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Frozen wages compromising standard of living of workers across country

business December 28, 2018 01:00

By WICHIT CHAITRONG
THE NATION

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WORKERS ARE expected to reap some gains from political campaigns in the run-up to the upcoming general election, but most of them are still struggling to make ends meet due to both the economic slowdown and disruptions caused by technology, experts said. 



A minimum wage committee has proposed a wage rise of between Bt5 and Bt11 for next year.

“Workers will get some benefit as the junta-backed government becomes weak and the stage is set for elections,” said Lae Dilokvidhyarat, a labour economist at Chulalongkorn University.

He expected the outgoing government to propose a rise in the minimum wage for workers while political parties are also expected to make similar promises. The Yingluck Shinawatra administration in 2012 and 2013 had fulfilled the Pheu Thai Party’s election pledge to raise the daily minimum wage to Bt300. Lae said wages should be increased in order to help workers, as their income had been almost frozen for the past four to five years.

“Factory workers have been sustaining themselves by working overtime jobs and it has resulted in a social cost, as they are unable to spend much time with their children,” he pointed out.

Yongyuth Chalamwong, who is research director at Thailand Development Research Institute (TDRI) specialising in labour development, said that raising the minimum wage should be announced at the beginning of next year instead of later, as this will allow private companies to adjust wages across the board right away.

He expected a significant hike in wages, taking into account the slower growth rate of the economy at about 3-4 per cent next year.

“I would like to suggest an automatic minimum wage adjustment based on the rate of inflation,” he said.

He expressed concerns over shrinking job opportunities for Thai workers partly due to the information revolution. “The government must think carefully before signing the next memorandum of understanding with neighbouring countries on importing labour,” he warned.

He suspected that private firms do not make enough efforts to hire Thai workers, as they are advised by the government guidelines. 

Manus Kosol, president of Confederation of Thai Labour, said he did not expect an early announcement of a minimum wage hike next year. So far, the tripartite subcommittee responsible for setting the minimum wage in some provinces has proposed a rise of between Bt5 to Bt11, he said. Currently, the daily minimum wage ranges between Bt308 to Bt330 across the country.

Manus complained that many manufacturing plants had resorted to outsourcing labour in order to reduce their cost. Such workers are not employees of the company so the practice puts them at a disadvantage. These workers are part of a labour pool managed by labour agents, he added. 

Tanit Sorat, president of V-Serve Group, said that the labour sector does not have bargaining power, as factories have the option of deploying advanced robotics or artificial intelligence for their operations. They have to improve their skills and be able to perform many tasks, said Tanit, who is also vice-chairman of the Employers’ Confederation of Thai Trade and Industry.

Yongyuth said that universities should introduce more short courses of less than one-year duration, in order to retain labour to catch up with new technology. And the government has to provide subsidies for skills retraining. He said a large number of labourers in the agricultural sector, which employed about 11.6 million workers early this year, earn far less than their counterparts in other sectors. The agricultural gross domestic product per capita is only Bt51,758, which is too little for subsistence.

While the service sector employs the largest number of people at 17 million, that sector’s GDP per capita was about Bt354,706 annually. The service sector has absorbed about 1.5 million labourers migrating from the farm sector over the past 10 years, he said. Services such as retail and wholesale business, logistics, hotels and restaurants have the potential to grow and absorb more labour in the coming years, said Yongyuth.

The 6.3 million people working in the manufacturing sector (the key sub-sector of the industrial sector) are the highest earners. Manufacturing GDP per capita was estimated at Bt447,619 per annum. He said if Thailand could raise the average earnings of worker to Bt480,000, from the current Bt276,00, the country could get out of the middle-income trap. 

He did not agree with a proposal by the Democrat Party for an income guarantee scheme, which will ensure minimum earnings per worker of Bt120,000 annually. “It would cost a lot and Thailand cannot generate that much tax revenue,” he added.