Wage Hike A Blow To 80% Of Small Thai Industries

[webfact]

Wage hike a blow to 80% of small Thai industries
By Digital Media



BANGKOK, April 13 – Thailand’s small and medium enterprises (SMEs) are in deep trouble, with 80 percent reporting losses in this year’s first quarter and 10 per cent on the verge of shutdown, an industrial organisation said on Friday.

Thanit Sorat, secretary general of the Federation of Thai Industries (FTI), said the nationwide increase of daily minimum wage to Bt300 since January 1 has struck a heavy blow on SMEs – almost one third of which admitted to suffering from financial constraint.

In a survey by FTI with SMEs operators on the impact of the minimum wage hike, 42.02 per cent said they would hire less workers, 20.28 per cent would scale down production and 15.94 per cent were considering layoffs. Among those contemplating layoffs, 13.04 per cent said they would possibly relocate their production bases elsewhere.

Mr Thanit said the survey was aimed at assessing feedback on the plight of SMEs in order to seek government assistance if necessary.

He said it will take some time to obtain a clearer picture on the employment situation and SMEs’ financial and operational status, as some unemployed workers may find new jobs at larger industrial enterprises or non-Thai businesses which receive promotional privileges from the Board of Investment (BoI).

Mr Thanit added that 58 per cent of SMEs affected by the higher labour cost have adjusted through various measures such as reduction of work force, working hours and welfare while enhancing labour and production productivity.

Sixty per cent of manufacturers said they would maintain their bases in Thailand while 26 per cent were considering relocating to neighbouring countries with cheaper labour costs, including Cambodia, Myanmar and Laos PDR.

Regarding government assistance, 50 per cent said they have never received any contributions from the state, while 28 per cent said government-issued measures did help, but on a small scale.

They called on the government to subsidise part of their labour costs and offer low-interest loans.

On the impact of the new minimum wage, 54 per cent of the entrepreneurs said their overall manufacturing costs increased by 15 per cent, 24 per cent saw an increase by 7-10 per cent, and 18 per cent found the impact minor at 3-5 per cent. Only 4 per cent of the manufacturers said they did not feel the pinch from the wage hike.

During Q1, 52.94 per cent of the enterprises surveyed said they could increase their product prices but only slightly, while 47 per cent had to maintain the same prices. (MCOT online news)


-- TNA 2013-04-13

[jucel]

God forbid any owner, manager taking a pay cut to balance things out! To be fair owners/companies have had it easy for a long time, paying people a pittance while they get fat!

[nev]

God forbid any owner, manager taking a pay cut to balance things out! To be fair owners/companies have had it easy for a long time, paying people a pittance while they get fat!

No mention of the money invested by the owners/companies and jobs created by them?

[scorecard]

God forbid any owner, manager taking a pay cut to balance things out! To be fair owners/companies have had it easy for a long time, paying people a pittance while they get fat!

No mention of the money invested by the owners/companies and jobs created by them?

Many points to look at:

- Owners / managers taking big salaries / workers paid a pittance etc.

Paid a pittance is not acceptable.

But there is a valid point in 'No mention of the money invested by the owners/companies and jobs created by them?'

Also valid to mention that owners / investors take the biggest risk (owners compared to employees) when they start / run a business.

But it would be nice to see a fairer cut up of the cake.

[NeverSure]

God forbid any owner, manager taking a pay cut to balance things out! To be fair owners/companies have had it easy for a long time, paying people a pittance while they get fat!

No mention of the money invested by the owners/companies and jobs created by them?

Or of the risk the owners take? They aren't supposed to be rewarded for risk, investment?

If "the people" want to get rich, why don't they start their own company?

[NeverSure]

God forbid any owner, manager taking a pay cut to balance things out! To be fair owners/companies have had it easy for a long time, paying people a pittance while they get fat!

No mention of the money invested by the owners/companies and jobs created by them?

Many points to look at:

- Owners / managers taking big salaries / workers paid a pittance etc.

Paid a pittance is not acceptable.

But there is a valid point in 'No mention of the money invested by the owners/companies and jobs created by them?'

Also valid to mention that owners / investors take the biggest risk (owners compared to employees) when they start / run a business.

But it would be nice to see a fairer cut up of the cake.

Many owners don't get a fat salary or even make a profit. Some go broke. Many do. Are the ones who take the risk and make the investment not the ones who are entitled to the reward? If I go ask for a job at McDonald's, am I to make as much as McDonald's does, to be fair? They are rich. Shouldn't they therefore pay me a ton of money?

Or, should they pay me what the market will bear?

[DocN]

God forbid any owner, manager taking a pay cut to balance things out! To be fair owners/companies have had it easy for a long time, paying people a pittance while they get fat!

No mention of the money invested by the owners/companies and jobs created by them?

Or of the risk the owners take? They aren't supposed to be rewarded for risk, investment?

If "the people" want to get rich, why don't they start their own company?

Wow!

"If the people want to get rich"...which sure they will, by earning a minimum wage of 300 baht per day!

I am already looking out for all the new rich people in their Ferraris and Merces, building expensive houses on vast areas of land.

On the other hand, I already see companies like CP close to closing down, because they now have to pay more than a slave wage.

Mind you: everyday goods in Thailand, like eggs or oil are still sold for the same prices they were sold 50 years ago...so why would anyone ask for the wages to rise....

[Robby nz]

Don't know what you-all who have posted on this subject have done all your lives by the look of your posts it aint running a small business.

If you had any idea of what it takes to start and run a small business you would know that the boss works a hell of a lot harder than any of the employees and a lot of the time for less reward.

Debt is the word that haunts anyone who starts their own business and will probably follow close on their heels all their lives, yea I know I ran my own business's all my life till I finally escaped.

Sure a small business owner will have a reasonable house and car, better than their employees = more debt.

The ones who get rich enough for big houses and flash cars are not the small business owners rather the ones with the big successful ideas, like facebook for instance.

Or those who have or work at the top of big business.

Can also add, this being Thailand, those who are best at corruption.

A sudden wage hike for employees, in this case sometimes 100% really impacts on a small business particularly if they don't have the luxury of being able to raise their prices to compensate.

Get out and look around already there is some clothes, shoes and many other things in the shops made in China and other countries with lower wage rates.

And oh yes to the one who thinks prices havnt risen, try to pay attention.

[DocN]

Don't know what you-all who have posted on this subject have done all your lives by the look of your posts it aint running a small business.

If you had any idea of what it takes to start and run a small business you would know that the boss works a hell of a lot harder than any of the employees and a lot of the time for less reward.

Debt is the word that haunts anyone who starts their own business and will probably follow close on their heels all their lives, yea I know I ran my own business's all my life till I finally escaped.

Sure a small business owner will have a reasonable house and car, better than their employees = more debt.

The ones who get rich enough for big houses and flash cars are not the small business owners rather the ones with the big successful ideas, like facebook for instance.

Or those who have or work at the top of big business.

Can also add, this being Thailand, those who are best at corruption.

A sudden wage hike for employees, in this case sometimes 100% really impacts on a small business particularly if they don't have the luxury of being able to raise their prices to compensate.

Get out and look around already there is some clothes, shoes and many other things in the shops made in China and other countries with lower wage rates.

And oh yes to the one who thinks prices havnt risen, try to pay attention.

...sarcasm isn't your strong side, is it?

[Bluespunk]

God forbid any owner, manager taking a pay cut to balance things out! To be fair owners/companies have had it easy for a long time, paying people a pittance while they get fat!

No mention of the money invested by the owners/companies and jobs created by them?

Or of the risk the owners take? They aren't supposed to be rewarded for risk, investment?

If "the people" want to get rich, why don't they start their own company?

300 baht a day isn't going to make anyone rich.

[473geo]

If companies cannot market and sell a product to afford 300 baht a day wages......well the government is better off topping up the rice scheme fund than supporting poor business.......

Edited April 13, 2013 by 473geo

[Mirth]

Been here 6 years. Price of egg went up threefold and oil almost 3. Which part of Thailand are you in?

On the other hand, I already see companies like CP close to closing down, because they now have to pay more than a slave wage.

Mind you: everyday goods in Thailand, like eggs or oil are still sold for the same prices they were sold 50 years ago...so why would anyone ask for the wages to rise....

[Mirth]

...sarcasm isn't your strong side, is it?

And your point is?

[LuckyLew]

Great policy by a great Government

By the people for the people ... lol

The sooner the poor and downtrodden rise up an demand real change the better

As long as the let the thiefs continue nada will change

[siampolee]

Another fine result of central government interfering in matters that they have little or no knowledge of. Small businesses are just that often run by a family network who pool their resources.The little extra none family labour is a necessary option, however when income and profit dips the outside non family labour is first to under the hammer.

The comments emanating from some posters here who work offshore and whose wife is a rice farmer are indeed inane comments, if the commercial rice farmer goes to the wall one wonders what that poster might feel concerning the minimum wage issue then ?

One of course accepts that the labour his good lady employs is paid at the going rate of 300 baht per day aren't they.

Certainly the staff my wife employs are paid above that rate and were paid so before the stipulation of 300 baht a day came into force, the most valuable asset she has like many small business operators is her labour force, they're the life blood of my wifes business concerns, without them and their efforts she would be unable to operate..

Profits may be small but she is a successful business woman with a happy loyal workforce.

[jucel]

God forbid any owner, manager taking a pay cut to balance things out! To be fair owners/companies have had it easy for a long time, paying people a pittance while they get fat!

No mention of the money invested by the owners/companies and jobs created by them?

Or of the risk the owners take? They aren't supposed to be rewarded for risk, investment?

If "the people" want to get rich, why don't they start their own company?

it's a small and very significant thing called capital!. I am very much a conservative (UK), but I think sometimes greed, megalomania gets the better of people, businesses. I'm all for entrepreneurs/small businesses but you need to accept external circumstances & take a hit yourself. Look at all the large corps in 2007/08. Bang, redundancies left, right & centre because they were petrified of their share price. Normally when there is a big cull of staff, the share price goes up! Just pay the folks a bit more and take a haircut from the bottom line!

[BrianCR]

God forbid any owner, manager taking a pay cut to balance things out! To be fair owners/companies have had it easy for a long time, paying people a pittance while they get fat!

No mention of the money invested by the owners/companies and jobs created by them?

Or of the risk the owners take? They aren't supposed to be rewarded for risk, investment?

If "the people" want to get rich, why don't they start their own company?

Wow!

"If the people want to get rich"...which sure they will, by earning a minimum wage of 300 baht per day!

I am already looking out for all the new rich people in their Ferraris and Merces, building expensive houses on vast areas of land.

On the other hand, I already see companies like CP close to closing down, because they now have to pay more than a slave wage.

Mind you: everyday goods in Thailand, like eggs or oil are still sold for the same prices they were sold 50 years ago...so why would anyone ask for the wages to rise....

The report was about Small to Medium Companies how does CP (being Thailand largest) fit in here?

[BrianCR]

God forbid any owner, manager taking a pay cut to balance things out! To be fair owners/companies have had it easy for a long time, paying people a pittance while they get fat!

No mention of the money invested by the owners/companies and jobs created by them?

Or of the risk the owners take? They aren't supposed to be rewarded for risk, investment?

If "the people" want to get rich, why don't they start their own company?

it's a small and very significant thing called capital!. I am very much a conservative (UK), but I think sometimes greed, megalomania gets the better of people, businesses. I'm all for entrepreneurs/small businesses but you need to accept external circumstances & take a hit yourself. Look at all the large corps in 2007/08. Bang, redundancies left, right & centre because they were petrified of their share price. Normally when there is a big cull of staff, the share price goes up! Just pay the folks a bit more and take a haircut from the bottom line!

Many small Companies have "borrowed" a large portion of their capital so I think that we have a new business plan here, give the profits to the workers, business can't make enough profit to repay borrowed capital, business goes bust, employees out of work, owner goes bankrupt - great idea lets all build this into a business plan!

[jucel]

Many small Companies have "borrowed" a large portion of their capital so I think that we have a new business plan here, give the profits to the workers, business can't make enough profit to repay borrowed capital, business goes bust, employees out of work, owner goes bankrupt - great idea lets all build this into a business plan!

I was replying to the previous comments about why people don't start businesses! Because of lack of capital. Most of Thailand is built on 'old money' and the small/medium/large owners are stinking rich!! Anybody who chose to start a business within the last 18 months and didn't factor in the 300 baht min wage is stupid & so is their bank manager! Christ Almighty!! don't start talking about business plans!!! You'll be talking about marketing next!

[DLock]

Clearly few of you went to business school and even fewer have risked it all to start a business.

I am all for paying a fair wage, but this wage hike was built on the back of populist policies to get the PTP elected, and not on sound fundamental planning, and relied 100% on the SME's to tote the bill.

It was poorly thought through, poorly implemented and will have ramifications for years to come.

[DocN]

...sarcasm isn't your strong side, is it?

And your point is?

Okay...veeeeeeeeeeeery slow: the prices of essential, everyday goods rise...the wages didn't...for years....

get it?

[473geo]

More likely the strength of the baht is forcing customers to control their purchase costs by pushing back on the supplier, a 25% variance over 10 years takes a toll. Thailand gathers around 75% of it's GDP from exports so I guess that will catch most of the SME business. Minimum wage...drop in the ocean. For those that mention a minimum wage regarding agricultural labour, you will need to become more aware and consult the Geo friends and family wage structure leaflet, which outlines payment and benefits. A copy is available at 200 usd to cover the administration costs due to the printer not being family.

[rubl]

Complex issue which has never really been addressed structually. Around 60% of Thai workforce is employed by SMEs. Slowly salary/wage structures and productivety need to be adjusted.

How many years and with what social problems did that take in the Western World ?

[Thaddeus]

God forbid any owner, manager taking a pay cut to balance things out! To be fair owners/companies have had it easy for a long time, paying people a pittance while they get fat!

No mention of the money invested by the owners/companies and jobs created by them?

Or of the risk the owners take? They aren't supposed to be rewarded for risk, investment?

If "the people" want to get rich, why don't they start their own company?

300 baht a day isn't going to make anyone rich.

But it will make some unemployed, these people will then fail to appear in any Government figures.

[Bluespunk]

300 baht a day isn't going to make anyone rich.

But it will make some unemployed, these people will then fail to appear in any Government figures.

300 baht a day is not extravagant. it is barely a living wage. workers should be paid a living wage, not just survival wages.

[wolf5370]

Is this a surprise to anyone? Many factories work on tight profit lines, cheap labour for cheap goods - when forced to change one when there is little control over the other, means pressure. Minimum wage does not affect big business, it affect SMEs - although 300 baht seems fair, put against zilch with no job and no welfare, I'm sure a lot of these workers will not be as happy as they were when they were sold it at the election booth.

Of course wages have to rise, but 100% wage rise overnight was always going to cause big issues - they were warned by their own economists and experts, but it was an election promise they couldn't get away from (though watered down by extending the deadline and staging geographically) - this was going to be painful and with the baht at its all time strongest, I guess its just the start.

[Robby nz]

I wonder as I roam around this country about this unemployment business.

I see so many people doing their own thing with market stalls and other things that would in another country be called self employed and wonder just what percentage of the population is officially employed and paying tax?

None of these people would be in any position to be getting any sort of minimum wage and I doubt they would be paying it to anyone they employ nor deducting tax.

Just how many know there is such a thing as unemployment in this country and even if they did how to claim it?

Are the blind beggars I saw in the market I just came from, those with a limb missing I saw in BKK last week or those that sleep on the streets counted in the lovely 1% unemployment.

Might be that those who lose their job with a SME because of the 300B thing are in a position to know, or are told even, how to apply ( I believe there is a small payment involved) but what about all the others?

Those who have worked for a SME that closes usually have some skill involved with their job that often isn't transferable and it seems to me that those who are forced to close would be in groupings of what could be called less profitable industries such as clothing which is vulnerable to completion from imports from lower wage countries and you don't have to go far to find some of them.

Even parts of Thailand close to the borders in places like Sanklaburi where I was last week there are small clothing sweat shops that employ Burmese girls for 90B a day that provide unfair completion for a small clothing business trying to make a living.

A policy of raising the minimum wage in line with the cost of living is fine but a large lump sum increase can well be impossible for a SME to handle no matter what they do short of raising prices and that because of completion may in its self be impossible.

[surangw]

the other 20% ignore it.

[Markaew]

Instead of the wage increase I would like to see a shorter week for these people. Instead of a 6 or 7 day work week, have a 5 or 6 day week. To me that's the slave part of this.

[rametindallas]

Some thoughts:

In a Global Economy and Free Market, which would you rather have controlling businesses, the government with its self-serving, ignorant-of-business, corrupt politicians or private individuals/families with a personal stake in the success of that business and the efficiencies entailed?

No one is getting rich at B300 or B500. Why not make the minimum wage B500 and then workers could afford a home and consumer goods? Good for the economy right?... until the cost of homes and consumer goods rise to reflect the higher costs related to labor costs and then we are back to square one.

Sadly, there are many places in the World that have poorer people than Thailand and Capitalists will go where the labor is cheapest and profits highest. At least it will bring jobs to those who are poorer than Thais. The consolation, for all the jobs lost in Thailand, is that it will free up labor to work on all the Thai government projects the Thai government is borrowing for. Then more and more Thais are dependent on Government jobs. Less Capitalism and more Socialism. Maybe Thailand can emulate China and let the government, with its self-serving, ignorant-of-business, corrupt politicians, control everything. By the way, China is a House of Cards and their huge megaprojects are not sustainable.

On a positive note: If the Thai government would spend a fraction of their corrupt budgets on training Thais, who are very smart cookies, to do high-skilled jobs that offer value-for-money then wages would rise naturally as these workers could name their price AND be worth every Baht.

One example of a missed opportunity was with the tablet computers. Why didn't the Thai government set up a training program so that Thais could design and build the computers in Thailand instead of creating jobs in China?

Education is the key to improvement in living standards and ALL Thai governments have FAILED to improve the education system in this country (Education Ministers rarely serve even one year before they are replaced)

Lastly, how can anyone expect Thai workers to have a better life when ALL their politicians are self-serving and corrupt?