A worker, waving a red flag to warn motorists at a Bangkok construction site, will likely be among millions of workers benefiting from the proposed wage hike.
A worker, waving a red flag to warn motorists at a Bangkok construction site, will likely be among millions of workers benefiting from the proposed wage hike.

Modest variable minimum wage hike comes under criticism from workers and employers

national January 19, 2018 01:00

By THE NATION

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ACADEMICS and workers believe a consistent nationwide “flat rate” hike for the minimum wage should be in place instead of the variable Bt5 to Bt22 daily wage increase that comes into effect on April 1 after Cabinet approval.



However, there seemed little probability that any decision on wage hikes – finalised on Wednesday by the government tripartite committee – would satisfy everyone. Business representatives have all along complained that they saw the wage hike as merely “tackling the symptoms” of economic problems, adding it would leave them shouldering increased costs of production and could result in worker layoffs.

Rangsit University deputy rector Anusorn Tamajai said wages should be hiked to Bt350 or Bt360 to improve the quality of workers’ lives.

The “rather slight” increase approved would be of little help for workers’ coping with high living costs and debt, while low-skilled workers would still not be able to save, Anusorn said. 

The minimum wage hike should be a consistent rate nationwide because Thailand’s cost of living did not vary much depending on area, he said. Also, a flat-rate wage hike would reflect values of equality and allow labour unions to increase their bargaining power for fairer wages and welfare assistance, he said.

Chalee Loisung, chair of the Thai Labour Solidarity Committee (TLSC), called for a Bt360 flat-rate hike nationwide. The TLSC would meet on Monday to work out their stance opposing the government’s decision, he said. 

Deputy Prime Minister Somkid Jatusripitak, who is in charge of economic affairs, hailed the wage hike as stimulating the economy, which he said “obviously [emerged] from careful consideration by all sides”.

Workers would get a boost in their purchasing power, which would in turn allow private-sector companies to sell more products, he said. 

Somkid said he had already instructed the Ministry of Commerce to implement controls to ensure that the prices of consumer items do not increase and are kept in line with the increase in wages.

The final details in the wage hike emerged on Wednesday after a seven-hour meeting of the committee tasked with reaching an agreement. The panel also recommended a trial “floating rate” wage hike in three provinces under the Eastern Economic Corridor scheme – Chon Buri, Rayong and Chacheongsao.

Somkid said that the proposed trial would be discussed at a later date as the government would first implement the core recommendations.

The nationwide minimum wage was raised from Bt300 to Bt310 last year after remaining static for three years from 2014 to 2016. With the new increase, the average nationwide minimum wage will be Bt315.97 per day. 

Some business leaders were not happy with the relatively small increase. 

Businesses would see an increase in operating costs without a corresponding ability to boost their production, said Pipat Luengnaru-emitchai, assistant managing director of research and financial institutions analyst at Phatra Securities Public Co Ltd. 

Some companies would replace workers through automation, he said, while others with large numbers of workers who could not be replaced by machines could move their production base to other countries.

“This raises a challenge for business operators to adjust and boost their production to cover the wage hikes. If they fail, it will certainly lead to some impacts,” he said.

Some companies would replace workers through automation, he said, while others with large numbers of workers who could not be replaced by machines could move their production base to other countries.

“Such a significant hike as 10 per cent in some areas raises a challenge for business operators to adjust and boost their production to cover the wage hikes. If they fail, it will certainly lead to some impacts,” he said.

With the northeastern province of Buri Ram seeing its minimum wage hiked by Bt15 to Bt325 a day under the committee agreement, business operators there said they would have to shoulder increased costs until they passed it on to consumers by increasing prices.

 The result would be negative for both workers and people in other professions whose incomes remained static, business figures argued.

Naiyana Thabwong, a wholesale and retail shop owner, said she employed 13 people and paid about Bt100,000 a month in wages. With the wage hike, she would have to shoulder more costs during a period of “slower economic conditions due to the shrinking sale volumes, because people are trying to save money”.

She said she might have to lay off some workers to ensure the business survived. 

The new wage hike was an approach “tackling the symptoms” rather than solving the root problems in the economy, Naiyana said.

The Employers Confederation of Thai Trade and Industry vice president Tanit Sorat said he did not agree with raising wages because it would adversely affect small and medium-seized enterprises (SMEs). 

It was also irrational to group poorer provinces with richer ones, such as Roi Et with Prachuap Khiri Khan or Kalasin with Nakhon Sawan province, he said. The SMEs in poor provinces could not afford the same costs, he said.

Even SMEs located in the greater Bangkok area with 200 or more employees would face rising costs of about 1.1 million per year, he estimated.

Low technology industries such as garments, leather and food processing could be hard hit and find it difficult to raise prices due to fierce competition, he said.