Relief measures for business operators as rise in minimum wages approved 

Economy January 31, 2018 01:00

By The Nation

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The Cabinet has approved a rise of Bt8-Bt20 in minimum wages to raise Thailand’s average minimum wages to Bt308-Bt330 per day, while the government has launched three relief measures to help affected business operators.



 

Nattaporn Jatusripitak, minister adviser to the Office of Prime Minister, said that the move is aimed for social equality as wages have not been raised for some time, adding that the rises are tailored to the need of each province. 

The increases by the central wage committee will take effect from April 1, 2018 onwards in the range of Bt8-Bt20.

There will be seven wage rates - Bt308, Bt310, Bt315, Bt318, Bt320, Bt325 and Bt330. The average minimum wage is Bt315.97. 

Three provinces - Phuket, Chon Buri and Rayong - will get the highest rate at Bt330 a day, and three southernmost border provinces - Yala, Pattani and Narathiwat - get the lowest at Bt308. 

Among the three relief measures, the tax measure will allow SMEs to have all expenses arising from the wage rises as tax deductibles by 1.15 time during April 1-December 31, 2018. The SMEs must earn income of no more than Bt100 million with no more than 200 workers.

 The government is expected to lose about Bt5.4 billion in income from this measure.

 Another measure involves a Bt5-billion project to increase SMEs’ production efficiency and business management during February 2018-September 2020.

 About 50,000 SMEs are expected to join the project on expectation that they could reduce their production costs by 10 per cent and benefit from knowledge transfers. The Ministry of Industry forecasts SMEs’ costs will rise by 0.5-1.0 per cent of total costs as a result of the wage rises.

A committee to supervise the project will be established to define qualifications of the project participants before the project is opened for application and selection.

 The last measure will improve production efficiency through machinery changes following the Board of Investment’s announcement. Business operators will be exempt from the corporate income tax for three years.

 The prime minister has also assigned each agency to find additional relief measures to help small shops.

Meanwhile, the Commerce Ministry said recently that the rise in the minimum wage rate would have very low impact on the cost of goods and could not be cited as an acceptable reason to increase product prices.

Despite arguments made by some business representatives that the wage increase would impact their costs of production, Commerce Minister Sontirat Sontijirawong said recently that there will be very small impact on the cost of production of goods or exports. An assessment by the ministry found that the higher minimum wage would increase the cost of a finished good by only 0.05 per cent, the cost in the production sector by only 0.07 per cent and the cost of exported goods by 0.022 per cent. 

“From our study on the impacts of the wage increases, we found that the average minimum wage of the country has increased to Bt315.9 or a 3.4 per cent rise from the earlier rate. Our study also finds that this rate would cause only a maximum 0.1 per cent increase in the cost of goods production,” Sontirat said. “Therefore, sellers cannot use this wage hike as a reason to increase the price of their products.” The Commerce Ministry will meet with representatives of the business sectors next week to review the study’s findings and hear their feedback, he added.

Sontirat suggested that people report any hike in the costs of products or services by calling the Internal Trade Department at 1569 or contacting provincial Commerce offices nationwide. Officers will closely monitor the price of goods in the market to ensure consumers are not taken advantage of.