Poll finds Bt300 wage 'to begin hurting soon'

More than half of the respondents to a business poll said the government's proposals for mitigating the impact of the new Bt300 minimum wage were insufficient, and consumers and the very workers the higher wage is meant to help could see negative effects around midyear.

As well, according to the same poll of 600 enterprises nationwide by the University of the Thai Chamber of Commerce (UTCC), most are worried that the rapid appreciation of the baht will hurt the ability of Thai exporters to compete against rivals in other countries. They called on the government to come out with urgent and concrete measures to stabilise the baht and not allow it to go below 30 to the US dollar.

The survey found that most enterprises would be able to cope with the higher cost of labour for only seven months before taking steps to maintain their profits, or even shutting down in extreme cases.

According to the poll, more than half of enterprises foresee no benefits from the government's 16 measures to relieve the impact of the wage increase, which took effect nationwide at the beginning of the year.

Thanavath Phonvichai, director of the UTCC's Economic and Business Forecasting Centre, said businesses would need to adjust by reducing employee benefits and increasing retail prices, which would create problems for both labourers and consumers.

"Despite the higher wage, labourers and consumers will not really benefit from the policy. Enterprises will need to adjust by increasing prices, pushing the burden on to consumers, who are labourers themselves," Thanavath said.

He acknowledged that the improved wages would help stimulate the economy by 0.4-0.5 per cent in the short term. However, negative impacts could be seen by the second and third quarter of the year.

While only 7.8 per cent of the respondents said they expected the worst-case scenario of actual business closures within the next six months, most agreed that they would have to reduce employee benefits, increase prices, hire foreign labour, or reduce the workforce through lay-offs and possibly mechanisation.

Wachira Kuntaweethep, a lecturer at the UTCC, said more than half of enterprises found the government's measures to relieve the impact of the wage increase to be useless. Several called on the government to come out gradually with more tangible measures to relieve their burden and help labour directly.

For instance, it could pay compensation to businesses for a period, reduce corporate tax even further, set up training programmes for labourers, provide sources of funds, help reduce production costs, and support export growth.

A separate UTCC survey of 1,200 labourers found that most believed the higher wages would make their lives easier, at least initially. However, a slight majority - just over 52 per cent - were concerned that the increase would not be enough to cover their expenses in the long run as prices would increase at a greater rate than their incomes within six months.

The respondents generally felt that the Bt300 minimum was still too low. On average, they favoured a level of Bt464 per day.

Almost 60 per cent of the respondents were also concerned that they could lose their jobs in the future because employers could not cope with higher production and wage costs and would close their businesses.

According to the poll, 29.4 per cent of the additional pay enjoyed by labourers under the policy would be spent on mobile phones, 26.6 per cent on clothes, 21.8 per cent on motorcycles and 7.5 per cent on consumer goods.

Wachira said that overall, he did not believe that the improved wage would benefit labourers, as it would not mitigate the debts borne by lower-income people.