Wage Hike A Blow To 80% Of Small Thai Industries

[hellodolly]

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....

Well they are now selling for more than they did last December.

So what is your point?

[justathought]

I have a small factory employing about 100 people near Ayutthya. And I am finding it damn hard to get additional staff even when offering 350 baht per day. So I suspect this news article is not entirely true.

[Phatcharanan]

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!

At least people were employed

[soomak]

300 baht a day is still very low.

I wonder how many of you could live of that? I certainly couldn't.

I employ a few people in the Philippines, a country poorer than Thailand, and still pay them between $2.20-3.00 per hour, which is 570 - 780 Baht per day (based on 9 hours per day).

The problem with most Thai businesses is the very low productivity, and the lack of incentive to be more efficient.

I just walked into the Big-C electronics section a few days ago, and counted about 10 employees wondering aimlessly and talking with each other. Surely 5 could do the job just as fine, while increasing the productivity two fold in a blink of an eye...

It usually doesn't take much effort to increase productivity in low developed countries, as the technology and knowledge is out there, it just has to be implemented.

The problem is with incentive, and higher wage means higher incentive for investment in modernization.

[soomak]

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.

[Mosha]

It's not just the boss. There is maintaining a differential. So Somchai gets his 300 Baht, the guy on 500 Baht wants a raise because guy labouring for him has caught up.

[Locationthailand]

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?

Relating facts isn't yours. Eggs are not a staple. Rice is. Rice has doubled in the last three years. Fuel - essential to the economic continuance is up 28%. Housing - often referred to as also essential,both as an economic indicator and essential, by comparing prices with the West you may see that the basic wage is relevant to cost of housing. Here the cost of wages has risen not in conjunction with the value or price of housing. Despite the 'basic wage' being referred to as 'slave labour' here, the majority of the worlds population - yes China, India account for that, get less than the Thai basic wage. It is all relative but if you wish to champion the Thai argument, more power to you. But compare apples with apples. Just get your fact right. And the numbers quoted here - even if inaccurate - are quite staggering as to the (negative) affect the wage hike has had on the Thai economy (if you can believe them).

[Thai at Heart]

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

[Mirth]

...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?

Are you drunk ALL the time?

[AnotherOneAmerican]

The high value of the Baht makes it cheaper for the wholesalers to buy imported goods.

It's a factor that will drive all locally manufactured goods out of the market.

Wages are mainly irrelevant to this equation.

[BrianCR]

300 baht a day is still very low.

I wonder how many of you could live of that? I certainly couldn't.

I employ a few people in the Philippines, a country poorer than Thailand, and still pay them between $2.20-3.00 per hour, which is 570 - 780 Baht per day (based on 9 hours per day).

The problem with most Thai businesses is the very low productivity, and the lack of incentive to be more efficient.

I just walked into the Big-C electronics section a few days ago, and counted about 10 employees wondering aimlessly and talking with each other. Surely 5 could do the job just as fine, while increasing the productivity two fold in a blink of an eye...

It usually doesn't take much effort to increase productivity in low developed countries, as the technology and knowledge is out there, it just has to be implemented.

The problem is with incentive, and higher wage means higher incentive for investment in modernization.

Your idea is correct and would work (does work) in many countries but unlikely here in Thailand. If you want to keep production/sales rolling for everyone person you need to work you have to employ three (900 baht per day). Why? Because Thai's are not taught work ethics and many still have the "farmer approach" to work - work when you need and take lots of time off. An employer can never be sure who will be at work at any given period and who will not bother to turn up! Giving a Thai a bonus for extra working/hard work/etc has the opposite affect here to the west where most people will work harder to try and get another bonus - here? They get the extra money and don't bother to go to work until they need to get more to spend. Another important thing to consider is that after completing one months work a Thai person expects a long service award! Okay, a slight exaggeration and of course some people work hard and attend regularly but, what this Country needs BEFORE giving wage hikes is educational courses on work ethics! Wage hikes come later

[BrianCR]

The high value of the Baht makes it cheaper for the wholesalers to buy imported goods.

It's a factor that will drive all locally manufactured goods out of the market.

Wages are mainly irrelevant to this equation.

Why? Don't you need people to handle or sell the imports?

[BrianCR]

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.

And, afterwards taught to survive without a wage when manufacturing (as it has historically) moves to a cheaper location!

[Thai at Heart]

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.

And, afterwards taught to survive without a wage when manufacturing (as it has historically) moves to a cheaper location!

Well, they keep trumpeting that they are at full employment, so would you bother to invest in a country with no available labor?

[Tropicalevo]

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!

A bit of a silly generalisation from a disgruntled employee? (Have you already bought your copy of 'Ding dong, the witch is dead'?)

I pay my staff more than the minumum wage. I have done for over 10 years.

I cannot take a pay cut - I have to pay a certain amount of tax to maintain my work permit. (I do not take any salary actually - I invest it all back in the business)

The 300 baht a day is just the beginning of the increased costs. The social security and tax is also increased.

Then there is the knock on effect. The maid says "a labourer now gets 9,000 baht a month - I need 15,000 baht a month because I am worth more".

On Dec 31st - I was paying 13,000 baht a month for a security guard - Jan 1st - it is 14,000 baht a month/guard/shift. All because of 'increased costs'.

The only fat thing about me is my beer gut - not my bank balance.

Get real and talk to some SME owners. It's tough out there for us. And the biggest killer of SME's - cash flow. I have to pay my staff every two weeks. My customers pay when they feel like it. I do not have the luxury of saying 'pay me now or go somewhere else'. My customer base is restriced by location.

[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?

Are you drunk ALL the time?

No...only when I have to talk to people like you, but thanks for asking

[Mirth]

Are you drunk ALL the time?

No...only when I have to talk to people like you, but thanks for asking

And the infantile mind reveals itself, I rest my case.

Please refer to your post #7 but being of an infant mind, am sure you will have more immature retort but you will assume that they are educated thoughts or wise remarks, to the extent of praising yourself in the art of sarcasm and everything but in reality, painting yourself as who you truly are, which is the opposite of everything you think yourself as.

[SICHONSTEVE]

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?

Where does sarcasm come into it?

He is only giving his version of events in a quite legitimate way and your unjustified criticism is unnecessary and unwarranted!!

[geriatrickid]

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?

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.

[BrianCR]

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!

You are just taking the easy way out and generalizing - I and about 10/12 friends own small businesses in this area and none of us are filthy rich however, we do employ Thai people. The local market with about 200 stalls is supported by maybe 20 paid workers (the other stalls are operated by family members - still employees through) are you saying that we and all these people are filthy rich? If you are then you really do have a problem and if you're not then try and remember that large numbers of Thai (and Burmese) are employed by other people who are making a living and (unfortunately) are not filthy rich!

PS

It's quite funny really as you are reversing the Thai mindset - that all ex-pats are mufti-millionaires haha

Edited April 14, 2013 by BrianCR

[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?

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.

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.

Edited April 14, 2013 by NeverSure

[metisdead]

An off topic post has been removed, this topic is not about US auto workers or Detroit.

[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.

And, afterwards taught to survive without a wage when manufacturing (as it has historically) moves to a cheaper location!

Hard to find anywhere cheaper than 300 baht a day without accepting wage levels barely above slavery are morally correct. If workers are not treated like humans they will react and follow those who promise them heaven on earth. We saw where that lead three years ago. I dislike PT a lot, but here they are right.

[hellodolly]

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?

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.

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.

Question

If those road side stall operations run by only one person can not make 300 baht a day will the Government force them to close down?

[hellodolly]

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.

And, afterwards taught to survive without a wage when manufacturing (as it has historically) moves to a cheaper location!

Hard to find anywhere cheaper than 300 baht a day without accepting wage levels barely above slavery are morally correct. If workers are not treated like humans they will react and follow those who promise them heaven on earth. We saw where that lead three years ago. I dislike PT a lot, but here they are right.

Could you kindly give us an example of how this wage hike has benefited all 66,000,000 Thai's and take into consideration the number of laid off people and the rise in prices.

Talk is cheap give us the figures remember 66,000,000 Thais.

[Bluespunk]

nope I can't. However I do know that asking people to live on less than the minimum wage is wrong. 300 baht is not a lot of money. Yes talk is cheap, but as you say the cost of living is not and has been rising long before the minimum wage was introduced.

Edited April 14, 2013 by Bluespunk

[Equalizer]

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.

[NoshowJones]

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.

[NoshowJones]

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?

Not only Thai workers can be expected to have a better life and not have because of their Politicians being corrupt, I believe about 95% of British MPs are corrupt too.

[gabruce]

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

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.

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.

I'll just point out that usually unemployment statistics are lies in all countries!!! The prevailing (all?) method is to only count the people who are actively looking for work. So the consideration here in Thailand, are how many Thai's are actively looking for work. I'd probably believe the nearly zero figure based on this definition.

Note the difference in numbers in the USA. approx 101 million working age american are not participating in the labour force (the official figure is 63.3% is participating, over 16). Yet they enjoy an unemployement rate of about 7.6% right now.

My experience is that it's very difficult to find anyone to work in Thailand. People are more likely to want to have their own little enterprise.

The most recent labour force participation rate for Thailand that I've found is from 2010 which is 71.7% down from 81.4% in 1990

Labour force participation is anyone that is economically active.