Thailand’s minimum wage increase raises concern

3:22 AM // 0 comments // Lonely // Category: Business
    July 17, 2011
    Boris Sullivan

The private sector has expressed its concern over the plan of the new Pheu Thai-led government to raise minimum wage to 300 baht per day across the country, saying that the measure will prompt an increase of 140 billion baht a year to the capital labor cost.

Thai Chamber of Commerce TCC Vice-Chairperson Pongsak Assakul said the domestic private sector and a number of foreign investors have already been worried about the huge impact from the upcoming government’s policy on the production cost.
hundreds baht banknote

The Pheu Thai Party earlier promoted raising the minimum wage of workers across the country to Bt300 per day



Mr Pongsak viewed that small and medium businesses are likely to receive impacts the most. He suggested that the government enforce assistance packages in order to alleviate the consequences if it really wants to forge ahead with the minimum wage adjustment.

Apart from the aforementioned impact, it is worrying that Thai and foreign investors might shift their production base here to other countries which offer lower wages but have similar investment climate.

Nevertheless, the TCC vice-president stressed that the Thai business sector is ready to work and discuss with the new government closely for long-term benefits of the country.

via Private sector worrying about minimum wage rise : National News Bureau of Thailand.

The Pheu Thai Party earlier promoted raising the minimum wage of workers across the country to Bt300 per day and starting a  minimum salary for new graduates from Bt15,000 per month, campaign promises which are believed to have drawn a large number of votes for the party in Sunday’s election.

Mr Jarupong said the Pheu Thai-led government will raise the minimum salary per month to Bt15,000 $500 for civil servants and state enterprise employees this October, while a minimum daily wage hike is expected to begin in January 2012, as the government must talks with the private sector first.

The wage increase will be put into effect after the government creates better understanding on the matter with the private sector and finds appropriate solutions for them such as a corporate income tax reduction and provision of new export markets, according to Mr Jarupong.”The policy on minimum wage rise to Bt300 per day is aimed at helping grassroots people. We affirm that this policy will be equally implemented in every province,” Mr Jarupong promised.

Prime minister-to-be Yingluck Shinawatra on Wednesday said she welcomes opinions and comments from the business community on her Pheu Thai Party campaign pledge to increase Thailand’s minimum wage to Bt300 per day as discussion on pros and cons was needed before implementation.

The private sector aired its disagreement with the planned daily minimum wage, branding it as only political campaign ploy to win votes from the electorate.

Ms Yingluck said all opinions and comments were welcome as her Pheu Thai Party is willing to discuss the matter with all stakeholders.

    “Pheu Thai is not rushing to increase the daily minimum wage without thinking about the negative impact and damages that may arise,”

she said, referring to the consequences of such an action. “I am confident that the issue can be discussed.”

Asked whether she is concerned that the plan to increase the minimum wage might not be put into practice, Ms Yingluck said, “As long as there is a will to do so, (we) must clarify to make it clear to the public.”

Thailand’s election-winning Pheu Thai Party announced after the July 3 election that it expects to raise the daily minimum wage for workers nationwide to Bt300 (US$10) as early as January next year and a minimum starting salary for university graduates of Bt15,000 (US$500) per month, as promised in its election campaign.

Meanwhile, Buri Ram Chamber of Commerce Chairman Weeradet Tangtrongwetchakit urged the new government to review the plan as it could negatively impact companies and other employers, making them eventually unable to afford employing workers and would be forced to reduce their number.

This would lead to unemployment, he said, adding that the increase of minimum wage should be done gradually, step by step, not leapfrogging in one action.

The government, on the other hand, should provide measures to support both employers and employees, he said.

An owner of a textile factory in Kalasin, Suk Yubomchu, said he wanted government to come up with measures to help enterpreneurs as higher wage could mean higher production costs which would burden them.

“If the government cannot help entrepreneurs, they then would be forced to close their factories,” he said. (MCOT online news)