WITH SLUGGISH economic growth and rising cost of living while the minimum wage has been frozen for four years, blue-collar workers’ debts have risen to the highest level in eight years, according to a survey by the University of the Thai Chamber of Commer
This rising debt burden among labourers implies that consumers have low spending power, hindering business growth.
To relieve this problem, workers have called for an increase in the daily minimum wage. However, most businesses are against the idea, saying a time of sluggish economic growth is not suitable for raising the minimum wage.
Many labourers have found that their incomes are insufficient to cover their cost of living. Thus, more people are turning to loan sharks this year, Thanavath Phonvichai, director of the UTCC’s Economic and Business Forecasting Centre, said yesterday.
“The debt burden among labourers is the worst in eight years, since 2009. With low liquidity, low-income people have to turn to loan sharks, and this creates more financial and social problems,” he said.
Based on a survey of 1,212 workers whose monthly incomes were less than Bt15,000, almost 96 per cent of labourers carry a debt burden. Average debt per household is Bt119,061. About 60 per cent of this is in the form of underground loans, and the rest is owed to banks or other financial institutions.
More than 83 per cent said they had sometimes fallen behind on their debt payments.
The survey found that a suitable minimum wage for daily workers this year is Bt356.
Reasons that blue-collar workers have to borrow are daily expenses, housing, paying back previous debts, and vehicles, in that order.
At the same time, labourers have realised that with slow economic growth, they are at higher risk of unemployment. Thus, to ensure that businesses can survive while incomes are sufficient, labourers said wages could be adjusted based on the costs in each area of utilities, food, travel, interest, and rent.
The survey also found that spending by Thais during the coming Labour Day weekend was expected to rise by 2.7 per cent to Bt2.05 billion compared with last year’s May 1 holiday.
Meanwhile, in a separate survey by the UTCC derived from 600 business respondents, most foresee that overall business growth will be slow during the first two quarters. They expect better business performance in the second half of this year, so they may consider investing and expanding their business in the third quarter.
More than 70 per cent of business respondents said now was not a suitable time to increase the minimum wage, while only 28 per cent said wages could be increased.
A suitable minimum daily wage according to employers is Bt310. If wages are increased, enterprises say they will need to increase prices, reduce staff numbers, employ more foreign workers, use more machinery, move their plants or close down altogether.
To help reduce employers’ burdens, they called for the government to adjust the minimum wage gradually based on each area’s necessities, reduce corporate income tax, and help increase labour skills.