Minimum wages are expected to increase sharply soon, as part of the government's policy to give greater financial support to grass-roots people.
"It will be for the long term,"" Finance Minister Korn Chatikavanij said yesterday in reply to a question about the appropriate level of wages.
He said he would discuss the matter with the labour minister.
A source said Korn had asked officials to study the impact on the economy if minimum wages were to be raised in one go to cover a five-year period, instead of in small annual increments.
The study will examine the benefits of such a wage hike, the cost to business, tax measures to compensate business, and the effect on inflation.
Korn said yesterday that inflationary pressure may not be a problem in the short term, as global economic growth is expected to slow in the second half of the year.
He does however foresee a risk of disruption to the Thai economic recovery due to European government policies aimed at addressing the euro-zone public-debt crisis.
He said European spending cuts are expected to cause lower economic growth in the next two to three years, and this would lead to lower demand for Thai exports.
The minister is, however, optimistic that the Thai budget deficit this year will sink to 1 per cent of gross domestic product from the previously estimated 3.5 per cent, due to rising government revenue.
"The deficit will be lower than 1 per cent if the government cannot fully disburse the budget as planned," he added.
Outgoing Bank of Thailand Governor Tarisa Watanagase said that while extending the government's cost-relief measures would delay inflationary pressure, it did not address the cause of inflation.
She declined to comment on the inflation implications of a minimum-wage hike due to lack of details.
However, she said a small policy interest-rate hike would be better than a large one-time increase later.
She said the central bank would increase the policy interest rate this year in order to pre-empt inflation, adding that it would take about eight quarters before Bank of Thailand action affected economic activity.
Korn said he could accept the central bank slightly increasing the policy rate this year, reasoning that a small hike would not greatly increase industrial costs as the current rate of 1.25 per cent is a historic low.