical of communist states.

I believe it is the opposite of what you say.

In a free market (capitalist) economy the labour costs of production are not fixed or stipulated by a central government, but allowed to fluctuate according to the relative supply of workers and skills required. Similarly the prices of goods sold will fluctuate according to market demand. That's pretty much what we had here before. In a socialist/communist/centrally manipulated economy wages (and or prices of finished goods) are fixed. Such as "300 baht minimum wage". This distorts the market and ultimately is folly.

Not at all. They are reporting for several years, unemployment rates under 1% but the companies have won/negotiated below inflation rate increases in the minimum wage for almost a decade.

Its time to give a little back.....

But as you said above, which seems like a perfect example:

" My mates textile company up country doesn't have enough capacity to keep up.

390 a day plus performance bonus.'

Which I took to mean that the owners are choosing to pay more than the new minimum due to excess demand and shortage of labour. This is just as it should be. The opposite also applies: when market demand falls below the existing capacity the owner will eventually (if persistent) be forced to cut capacity (lay off workers) or offer lower wages (or manufacture new products altogether, but let's keep this simple). If he does not, the business will go bust.

If the government meddles in the free market by stipulating a minimum wage it diminishes the entrepreneurs' ability to adjust to suit market forces as and when required. This is one reason I say that it is ultimately economic folly.

When labour is cheap relative to other nations, business flows into Thailand and everyone benefits from that by having full employment. When Thailand labour rates are much higher, you'll see some of those businesses close and move elsewhere and there will be unemployment. This is simple economics, not fogged by political expediency.

Its a lot more complicated than that. He desperately needs labour, and his boi company refuses to allow imported labour. Meanwhile, there are other companies in the locality who have thousands of Burmese on less than minimum.

So this idiotic corrupt system has allowed mercenary companies to import labour at below 190 minimum and gain an unfair advantage over other more principled employers, and hundreds loud thousands have moved away from home too chase a marginally higher wage.

A minimum wage can become a weight on industry but at the levels as low as this in export mass manufacturing it actually represents a relatively small part of the export price versus the base cost of the materials.

I have seen it first hand. To increase from where we were to the current level represented a 1.6% increase on fob pricing. The buyers are it.

[KhunOr]

Well there you have it. Another perfect example of how government meddling in the free market is folly! As a BOI company your friend has enjoyed privileges like tax breaks that non BOI companies cannot enjoy (but will try to find other ways to obtain competitive advantages). Right?

Take away all this meddling and unfair advantage and you'll have a free market in which supply and demand will regulate the economy all by itself.

[Thai at Heart]

Well there you have it. Another perfect example of how government meddling in the free market is folly! As a BOI company your friend has enjoyed privileges like tax breaks that non BOI companies cannot enjoy (but will try to find other ways to obtain competitive advantages). Right?

Take away all this meddling and unfair advantage and you'll have a free market in which supply and demand will regulate the economy all by itself.

The issue isn't that he is boi, but that the others can freely avail of the entire regional labour market.

The distortion is that Thai minimum wage employees are actually priced at a premium in their own country.

Anyone employed in Thailand should be paid at least minimum. Simplicity itself.

[fatman0757]

While everybody is complaining about government interference and wages should be dictated by market requirements it is also a fact that many European governments have implicated similar minimum wage requirements for the same reasons.

[KhunOr]

While everybody is complaining about government interference and wages should be dictated by market requirements it is also a fact that many European governments have implicated similar minimum wage requirements for the same reasons.

And look what a mess that's got them into!

[fatman0757]

It's not minimum wage requirements that have created the mess in Europe and elsewhere in the world but the recklessness and greed of people at the other end of the pay scale I'm afraid

[jbrain]

My mates textile company up country doesn't have enough capacity to keep up.

390 a day plus performance bonus.

The problem isn't that there aren't enough people without a job, but the attitude of if we have enough food to survive the day why would we need to have a job.

[annabel]

While everybody is complaining about government interference and wages should be dictated by market requirements it is also a fact that many European governments have implicated similar minimum wage requirements for the same reasons.

That's how it is in Canada and the USA also ... There is a minimum wage stipulation which everybody has to live by... However in Thailand will this also apply to Maebans, or any other domestic help like gardners or security guards...??

[geriatrickid]

So, a policy designed to help lower-wage Thais will instead only help them to become unemployed.

Socialism in action.

You don't get it do you?

There is a labour shortage in Thailand.

Whenever there are labour shortages, wages increase. The government has been keeping the wages down to benefit business.

Unemployment is only 0.6%

[OzMick]

So, a policy designed to help lower-wage Thais will instead only help them to become unemployed.

Socialism in action.

You don't get it do you?

There is a labour shortage in Thailand.

Whenever there are labour shortages, wages increase. The government has been keeping the wages down to benefit business.

Unemployment is only 0.6%

Perhaps if PTP stopped subsiding workers in an uneconomic industry, the labour problem would be solved.

[whybother]

So, a policy designed to help lower-wage Thais will instead only help them to become unemployed.

Socialism in action.

You don't get it do you?

There is a labour shortage in Thailand.

Whenever there are labour shortages, wages increase. The government has been keeping the wages down to benefit business.

Unemployment is only 0.6%

I would have thought that wages would increase naturally and they wouldn't to be forced up by the government.

Sent from my HTC phone.

[impulse]

So, a policy designed to help lower-wage Thais will instead only help them to become unemployed.

Socialism in action.

You don't get it do you?

There is a labour shortage in Thailand.

Whenever there are labour shortages, wages increase. The government has been keeping the wages down to benefit business.

Unemployment is only 0.6%

It's not a labor shortage, it's a shortage of people willing to work for what employers are offering. They'd rather fry eggs, sell hats or whatever for the same (or more) money.

I'd quit, too if I could make more money frying up omelets on the street than slaving at a sewing machine 10-12 hours a day 6 or 7 days a week.

Offer up 1000 baht per day and see if there's still a labor shortage. See how many folks abandon their little street carts to jump on those jobs that pay a living wage.

But, of course, if the employers continue to get their way, they'll continue importing cheap labor from next door and have them by the "short and curlies" in addition to paying them squat. Illegals and barely legals don't complain too much about being cheated or treated badly...

Edited January 2, 2013 by impulse

[mccw]

So, a policy designed to help lower-wage Thais will instead only help them to become unemployed.

Socialism in action.

You don't get it do you?

There is a labour shortage in Thailand.

Whenever there are labour shortages, wages increase. The government has been keeping the wages down to benefit business.

Unemployment is only 0.6%

It's not a labor shortage, it's a shortage of people willing to work for what employers are offering. They'd rather fry eggs, sell hats or whatever for the same (or more) money.

I'd quit, too if I could make more money frying up omelets on the street than slaving at a sewing machine 10-12 hours a day 6 or 7 days a week.

Offer up 1000 baht per day and see if there's still a labor shortage. See how many folks abandon their little street carts to jump on those jobs that pay a living wage.

But, of course, if the employers continue to get their way, they'll continue importing cheap labor from next door and have them by the "short and curlies" in addition to paying them squat. Illegals and barely legals don't complain too much about being cheated or treated badly...

It's great thai people can take care themselves self employed in more enjoyable work than slaving in a factory because the cost of living is so low. But it's foolish policies like this that will send the living cost up so much the content will be poor and small businesses bust so all must take the slave work for big companies just to survive. Same as what's happened across the west.

You guys cheering this truly have no grasp on economic reality.

[Exsexyman]

My mates textile company up country doesn't have enough capacity to keep up.

390 a day plus performance bonus.

So how much profit is your mate making? Paying his workers eight quid a day for slaving over a sewing machine all day, and probably boasting that he is paying above the average. No wonder the Thai girls are flocking to tourist areas to sell their bodies as soon as they reach sixteen. Shameful.