Wage Hike A Blow To 80% Of Small Thai Industries

[realenglish1]

Every one is complaining about the wage hike and that a lot of businesses will shut down because of it. Well if it was the difference between the old wage and the new wage that was the only thing keeping them opened

I think not

I have heard this complaint from many during wage hikes in minumum wages by the governments of Canada and the United States. And after the wage hike occurs no one shuts down or moves

So I suspect this is the same Give the laborer a break Let them make a decent wage. After all They are your business

[rotary]

This wage hike will cost lots of Thai jobs. I know one guy who has been in business for 30 plus years with a small factory. He is almost out of business now. In the end the people who need the jobs lose.

[Sayonarax]

If maids want 9K then ill be charging em board and food.

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.

I cant afford to live in Central London.. should my employer raise my salary to meet my living standards?
I cant afford an iPhone 5.. should my employer raise my salary to meet my needs and wants?

I cant afford to raise my unwanted offspring.. should my employer increase my salary?

When you work for others you are just surviving life. No one forces you to get a job for less than 300b.

[khunken]

Basically IMO B300 is not too much to pay a worker in Thailand. The way it was implemented however was purely for political purposes & should have been a 2 or 3-step process. There has been no effort to improve the skills or productivity of Thai workers.

Many SMEs here are just a tad above slave users, especially those employing non-Thais who have no outlet to get another job or any power to fight for better wages. Plus there are many politically connected companies that are allowed to get away with non implementation.

Unemployment here is undoubtedly low - just look at construction where a number of projects are going very slowly due to a lack of workers.

If SMEs want to succeed they will have to adapt to the B300 wage & I'm sure many can do it. Some won't but they are probably marginal anyway.

[DocN]

If maids want 9K then ill be charging em board and food.

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.

I cant afford to live in Central London.. should my employer raise my salary to meet my living standards?

I cant afford an iPhone 5.. should my employer raise my salary to meet my needs and wants?

I cant afford to raise my unwanted offspring.. should my employer increase my salary?

When you work for others you are just surviving life. No one forces you to get a job for less than 300b.

Humanitarian, aren't you?!

The cost of living in Thaialnd has been rising and rising, without the wages following.

Education in Thailand is still a question of rich or poor.

"Let them eat cake, if they can't effort bread", huh?

[whybother]

A nice sentiment, but you neglect to take into account that there is not a level playing field. Start ups have a difficult time raising capital. Unlike most western countries, there are no fair lending laws in effect, nor is it easy for someone not "connected" to secure contracts, permits etc. In the USA, small entrepreneurs are helped out. In Canada small businesses started by the poor are eligible for tax relief and subsidies.

BTW, if everyone started a business, there would be no workers to sit in the sweatshops or to come clean your local sewer or collect your garbage etc. Thailand has a labour shortage. Under a free market quasi capitalist system, wages would reflect that shortage. Instead, successive Thai governments have kept wages low to the benefit of many businesses.

Nothing is stopping businesses from paying more than the minimum wage. The government isn't keeping the wages low. The businesses are. Edited April 14, 2013 by whybother

[bangkokheat]

thats the idea, let the employers carry the burden of the wasted money from tax and corruption, you shit arse employers can pay for the government mistakes and corruption that help raise the cost of products

[kimamey]

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.

I think raising wages is a good thing even though it's not in my interest but what's needed is a long term strategy to bring in the increase gradually. Of course that doesn't win elections here.

It's not entirely true that the government hasn't helped out. They are as far as I know spending money on training through the Department of Skill Development.

[Bluespunk]

If maids want 9K then ill be charging em board and food.

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.

I cant afford to live in Central London.. should my employer raise my salary to meet my living standards?

I cant afford an iPhone 5.. should my employer raise my salary to meet my needs and wants?

I cant afford to raise my unwanted offspring.. should my employer increase my salary?

When you work for others you are just surviving life. No one forces you to get a job for less than 300b.

i believe the london allowance a lot of workers there get is to help pay their rent. as to question 2, no, but then again 300 baht a day is hardly going to leave a lot spare for i phones. now, question 3, unwanted, interesting attitude, but as to your query, yes a wage should allow you to feed, clothe and generally give your children a chance in life.

[geriatrickid]

If Thailand has a labor shortage, I'd like to know why so many sit around in villages drinking beer all day.

Thailand claims almost 0 unemployment, and I throw the BS flag if compared to the West. If I have a little stall on the sidewalk and maybe earn 200 baht per day with it, I must be employed by Thai calculations. If those people aren't "employed," then Thailand would have to adjust its numbers. I don't believe that Thailand pays any attention to rural Isaan or other rural areas, or poor vendors along the streets and roads when it says people are "employed."

I think that most of the worst lies I've ever heard came out of the **** government.

http://www.thaivisa.com/forum/topic/605958-severe-labour-shortage-looms-thailand/

http://www.thaivisa.com/forum/topic/604482-skilled-labour-shortage-tops-c-e-os-concerns-for-first-half-of-2013-thailand/

Nice explanation of Thailand's labour issue here

http://www.google.com/url?sa=t&rct=j&q=thailand%20labour%20kelly&source=web&cd=1&cad=rja&ved=0CC4QFjAA&url=http%3A%2F%2Fwww.kellyocg.com%2FKnowledge%2FEmployment_Outlook_2012_Content%2FEmployment_Outlook_2012_-_Thailand_PDF%2F&ei=WbhqUbKNBsay0QGgt4HoDQ&usg=AFQjCNHHEpbMAI7y1ERszWgXqjI4-r2sUA&bvm=bv.45175338,d.dmQ

The opinions offered on the labour shortages are fairly consistent from both the business and labour sectors. The ILO, IMF, World Bank and multiple sources from across the political spectrum all share a common position in this matter.

[lockman]

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.......

Meanwhile out here in the rural, combines are selling well....simply due to the increased wage demands because the "government say so" So those who worked and earned some money are further depressed. My findings is these type of mandatory wage increases without thought of consequences simply hurts the poor the most.

[Mosha]

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?

The problem begins when you have to pay the toilet cleaner 300bht per day, this has to be your starting point, so if you was once running a small team and you was making 300 bht and all of a sudden they are now making 300 bht why would you not want more for the responsibility. In turn if the toilet cleaner now makes 300bht why would your small team not want more than the toilet cleaner for doing a semi skilled job. And so on.

Exactly. As I said previously. Skilled people demand the differential is maintained. You raise the amount to lift people above the poverty level. You only raise the bar for what is the poverty level. Life isn't fair, what do socialists do when they can't use other people's money.

[Mosha]

A nice sentiment, but you neglect to take into account that there is not a level playing field. Start ups have a difficult time raising capital. Unlike most western countries, there are no fair lending laws in effect, nor is it easy for someone not "connected" to secure contracts, permits etc. In the USA, small entrepreneurs are helped out. In Canada small businesses started by the poor are eligible for tax relief and subsidies.

BTW, if everyone started a business, there would be no workers to sit in the sweatshops or to come clean your local sewer or collect your garbage etc. Thailand has a labour shortage. Under a free market quasi capitalist system, wages would reflect that shortage. Instead, successive Thai governments have kept wages low to the benefit of many businesses.

Nothing is stopping businesses from paying more than the minimum wage. The government isn't keeping the wages low. The businesses are.

Of course productivity does not come in to it. Ask my wife why we don't use Thais to tap our trees.

[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.......

Meanwhile out here in the rural, combines are selling well....simply due to the increased wage demands because the "government say so" So those who worked and earned some money are further depressed. My findings is these type of mandatory wage increases without thought of consequences simply hurts the poor the most.

I've got news for you, mechanical harvesting was cheaper even when the wages were 150 baht a day. One progression you cannot put down to the wage increase, think again....

[rametindallas]

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.

You are partially correct. The cost of goods and services doesn't only depend on the wage, it also depends on the price of capital (interest rates), the taxes, the price of natural resources (such as oil and gas), and of course the efficiency of the businesses.

If you raise the minimum wage from 300 to 500 baht, prices will not rise by 66%.

They might rise 10-30%, depending on the industry (the more labor intensive, the higher the price increase).

Higher labor costs also create an incentive for using better (and more expensive) technology. So as the efficiency increases, the price drops.

Take a simple example:

Compare the price of a car manufactured in Thailand (and sold locally) and a car manufactured in the US (and sold there). Its almost the same price, yet the wages in the US are probably 6 times higher.

You are correct, of course. I was being too simplistic but there are legitimate reasons not to raise the mandated minimum wage to Baht 500. I believe the labor shortage created by new government infrastructure programs will do more to raise wages than any mandate as, even now, it is difficult to find qualified workers at Baht 300

[movsrus]

The appreciation of the Thai baht and the increase in minimum wage is hurting the SME in Thailand. I think for many SME's the appreciation of the baht is a greater problem than the increase in minimum wages. SME's generally don't have the financing to be able to hedge currency rates that bigger companies and multi-nationals do so they have to grin and bear it. If the baht drops to 26-27 to the USD it will force many of these small companies to go out of business or move to other countries where they can get better rates for labor.

[rametindallas]

You get the big business man, he has built companies up and increases his profits every year. eventually he makes say $10,00000 profit, more than enough to last him and his family the rest of their lives. Next year he makes say $12,000000, then five years later he has a personal fortune of $30,000000.

The following year, he only makes $2.000000 profit. Oh what a tragedy, he's a millionaire many times over, and it is a great tragedy now his profits have dropped a little bit, but he is still a millionaire many times over. Then he dies and some spoiled brats get all the money, having not worked a day in their lives. Before anyone says "and your'e point is",. Capitalism is OK up to a point, but what I

have described is just pure greed, and it happens all over the world.

Dr. Thaksin has made quite a bit more than $30M but the poor of the N and NE don't seem to mind. Bill Gates made his money by increasing the wealth of the whole world by making it more efficient. No one got poorer because Bill Gates became super rich. Capitalism is fine when it improves the world without exploiting the poor in a negative way. How does that big business man you refer to increase his profits every year? People who are very rich want more so they expand their businesses (create jobs). If there was no 'pure greed', the 'big business man', after getting all the money he and his family need would just cease operations, lay everyone off, and retire; he has 'enough'. Is that what you want him to do? It is not Human Nature to work for nothing (though some rare individuals do). I read in Forbes Magazine that most wealth is created and not inherited and that about 20% of the super wealthy inherited their money.

[hellodolly]

You get the big business man, he has built companies up and increases his profits every year. eventually he makes say $10,00000 profit, more than enough to last him and his family the rest of their lives. Next year he makes say $12,000000, then five years later he has a personal fortune of $30,000000.

The following year, he only makes $2.000000 profit. Oh what a tragedy, he's a millionaire many times over, and it is a great tragedy now his profits have dropped a little bit, but he is still a millionaire many times over. Then he dies and some spoiled brats get all the money, having not worked a day in their lives. Before anyone says "and your'e point is",. Capitalism is OK up to a point, but what I

have described is just pure greed, and it happens all over the world.

Dr. Thaksin has made quite a bit more than $30M but the poor of the N and NE don't seem to mind. Bill Gates made his money by increasing the wealth of the whole world by making it more efficient. No one got poorer because Bill Gates became super rich. Capitalism is fine when it improves the world without exploiting the poor in a negative way. How does that big business man you refer to increase his profits every year? People who are very rich want more so they expand their businesses (create jobs). If there was no 'pure greed', the 'big business man', after getting all the money he and his family need would just cease operations, lay everyone off, and retire; he has 'enough'. Is that what you want him to do? It is not Human Nature to work for nothing (though some rare individuals do). I read in Forbes Magazine that most wealth is created and not inherited and that about 20% of the super wealthy inherited their money.

He obviously has no idea of what he is talking about.

Millions of small family business some just one person road carts and that id-ot talks about a man who makes a lot of money and creates jobs so more people can buy from the small business man and the road side carts.

I would love to see his reaction if the one man he is talking about said to him I agree with you I will lay every one off and live on what I have made. I have made to much.

Not sure how the road side carts do. I just found out that the one I have been buying my orange juice from raised the price from 20 to 25 baht a bottle. Probably an attempt to keep up with mister rich man. Or the inflation that goes hand in hand with higher wages.

[hellodolly]

It would be interesting if any of these SME could produce some figures on how this has really effected their profitability.

Well like I said my orange juice vender just raised her prices from 20 baht to 25 baht.

Now how much of that is profit I don't know but rumor is the rental of the cart space is in the 10,000 baht a month neighborhood.

Do you really think her raise in cost wioll bring in a ton of profit?

[NeverSure]

You get the big business man, he has built companies up and increases his profits every year. eventually he makes say $10,00000 profit, more than enough to last him and his family the rest of their lives. Next year he makes say $12,000000, then five years later he has a personal fortune of $30,000000.

The following year, he only makes $2.000000 profit. Oh what a tragedy, he's a millionaire many times over, and it is a great tragedy now his profits have dropped a little bit, but he is still a millionaire many times over. Then he dies and some spoiled brats get all the money, having not worked a day in their lives. Before anyone says "and your'e point is",. Capitalism is OK up to a point, but what I

have described is just pure greed, and it happens all over the world.

Please explain to me where any jobs would come from, and any resulting taxes would be paid, if it weren't for entrepreneurs starting businesses for the sole hope of making money?

People don't start businesses to make other people money. They also don't start businesses in the hope of creating jobs for anyone.

The only reason anyone would make the investment and take the risk of starting a business is to make himself a bunch of money.

Jobs and resulting taxes are just a byproduct of that hope of making money.

You would imply that anyone who is successful at starting a business, making money for himself and his family, and creating jobs is evil. I would claim that he is the biggest sole contributor to a successful economy.

[473geo]

It would be interesting if any of these SME could produce some figures on how this has really effected their profitability.

Well like I said my orange juice vender just raised her prices from 20 baht to 25 baht.

Now how much of that is profit I don't know but rumor is the rental of the cart space is in the 10,000 baht a month neighborhood.

Do you really think her raise in cost wioll bring in a ton of profit?

Sorry to point this out dolly but what has the efect of a rental cost increase to do with the minmum wage increase.....have they put the rents up to pay the rent collector the 300 baht a day!

[wolf5370]

Every one is complaining about the wage hike and that a lot of businesses will shut down because of it. Well if it was the difference between the old wage and the new wage that was the only thing keeping them opened

I think not

I have heard this complaint from many during wage hikes in minumum wages by the governments of Canada and the United States. And after the wage hike occurs no one shuts down or moves

So I suspect this is the same Give the laborer a break Let them make a decent wage. After all They are your business

OK so when did the USA or Canada double the minimum wage? Raises are one thing, 100%+ raises from the bottom up cause mayhem. Thailand's is a manufacturing industrialised nation (and agricultural, but that is less relevant here due to self employed nature of farming here) with much of its manufacturing factory based using large labour forces rather than mass automation. This keeps the unemployment down and makes financial sense whilst wages are lower - Thailand also manufactures for many foreign companies (car and electronics especially) - with both exchange rate hikes and wage hikes, automation and relocation start to look good - that is not good news for the poor on many fronts.

Sure salaries need to rise with cost of living - and agreed they have not - but this should have been phased over several years to allow for companies to adjust and restructure - it was a populist not well thought-out election promise policy - most of us said it would hurt in the short to medium term and it is starting to now (badly timed with the very strong baht). There are also other ways to help the low paid - getting rid of free medical certainly wasn't one of them and neither is tablet pcs or car loans. Minimum wage raises always causes inflation that eats much (or all) the benefit anyway - it causes SMEs and even large corps to look to outsourcing, automation, rationalisation and staffing levels - remember SMEs forced to push prices up also increases costs of upstream companies - small dominos can also knock over big dominos with enough momentum.

[Thai at Heart]

It's all moot as long as companies don't pay it, or they freely import from neighbouring countries and pay less.

[Thai at Heart]

It would be interesting if any of these SME could produce some figures on how this has really effected their profitability.

Well like I said my orange juice vender just raised her prices from 20 baht to 25 baht.

Now how much of that is profit I don't know but rumor is the rental of the cart space is in the 10,000 baht a month neighborhood.

Do you really think her raise in cost wioll bring in a ton of profit?

I would hope that the Thai definition of an SME goes beyond an orange juice vendor.

[Mosha]

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.

You are partially correct. The cost of goods and services doesn't only depend on the wage, it also depends on the price of capital (interest rates), the taxes, the price of natural resources (such as oil and gas), and of course the efficiency of the businesses.

If you raise the minimum wage from 300 to 500 baht, prices will not rise by 66%.

They might rise 10-30%, depending on the industry (the more labor intensive, the higher the price increase).

Higher labor costs also create an incentive for using better (and more expensive) technology. So as the efficiency increases, the price drops.

Take a simple example:

Compare the price of a car manufactured in Thailand (and sold locally) and a car manufactured in the US (and sold there). Its almost the same price, yet the wages in the US are probably 6 times higher.

You are correct, of course. I was being too simplistic but there are legitimate reasons not to raise the mandated minimum wage to Baht 500. I believe the labor shortage created by new government infrastructure programs will do more to raise wages than any mandate as, even now, it is difficult to find qualified workers at Baht 300

You can't get a non skilled person for that in Ranong.

[johna]

While the forum members are debating this issue, employers here in Pathum Thani, and that includes major corporations have solved the problem by hiring Burmese and Cambodian workers, accommodation either on or of site plus transportation included.

[NoshowJones]

Neversure, HelloDolly and Rametindallas. You all make good points in your'e answer to me, and I did say Capitalism is OK up to a point. I would doubt if any of you are from the UK, and I believe that most UK TV posters will agree with me that in the UK, the rich are getting richer and the poor are getting poorer all the time. The profits some people are making is way over the top ie, the power companies are hiking their bills by astronimical amounts all the time, and thousands of old age pensioners are dying every winter through cold related illnesses, they have to make a choice of staying warm or going hungry, and the 200 GBP they get every year does not come close to seeing them through the winter.

That is only a small part of the greed of rich companies and their huge profits. If people can run a successful business, employ people and make a good living for themselves, that's great, good luck to them, as long as they play fair. and there are lots of business people like that, even in the UK, but the governments over the years (both Labour and Conservative) make sure their rich business friends get all the tax breaks going while the ordinary working class people get hammered through low wages and ever rising high taxation year after year. UK pensioners in Thailand and many other countries do not get their annual pension increases, they get them stolen from them by thieving UK governments after paying tax and National Insurance contributions all their working lives. Sorry I'm a bit off topic here, but I'm saying again Capitalism is OK up to a point, but in the UK it is well over the top.

[ABCer]

The appreciation of the Thai baht and the increase in minimum wage is hurting the SME in Thailand. I think for many SME's the appreciation of the baht is a greater problem than the increase in minimum wages. SME's generally don't have the financing to be able to hedge currency rates that bigger companies and multi-nationals do so they have to grin and bear it. If the baht drops to 26-27 to the USD it will force many of these small companies to go out of business or move to other countries where they can get better rates for labor.

True. This happened before and will happen again. Elementary laws of economics.

China, Taiwan, Filipines, Indonesia, Bangladesh, India, Pakistan, Laos, Cambodia, Burma - all will be happy recipients of these SMEs.

Lots of Thai people will suffer from such a 'kindness'. Today Thais look with compassion or contempt at many immigrant-workers.

I hope and wish that the table is not turned around against them. Only market can dictate prices in a free country. Anything else is counterproductive.