Wage Increase In Thailand Begins To Bite

[rheinwiese]

Team-Korn Chatikavanij English

Note to government, the reason why there is a gap in wage rates between different provinces (higher in more developed provinces and lower in less developed provinces) is so that there is an incentive to invest in the less developed provinces.

If wages are the same all over the country, who are you helping?

https://www.facebook.com/teamkornENG

[Kripe]

A good way to look at the fundamental error in the "raise the minimum wage" discussion is to make a reductio ad absurdum: if you can BY FIAT set a minimum wage then why not set it to 600 baht an hour so everyone can have a nice home and car? Why not 1,000? 10,000? (So everyone can buy a Mercedes!) Because, very quickly, product and service charges will rise to cover those costs ... and a loaf of bread will go for thousands of baht.

A minimum wage of 10,000 baht / hour might sound silly - but then so is 300. Just a smaller amount - but the results will be / must be the same. Just on a smaller, slower, scale so hopefully people won't notice what's happening.

So, raising the minimum wage without at the same time imposing sweeping price controls is meaningless ... and heaven help any country that tries that. Oh, wait a minute! Isn't that the basis for Marxism? Haven't we seen how well Communist societies fared in the 20th Century? "To each according to his needs" - whether or not you can pay for it! "From each according to his abilities" - whether or not your abilities have any value to the society or ultimate consumer. And exactly WHO is determining what YOU need? What YOUR abilities are?

But wouldn't a utopia be nice anyway?

(Just for comparison, minimum wage in U.K. is 300b/h, U.S. is 225b/h. Both of which having much higher costs of living than here.)

Just to clarify we are talking 300THB/DAY in Thailand - not b/h - 300 THB per day is properly equal to 25 THB/Hour

[jbrain]

Pakorn promised that his department would help laid-off workers claim the compensation and benefits to which they were entitled.

I can't wait to hear what those compensation and benefits exist of.

[Honkie]

A good way to look at the fundamental error in the "raise the minimum wage" discussion is to make a reductio ad absurdum: if you can BY FIAT set a minimum wage then why not set it to 600 baht an hour so everyone can have a nice home and car? Why not 1,000? 10,000? (So everyone can buy a Mercedes!) Because, very quickly, product and service charges will rise to cover those costs ... and a loaf of bread will go for thousands of baht.

A minimum wage of 10,000 baht / hour might sound silly - but then so is 300. Just a smaller amount - but the results will be / must be the same. Just on a smaller, slower, scale so hopefully people won't notice what's happening.

So, raising the minimum wage without at the same time imposing sweeping price controls is meaningless ... and heaven help any country that tries that. Oh, wait a minute! Isn't that the basis for Marxism? Haven't we seen how well Communist societies fared in the 20th Century? "To each according to his needs" - whether or not you can pay for it! "From each according to his abilities" - whether or not your abilities have any value to the society or ultimate consumer. And exactly WHO is determining what YOU need? What YOUR abilities are?

But wouldn't a utopia be nice anyway?

(Just for comparison, minimum wage in U.K. is 300b/h, U.S. is 225b/h. Both of which having much higher costs of living than here.)

Yes, yes, yes, we've all studied basic economics.

How does this reconcile with say a Thai Chinese garment exporter who transfer prices all the profit out through Hong Kong, thus paying no income tax in Thailand whilst paying his labour at rates below equilibrium?

This move could simply be seen as a transfer of wealth from owners to labour.

A good way to look at the fundamental error in the "raise the minimum wage" discussion is to make a reductio ad absurdum: if you can BY FIAT set a minimum wage then why not set it to 600 baht an hour so everyone can have a nice home and car? Why not 1,000? 10,000? (So everyone can buy a Mercedes!) Because, very quickly, product and service charges will rise to cover those costs ... and a loaf of bread will go for thousands of baht.

A minimum wage of 10,000 baht / hour might sound silly - but then so is 300. Just a smaller amount - but the results will be / must be the same. Just on a smaller, slower, scale so hopefully people won't notice what's happening.

So, raising the minimum wage without at the same time imposing sweeping price controls is meaningless ... and heaven help any country that tries that. Oh, wait a minute! Isn't that the basis for Marxism? Haven't we seen how well Communist societies fared in the 20th Century? "To each according to his needs" - whether or not you can pay for it! "From each according to his abilities" - whether or not your abilities have any value to the society or ultimate consumer. And exactly WHO is determining what YOU need? What YOUR abilities are?

But wouldn't a utopia be nice anyway?

(Just for comparison, minimum wage in U.K. is 300b/h, U.S. is 225b/h. Both of which having much higher costs of living than here.)

Yes, yes, yes, we've all studied basic economics.

How does this reconcile with say a Thai Chinese garment exporter who transfer prices all the profit out through Hong Kong, thus paying no income tax in Thailand whilst paying his labour at rates below equilibrium?

This move could simply be seen as a transfer of wealth from owners to labour.

Are you in the garment export business ?

[canman]

A good way to look at the fundamental error in the "raise the minimum wage" discussion is to make a reductio ad absurdum: if you can BY FIAT set a minimum wage then why not set it to 600 baht an hour so everyone can have a nice home and car? Why not 1,000? 10,000? (So everyone can buy a Mercedes!) Because, very quickly, product and service charges will rise to cover those costs ... and a loaf of bread will go for thousands of baht.

A minimum wage of 10,000 baht / hour might sound silly - but then so is 300. Just a smaller amount - but the results will be / must be the same. Just on a smaller, slower, scale so hopefully people won't notice what's happening.

So, raising the minimum wage without at the same time imposing sweeping price controls is meaningless ... and heaven help any country that tries that. Oh, wait a minute! Isn't that the basis for Marxism? Haven't we seen how well Communist societies fared in the 20th Century? "To each according to his needs" - whether or not you can pay for it! "From each according to his abilities" - whether or not your abilities have any value to the society or ultimate consumer. And exactly WHO is determining what YOU need? What YOUR abilities are?

But wouldn't a utopia be nice anyway?

(Just for comparison, minimum wage in U.K. is 300b/h, U.S. is 225b/h. Both of which having much higher costs of living than here.)

The Thai Minimum wage is 300b/day not per hour. Not an unreasonable number IMHO

[tinfoilhat]

A good way to look at the fundamental error in the "raise the minimum wage" discussion is to make a reductio ad absurdum: if you can BY FIAT set a minimum wage then why not set it to 600 baht an hour so everyone can have a nice home and car? Why not 1,000? 10,000? (So everyone can buy a Mercedes!) Because, very quickly, product and service charges will rise to cover those costs ... and a loaf of bread will go for thousands of baht.

A minimum wage of 10,000 baht / hour might sound silly - but then so is 300. Just a smaller amount - but the results will be / must be the same. Just on a smaller, slower, scale so hopefully people won't notice what's happening.

So, raising the minimum wage without at the same time imposing sweeping price controls is meaningless ... and heaven help any country that tries that. Oh, wait a minute! Isn't that the basis for Marxism? Haven't we seen how well Communist societies fared in the 20th Century? "To each according to his needs" - whether or not you can pay for it! "From each according to his abilities" - whether or not your abilities have any value to the society or ultimate consumer. And exactly WHO is determining what YOU need? What YOUR abilities are?

But wouldn't a utopia be nice anyway?

(Just for comparison, minimum wage in U.K. is 300b/h, U.S. is 225b/h. Both of which having much higher costs of living than here.)

you do realize you are talking about an increase to 300 thb per DAY, not per hour as you suggest?

Edited January 4, 2013 by tinfoilhat

[tinfoilhat]

Yes, my argument holds even at 37.5 baht / hour. But that obviously I couldn't "compute" that the number was /DAY and not /HOUR says something about how I can't even imagine making a living at that level.

And that shows something else about Marx's argument. While his "solution" is utopian and unworkable, his basis is correct: that labor is just a commodity like any other commodity - and that market forces will always, eventually, drive it down to subsistence levels. So (1) we need laborers to make things, we can't all be entrepreneurs or technologists; and (2) in a healthy society we can't have major segments only able to make a bare "living" (if it can be called that.)

The solution? I have no idea. But raising the minimum wage is not one of them. So then what?

At least something you have written here is correct

Edited January 4, 2013 by tinfoilhat

[mccw]

many businesses will move to cambodia and the likes

the cambodian government must be loving this move by the thai

government

Yes, being known for cheap slave labour is awesome. These companies come to Thailand to take advantage of the cheap labour and the lack of benefits for thier employees who are taken advantage of. They will not go out of business by increasing wages, but will not be able to fill the CEOs pockets with nice bonuses and the investors can't buy thier kids that mercedies for thier birthday. These people SUCK. Eventually, even Cambodia wages will rise. This is why Unions started, due to slimy corporation profits more important then the people who make them those profits.

Spot on. Sadly a few incredibly greedy people are now making massive profits while increasing poverty. Asia's so called 'elites' are merrily following western corporate greed and show a shocking disregard for their fellow human beings. The scum that floats on top of our respective societies is truly awful.

This won't affect the big corporations too bad, they can absorb the cost or move. It's the Thai SMEs that will suffer and the self employed or unemployed/ retired who must deal with the increasing cost of daily essentials.

[Mosha]

OK look at it this way

Decrease staff = decreased production = same boat

Decrease staff = those left have less time to stand about texting.

[Hunter88]

$10.00 a day? Outrageous.

[marstons]

300 baht per day law is also a convieniant excuse for companies to close factories. Its got to be pretty tough to try and live on less than 300 baht per day. Many of the Western based companies here are already are paying above this rate.

[petermwolk]

A good way to look at the fundamental error in the "raise the minimum wage" discussion is to make a reductio ad absurdum: if you can BY FIAT set a minimum wage then why not set it to 600 baht an hour so everyone can have a nice home and car? Why not 1,000? 10,000? (So everyone can buy a Mercedes!) Because, very quickly, product and service charges will rise to cover those costs ... and a loaf of bread will go for thousands of baht.

A minimum wage of 10,000 baht / hour might sound silly - but then so is 300. Just a smaller amount - but the results will be / must be the same. Just on a smaller, slower, scale so hopefully people won't notice what's happening.

So, raising the minimum wage without at the same time imposing sweeping price controls is meaningless ... and heaven help any country that tries that. Oh, wait a minute! Isn't that the basis for Marxism? Haven't we seen how well Communist societies fared in the 20th Century? "To each according to his needs" - whether or not you can pay for it! "From each according to his abilities" - whether or not your abilities have any value to the society or ultimate consumer. And exactly WHO is determining what YOU need? What YOUR abilities are?

But wouldn't a utopia be nice anyway?

(Just for comparison, minimum wage in U.K. is 300b/h, U.S. is 225b/h. Both of which having much higher costs of living than here.)

you do realize you are talking about an increase to 300 thb per DAY, not per hour as you suggest?

Mea culpa, mea culpa, mea maxima culpa. (Does anyone - even Catholics - know Latin anymore?) See my feeble acknowledgment elsewhere. But I'm getting a count on who's reading - so always a silver lining.

[petermwolk]

A good way to look at the fundamental error in the "raise the minimum wage" discussion is to make a reductio ad absurdum: if you can BY FIAT set a minimum wage then why not set it to 600 baht an hour so everyone can have a nice home and car? Why not 1,000? 10,000? (So everyone can buy a Mercedes!) Because, very quickly, product and service charges will rise to cover those costs ... and a loaf of bread will go for thousands of baht.

A minimum wage of 10,000 baht / hour might sound silly - but then so is 300. Just a smaller amount - but the results will be / must be the same. Just on a smaller, slower, scale so hopefully people won't notice what's happening.

So, raising the minimum wage without at the same time imposing sweeping price controls is meaningless ... and heaven help any country that tries that. Oh, wait a minute! Isn't that the basis for Marxism? Haven't we seen how well Communist societies fared in the 20th Century? "To each according to his needs" - whether or not you can pay for it! "From each according to his abilities" - whether or not your abilities have any value to the society or ultimate consumer. And exactly WHO is determining what YOU need? What YOUR abilities are?

But wouldn't a utopia be nice anyway?

(Just for comparison, minimum wage in U.K. is 300b/h, U.S. is 225b/h. Both of which having much higher costs of living than here.)

The Thai Minimum wage is 300b/day not per hour. Not an unreasonable number IMHO

Mea culpa, mea culpa, mea maxima culpa. (Does anyone - even Catholics - know Latin anymore?) See my feeble acknowledgment elsewhere. But I'm getting a count on who's reading - so always a silver lining.

[hellodolly]

Great policy, large wages rises without any compensation from increased productivity, a formula for failure. This scheme will increase the debt burden on the Thai treasury as unemployement rises and so will the claims for unemployement. It further erodes the tax base, therefore less income and larger expenditure and a pool of disgruntled unemployed people. A formula for increased popularity for the PTP, not.

Just what and how much money is paid out to an unemployed 7/11 worker?

[hellodolly]

many businesses will move to cambodia and the likes

the cambodian government must be loving this move by the thai

government

Yes, being known for cheap slave labour is awesome. These companies come to Thailand to take advantage of the cheap labour and the lack of benefits for thier employees who are taken advantage of. They will not go out of business by increasing wages, but will not be able to fill the CEOs pockets with nice bonuses and the investors can't buy thier kids that mercedies for thier birthday. These people SUCK. Eventually, even Cambodia wages will rise. This is why Unions started, due to slimy corporation profits more important then the people who make them those profits.

Spot on. Sadly a few incredibly greedy people are now making massive profits while increasing poverty. Asia's so called 'elites' are merrily following western corporate greed and show a shocking disregard for their fellow human beings. The scum that floats on top of our respective societies is truly awful.

This won't affect the big corporations too bad, they can absorb the cost or move. It's the Thai SMEs that will suffer and the self employed or unemployed/ retired who must deal with the increasing cost of daily essentials.

Not exactly true. Big corporations that are not here now will in all likely hood rethink any plan to set up shop in Thailand.

[hellodolly]

Team-Korn Chatikavanij English

Note to government, the reason why there is a gap in wage rates between different provinces (higher in more developed provinces and lower in less developed provinces) is so that there is an incentive to invest in the less developed provinces.

If wages are the same all over the country, who are you helping?

https://www.facebook.com/teamkornENG

You bring up a valid point there.

Unfortunately the lower paying Provinces will have a higher shipping rate.

[Thait Spot]

300 baht per day law is also a convieniant excuse for companies to close factories. Its got to be pretty tough to try and live on less than 300 baht per day. Many of the Western based companies here are already are paying above this rate.

Regionally it's quite high comparatively.

Foreign firms pay higher wages for higher qualified staff.

Most of the staff I see at retail and food outlets wouldn't merit the cash and will suffer accordingly

Sent from my Nexus 7 using Thaivisa Connect App

[naboo]

I see the day the Baht declines getting closer.

And the return of the miserable old men that left when the pound fell below 60B. :-(

Edited January 4, 2013 by naboo

[hyperdimension]

This won't affect the big corporations too bad, they can absorb the cost or move.

I'm sure that SC Asset are not worried. The Shinawatras would have done prior calculations to ensure that the net outcome after taking into account corporate tax cuts is highly positive for their company.

[Moruya]

This won't affect the big corporations too bad, they can absorb the cost or move.

I'm sure that SC Asset are not worried. The Shinawatras would have done prior calculations to ensure that the net outcome after taking into account corporate tax cuts is highly positive for their company.

The house purchase scheme will give them a boost and skilled builders are already paid more

[OzMick]

The move to switch workers from wages to contract "piece work" is the ugly side of this move.

[happysanook]

$10.00 a day? Outrageous.

One can comfortably live off of that in Thailand - especially if you're Thai, which is more than can be said for the American minimum wage which ends up being about 1200B a day after taxes.

[khunken]

Most multi-national & large Thai companies are already paying more than B300 per day. I agree with paying a decent wage but the provincial minimums should have been raised more gradually & it certainly doesn't help site companies in the poorer provinces.

The reason for it was just another form of vote-buying & I hope these laid off workers remember why it happened to them.

[Gary A]

I worked for two Thai companies. These were VERY profitable companies who basically employed cheap labor. The huge profits went to the company owners. I actually felt guilty earning a very good salary while working with people who were being seriously exploited. My feelings regarding a 300 baht wage is that if a company can't afford to pay a livable wage to their employees, they better learn to be more efficient or close their badly managed companies.

[frankold]

and five of the 6 will be playing games on their smart phones or texting. I will never understand Thai employers.

A lot of these excess employees are members of the family that owns the small business. Better than having them laying around the house doing the same thing, watching tv or sleeping. It's similar to Laos - Vientiane anyway.

Tesco, big c, etc etc etc etc etc etc etc... Must have really really big families

[Thai at Heart]

$10.00 a day? Outrageous.

One can comfortably live off of that in Thailand - especially if you're Thai, which is more than can be said for the American minimum wage which ends up being about 1200B a day after taxes.

Do you honestly believe this. If you sit in the country and farm your own food it may barely be feasible. You might eak out av existence in a slum shanty hut, and not starve. What is the cheapest rental accommodation in any city these days, 2000 baht?, 3 meals a day 150 baht.

Comfortably live. What a statement.

[vijer]

Never forget the greed of the few is always paramount.

So if I open a business and I need good workers I should pay them peanuts because they should be grateful I gave them a job. Forget the fact that, I alone, cannot sew 10,000 garments a month by myself, or make thousands of iPhones, by myself, the only important thing is that I and a few people at the top get more money for ourselves. Now lets get out the calculator and figure out if it is cheaper to move to Cambodia. Then the wages go up in Cambodia; get out the calculator and figure out if it is cheaper to move to Myranmar, etc, etc.

The Chinese have Apple now, but maybe Apple will decide it can make more money by moving to Myanmar or Cambodia. (of course the Chinese will just copy the iPhone and sell the knock off)

This is why governments should impose high import duties on goods not made in their country. The least expensive cars in Thailand are the ones made here. Why? No 200% import duty. So the rich want to by a Mercedes that costs $75,000 in the USA but costs $150,000 in Thailand, thats good for the govenment, a fair tax I would say. Hell make it 400% Or Mercedes could build a plant in Thailand for cars sold in Thailand.

An iPhone 5 in the USA sells for $650; impose a 200% import duty and now the price rockets to $1,300. Watch how fast sales drop. If the governmnet stuck to its policy and did't back down to business pressure, watch how fast Apple would start making iPhones in the USA. You don't see many US cars in Korea or Japan, why, because of the import duties.

[MrRealDeal]

Just like the other similar thread on this the part of the equation that everyone is leaving out is the corporate tax rates went from 30 to 23 percent which in most cases, and why corporation supported the scheme, is more than the increase in wages for the corporations.

So the idea and comments about how the corps. are somehow suffereing or need to make changes is simply factually incorect propoganda mostly promoted by companys that are simply not doing well for other reasons.

The rate drops to 20 percent in 2013

[Thai at Heart]

and five of the 6 will be playing games on their smart phones or texting. I will never understand Thai employers.

A lot of these excess employees are members of the family that owns the small business. Better than having them laying around the house doing the same thing, watching tv or sleeping. It's similar to Laos - Vientiane anyway.

Tesco, big c, etc etc etc etc etc etc etc... Must have really really big families

Home pro is unbelievable.

[Thai at Heart]

Just like the other similar thread on this the part of the equation that everyone is leaving out is the corporate tax rates went from 30 to 23 percent which in most cases, and why corporation supported the scheme, is more than the increase in wages for the corporations.

So the idea and comments about how the corps. are somehow suffereing or need to make changes is simply factually incorect propoganda mostly promoted by companys that are simply not doing well for other reasons.

The rate drops to 20 percent in 2013

The issue is that outside the big guys, just about every family owned company has expensed their life through their company to avoid paying any tax whatsoever. Employ all close family on 25k per month, pool it to 250k per month, put the house and office together a la all rice mills, get everyone a company car, have a factory canteen out the back of the house/office. Bingo, no corporate and minimal personal tax to pay.

Make a profit, take a business trip to Europe with said workforce and buy a merc.....

Edited January 4, 2013 by Thai at Heart