Minimum Wage in Thailand.

[Admin]

Quality products, not cheap labour, Pheu Thai policy: Jaruphong
The Nation 2011-07-07

Pheu Thai secretary-general Jaruphong Ruengsuwan said his party's election promise to increase the daily minimum wage to a flat Bt300 would help labourers stand on their own feet.

"From now on cheap labour will no longer exist in Thailand, and with this policy, skills of workers will be upgraded and a policy to make only high-quality products adopted, to accommodate a party policy - Year 2020," he said.

Asked whether this policy would result in foreign companies migrating from Thailand, he said the Pheu Thai-led government would subsidise operations of Thai firms in other countries where labour is cheap.

Citing a study by the International Labour Organisation, he said the daily minimum wage should be Bt441 - a rate he said would by sufficient to feed and support a labourer with a wife and a child in one day.

Jaruphong dismissed criticism that the Pheu Thai Party would want to scrap the wage tripartite structure, saying it would want to make the Wage Tripartite Committee truly represent employees.

The highest minimum wage is now Bt215 paid in Bangkok. An adviser to the WTC said on Tuesday that the most practical increase would be Bt7, which could be approved by October at the earliest.

He said another promise to pay a minimum salary of Bt15,000 to government officials at entry level would continue, and could be implemented by October. Personal income tax could be lower by January.

Caretaker Labour Minister Chalermchai Sri-on warned against approving the flat Bt300 rate, saying it would result in a higher cost of living and higher commodity prices.

He said the Bt15,000 promise would also affect the entire financial structure and burden fiscal policy, because those now receiving less than Bt15,000 would not accept new officials getting more than they did, and would demand equal or higher salaries.

[Admin]

POLICY RATE
Economists predict another rate hike tomorrow
By SEETALAVAJIT SABAYJAI
The Nation 2011-07-12

Economists forecast that Thailand's monetary policy will continue to tighten for the rest of this year due to higher spending and rising inflation, and expect another hike in the policy interest rate by 25 basis points at tomorrow's Monetary Policy Committee meeting.

The MPC is widely expected to lift the policy rate tomorrow by a quarter of a percentage point to 3.25 per cent. The one-day bond repurchase rate has been raised four times this year.

"Inflationary pressures stemming from increased personal and government spending will likely build and could see the BOT [Bank of Thailand] accelerate its policy-interest-rate hikes to temper the higher inflation that could result," said Chow Penn Nee, a Singapore-based economist at United Overseas Bank (UOB).

Wellian Wiranto, Asia economist at HSBC, said: "A lot hinges upon the policy platform of the incoming administration. If highly populist measures are adopted, then there is definitely a risk that the Bank of Thailand will have to counterbalance them by embarking on monetary-policy tightening."

If minimum wages go up by a great extent early next year, the central bank may nudge up its policy rate to 4.25-4.5 per cent by mid-2012, he said.

Ramya Suryanarayanan, an economist at DBS Bank in Singapore, said the minimum wages should be raised in a gradual manner, not by 50 per cent a year.

"If such drastic changes are implemented, then there is risk of inflation, wider fiscal deficit, etc, which will ultimately hamper the ability to attract investment. Even otherwise, inflation is a problem in Thailand this year and next," she said.

DBS Research noted that comments so far from prime minister-elect Yingluck Shinawatra suggested the new government's policy might tend towards an expansion of subsidies, in line with electoral promises. This approach lends itself to suppressing inflation in the short term but fanning it in the medium term.

Meanwhile, a Reuters Poll shows that the policy rate should be 3.75 per cent by the end of the year, and DBS expects the rate to be 4 per cent by end-December.

There is a high chance for a rate hike in the MPC meeting given relative political stability after this month's election, making the BOT more comfortable with its interest-normalisation process, Wiranto said.

HSBC expects the policy rate to reach 3.75 per cent by the end of this year as the central bank continues to stem price pressures after the expiry of producer-price agreements in April.

"Given the inflation risks that it is already seeing, it is no surprise then that the BOT has been rather vocal in expressing its wariness about the further upside inflation risk: the populist measures by the incoming administration, that is," HSBC said in its research.

"Particularly discomforting, given the tight labour-market conditions, is the potential minimum-wage increase to Bt300 per day, which would nearly double the current level for some provinces. Hence, even as global uncertainties prevent it from pursuing meatier, 50-basis-point hikes, we see the BOT trying its best to counter these risks and to keep inflation expectations well anchored, by hiking rates by 25 basis points whenever it can."

UOB predicts one more move in the fourth quarter, which could take the rate to 3.5 per cent by year-end. The DBS Bank economist forecast the rate to take another 25-basis-point increase, after tomorrow's meeting, in the third quarter and a 50-basis-point rise in the fourth quarter to end the year at 4 per cent.

[Admin]

Pay policy worries manufacturers
By Nalin Viboonchart,
Petchanet Pratruangkrai
The Nation 2011-07-12

Manufacturers are worried that the new government's policy to hike wages would push up the whole pay scale, which could make them lose their cost-competitiveness while consumers would inevitably have to shoulder higher prices.

"This means that we'll be in a difficult situation, as human-resource expenses will definitely surge. We may have to think about revising our production in Thailand to reduce the impact from higher costs," Anusorn Muttaraid, executive director of Delta Electronics (Thailand), said yesterday.

Raising the minimum daily wage to Bt300 is not an insurmountable problem, but the biggest impact will be on the company's workers who are currently receiving more than Bt300 per day, he said.

"Delta has to think about those workers' feelings, so it may have to raise their wages so that it can keep the gap between skilled workers and the newcomers," he said.

Delta employs about 7,000 daily workers, of whom roughly 1,000 get the minimum wage of about Bt200. The rest are paid more than Bt300 per day as they have worked with the company for years and have developed their skills.

Delta, one of the country's largest private employers, also carries about 13,000 full-time staff, whose salaries are not less than Bt15,000 per month. It seems that the company would not face any hardship paying a starting salary of Bt15,000, but that is not the case.

If Delta offers a higher salary to fresh graduates, it may have to think about adjusting the salary for holders of bachelor's degrees.

Paiboon Ponsuwanna, former chairman of the Food Industry Club of the Federation of Thai Industries, said hiking wages would send ripples through industry and end up hitting consumers and exports.

The food industry has more than 2 million workers, both skilled and unskilled, on the payroll now.

"Many buyers have asked whether Thailand will increase prices after hiking wages. We will destroy our own competitiveness if we quote higher prices when economic growth is sluggish in many import markets," he said.

Half of small and medium-sized enterprises might go out of business, particularly in the food and beverage industries. Millions of migrant workers will flow into Thailand. Exports this quarter will likely fall, Paiboon warned.
-----------------------------------------

Panel backs wage-hike plan
By Business Reporters
The Nation 2011-07-12

Committee in favour of 2-step approach towards implementing Bt300-a-day minimum wage

The Wage Tripartite Committee yesterday voiced initial support for the Pheu Thai Party's controversial election promise to raise the daily minimum wage to Bt300. However, its provincial sub-committees later proposed a two-step approach - one for major provinces and another for the rest of the country - far below the Pheu Thai plan.

The panel, which brings together representatives of the government, employers and workers, proposed that the daily wage of Bt300 should start in Bangkok, nearby provinces and Phuket as a pilot project.

However, the panel's provincial sub-committees were apparently not prepared for the big increase. After the meeting, Labour Ministry permanent secretary Somkiat Chayasriwong disclosed that sub-committees in 75 provinces had proposed an increase of Bt2 to Bt28 for 35 key provinces, while the remaining 40 provinces should get gradual adjustments to the same rates starting early next year. The proposed increase is a far cry from the Pheu Thai Party's Bt300 minimum-wage proposal.

The WTC will call another meeting early next month to consider the issue further.

Somkiat said the Wage Tripartite Committee agreed that hiking the wage to Bt300 should start in some provinces, including Bangkok and nearby provinces and Phuket. The minimum wage in Bangkok and nearby provinces is currently Bt215 and in Phuket it is Bt221. The remaining provinces would then be gradually adjusted, he said.

"We should wait until the new Labour Minister comes into office to manage the way the adjustment [is handled]," Somkiat said.

Somkiat warned that the minimum-wage policy would draw more labourers from neighbouring countries such as Cambodia, Laos and Burma, because they would also be entitled to reap the benefits of the higher wage environment. "I met Pheu Thai Party secretary-general Jarupong Ruangsuwan, to exchange views on this issue, but he didn't put any pressure on the ministry."

Meanwhile, the Centre for International Trade Studies at The University of the Thai Chamber of Commerce warned yesterday that Pheu Thai's populist policy to increase the minimum wage was likely to undermine exports, especially from labour-intensive industries. An increase in the minimum wage will mean higher costs and decreased revenue and efficiency, it said.

Centre director Aat Pisanwanich revealed that increasing the daily minimum wage to Bt300 and the starting salary for bachelor's degree graduates to Bt15,000 per month would increase costs of production by a monumental 28 per-cent. Production costs would soar by 31.5 per cent in the services sector and by 26.5 per cent for manufactured goods. Hence, exporters of food and tobacco goods will have to contend with a 35-per-cent rise in costs, the embroidery industry with 34-per-cent higher costs and the paper industry with a rise of 22 per cent.

As a consequence of the 39.5-per-cent increase in the minimum wage alone, hiking it from Bt215 to Bt300, costs of production will increase by an average 22 per cent; 29.6 per cent for manufactured goods and 19 per cent for the service sector, Aat said. Labour-intensive industries will suffer most from the minimum-wage increase.

Similarly, the increased starting salary for bachelor's degree graduates, raising it from Bt11,000 to Bt15,000, or an increase of 36 per cent, will prompt an overall increase in production costs of 5.7 per cent - 1.9 per cent for manufactured-goods industries and 7.3 per cent for the service sector, Aat said.

The paper industry will be hardest hit, with costs rising by 5.4 per cent, followed by textile and garment industries, with a1.5-per-cent rise in costs, and the tobacco industry, with costs rising by 0.8 per cent.

The UTCC's Centre for International Trade Studies said the value of Thailand's exports was likely to grow by 13 to 17 per cent, to between US$221 billion and $229 billion (Bt6.69 trillion and Bt6.94 trillion). It predicted that export industries would grow by 9.5 per cent to a value of $112 billion during the second half of 2011.

Although export industries have recorded significant growth of 21.5 per cent over the first half of this year, it is expected that industries will grow by a mere 9.5 per cent throughout the third and fourth quarters of 2011.

Moreover, the slow recovery of the global economy due to skyrocketing crude-oil prices and persisting public debt problems in European nations will stimulate the decline in Thailand's export growth, it said.

Negative effects

Raising the minimum daily wage to Bt300 and giving graduates a starting salary of Bt15,000 will hit the Kingdom's exports, with textile and garments and paper and paper products manufacturing being hardest hit by the significant increase in production costs.

Production costs increase:

By 22.3% (if the daily wage is Bt300)

By 5.7% (if Bt15,000 is starting salary)

[Admin]

WAGE

Wage rises could cost Bt100 bn in FDI
By Nalin Viboonchart
The Nation 2011-07-21

Thailand may lose Bt100 billion per year in foreign direct investment (FDI) if the new government immediately raises the daily minimum wage to Bt300, the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) says.

Chairman Dusit Nontanakorn yesterday said the minimum wage in Malaysia was 10 per cent higher than the minimum wage in Thailand, whereas in Indonesia it was 10-20 per cent lower.

If Thailand adjusts the daily minimum wage to Bt300 throughout the country, it will be more expensive than other production bases in Southeast Asia. In the long term, foreign investors may consider relocating to other countries such as Vietnam, he said.

Thailand attracts FDI of about Bt400 billion per year. If the country raises minimum wages, FDI is likely to drop 25 per cent per year or Bt100 billion, he said.

Dusit said he had discussed the issue with many foreign chambers of commerce in Thailand. Most said foreign investors considered competitiveness before deciding to invest in a country. If labour costs rose, some investors could relocate to other countries and it would be very difficult to bring them back.

"The Asean Economic Community will happen in the next four years. Investors have many choices for their investments. It is not necessary for them to stick with Thailand all the time," he said.

Dusit said that in the short term, about 90 per cent of small and medium-sized enterprises would be affected, as they would not be able to absorb the increased costs.

The JSCCIB is ready to discuss the policy with the new government to find a way to reduce its impact, he said.

Payungsak Chartsuthipol, chairman of the Federation of Thai Industries, said the daily minimum wage should be adjusted through the Wage Tripartite Committee without political interference. If the Pheu Thai-led government insisted on the policy, the FTI would require it to pay the wage difference.

In a separate matter, Payungsak said the Thai Industries Sentiment Index (TISI) in June dropped to 107.4 from 108.3 in May because of higher oil prices, financial problems in Europe and concern about political problems.

Flooding in Northern provinces was also a concern for industrialists, as it was affecting production volumes.

Over the next three months, the TISI is forecast to increase slightly to 113.5 from 111.2 in May, reflecting industry confidence in terms of orders, sales and production volume.

[Admin]

WAGE

Minimum wage hike 'a challenge' for business: MPC
The Nation 2011-07-28

A sudden one-time rise in the minimum wage nationwide at a rate "faster than labour productivity growth" will pose a challenge to the business sector, the Bank of Thailand's Monetary Policy Committee (MPC) has warned.

In the minutes of its July 13 meeting, when the policy rate was raised for the fourth time this year to 3.25 per cent, the MPC said many members said the wage rise must be at levels commensurate with rising living costs. Many parties have voiced concerns over the Pheu Thai government's policy to raise the nationwide daily minimum wage to Bt300.

TMB Bank's research house said the move would push core inflation beyond 5 per cent, way above the BOT's 3-per-cent target.

June's headline inflation rate was 4.06 per cent, with the previous month's figure being 4.19 per cent. Core inflation rose 2.55 per cent in June, compared with 2.48 per cent in May.

The MPC said rising food and energy prices remained the key risks to the Thai economy amid robust growth and continued fiscal stimulus, prompting it to agree unanimously on another rate hike, according to the minutes of its July 13 meeting, released yesterday.

"Despite a slowdown in the rise of prepared-food prices, continued upward adjustments in the prices of prepared foods together with high energy prices resulted in inflationary pressure remaining at an elevated level," the minutes said.

The risks of inflation outweighed the risks to growth, especially in light of continued fiscal stimulus, which may add to inflationary pressure. "As a result, a continued increase in the policy rate would be needed to contain inflation, particularly as it is demand-driven," the minutes said.

Inflationary pressure remained a key risk in the second half of this year on persistently high prices of prepared food and fuel and a narrowing output gap that could allow greater pass-through of production costs to retail prices, it said.

Even if measures aimed at relieving the cost of living slow price rises, the incoming government's planned measures, including the increase in minimum wages, would add to price pressure and may accelerate inflationary expectations.

The policy-makers are also keeping an eye on the global economic recovery, the euro zone's sovereign debt problems and the fiscal-policy formulation of the incoming government.

There is considerable uncertainty surrounding more government spending, particularly next year, and fiscal prudence will be required, it said.

The incoming government should gradually phase in its spending over time, prioritise its projects and target those with the greatest need, according to the minutes.

Besides, it should put emphasis on investment to improve productive capacity for a sustainable increase in growth and living standards. Tax reform should be implemented to raise government revenue to cope with increasing expenditure.

[urleft]

This is another slippery slope, increase the minimum wage to keep up with food prices, and then food prices go up because labor costs increased. 

[smithy99]

So you think 300 baht a day is ott

What really pisses me off is farang bars paying 2300 baht per month salary and charging 70 baht a beer which is a tidy profit.

Disgraceful

What salarys do other issan establishments pay?

Feel free to post

[smithy99]

This is another slippery slope, increase the minimum wage to keep up with food prices, and then food prices go up because labor costs increased.

So what do you think is a fair monthly salary?

[urleft]

This is another slippery slope, increase the minimum wage to keep up with food prices, and then food prices go up because labor costs increased.

So what do you think is a fair monthly salary?

Whatever someone is willing to pay, and whatever someone is willing to work for. 

We pay our help higher than average to keep them happy.  Good help is worth the price.  We also pay bonus for days when milestones are met (it was very hard to get this concept understood), and since we started it, our milestone days have doubled. 

[nookiebear]

So you think 300 baht a day is ott

What really pisses me off is farang bars paying 2300 baht per month salary and charging 70 baht a beer which is a tidy profit.

Disgraceful

What salarys do other issan establishments pay?

Feel free to post

Lets have the name of the place.............

My lass pays her helper 160 baht per shift (8am-3pm) plus two feeding frenzies,which isnt bad considering she does none of the cooking only 'waiting on' & washing up!!
And here we also have the cheapest beer & Cider prices in Isaan

[Admin]

EDITORIAL
The whole wage system needs an overhaul
The Nation 2011-08-14

Push for a Bt300 daily wage obscures need for greater skills, productivity, bargaining power

Pheu Thai's vow to implement a Bt300 minimum daily wage could be a "damned if you do, damned if don't" scenario for new Labour Minister Phadermchai Sasomsap. Although it is not known to what extent Phadermchai has been involved in the party's decision to announce the Bt300 minimum wage policy, he would be one of the key people to decide whether to go ahead with the policy, and how it is pursued.

The wage policy is not easy. While every party agrees that the current minimum wage is too low to keep up with productivity and GDP growth, leaders of industry have cried foul that a sudden rise to Bt300 per day is too drastic. But the labour representatives insist the new government will have to fulfil the promise it made to voters during the election.

Phadermchai will face a daunting task in having to protect the well-being of Thai workers while ensuring that compensation or the new wage don't turn into a double-edged sword. Big business operators claim such a wage hike could force many small and medium-sized factories to shut down. A sudden rise in the minimum wage could wreck the competitiveness of small and medium-sized industries because most of them are in high labour-intensive industries.

Shoe-making companies, for instance, say that labour costs account for 17-19 per cent of their production expenses. But big corporates have generally turned to automation and the labour cost might only be 10-12 per cent or less.

With opposition from some industrialists, Phadermchai and the Yingluck government will have to find the solution by balancing the interest of all parties.

The party recently floated an idea that it would cut the corporate income tax rate from 30 per cent to 23 per cent. But this might not benefit the affected small businesses. The fear is that big corporates which hire a small number of workers may get a free ride, because the corporate tax cut would be apply to all.

Some have proposed government coupons to make up the wage differential for industries that can't afford to pay their workers. But all these proposals are short-term ideas to enable the government get away with its Bt300-a-day promise.

What's unfortunate is the minimum wage issue takes attention away from the real issue that workers face. And that's the duty of Phadermchai: to get the public spotlight on the real issue.

The first thing the government should do is more fundamental: the entire wage system should be overhauled. It is ironic that while Thailand faces a shortage of labour, workers don't have strong bargaining power. According to Sakdina Chatkul na Ayutthaya, a labour expert, only 1.3 per cent of Thai workers are in unions.

In addition, the minimum wage should come from s scientific calculation based on a level of production, productivity and a level that will ensure the workers' well-being. The new labour minister should appoint independent bodies to decide the right minimum wage to ensure a fair rise. Presently, the minimum wage is a result of bargaining in a tripartite committee made up of representatives of employers, employees and the government.

While the discussion so far is concentrated on the size of the minimum wage, the other aspects of workers' well-being should also be considered.

Thai labour can be described as 3Ls: low-wage, long-time work and low productivity. From 2000 to 2007, the productivity of Thai workers increased by only 3 per cent compared to 5.3 per cent in Vietnam.

Phadermchai should promote the welfare of Thai workers by ensuring they have an opportunity to improve their technical skills to enable them to improve their livelihood.

In the meanwhile, the government must require that employers take care of their employees by providing fair treatment and proper welfare benefits.

Unfortunately, the other side of welfare benefits for workers has not been sufficiently addressed, as the minimum wage promise has blurred other issues behind the wage discussion.

Thai workers should have a chance to improve their skills to the point where they don't have to rely on the minimum wage to raise their worth. And that's the challenge that the Labour Ministry should strive to fulfil. Otherwise, the minimum wage will be politicised every election and such confusion does not bode well at all for industry or workers.

[Admin]

MINIMUM WAGE

Govt plans to be clear by October
The Nation 2011-08-19

Labour Ministry official ready to consider staggered raise over 34 years.

How the government will implement its policy to raise the daily minimum wage to Bt300 will become clear by October, Labour Ministry permanent secretary Somkiat Chayasriwong said yesterday.

The top official did not rule out a request by the Federation of Thai Industries (FTI) to gradually lift the minimum wage step by step over three to four years.

"We are ready to listen to all sides," Somkiat said.

The Labour Ministry, he added, was now surveying wage rates across the country.

Somkiat said the Department of Skill Development (DSD), in the meantime, had been instructed to promote skill training by offering eServices to interested employers.

He said improved skills would make workers well qualified for a daily wage of at least Bt300.

At present, laws encourage employers to provide training for their workers/employees by giving tax benefits. Employers should be able to claim tax deductions of an amount two times of the training cost. However, due to complicated procedures, some employers have not organised the training, paying fines to the Skill Development Fund instead.

"To simplify procedures to claim tax deductions as part of training costs, the DSD will launch eServices on September 8," Somkiat said.

He said employers could also check out useful training courses at www.dsd.go.th, and register the courses they were going to provide to their employees/workers via the web site.

Jiyuan Wang, the International Labour Organisation's country office director for Thailand, Cambodia and Lao People's Democratic Republic, downplayed any concern that rising wages would worsen inflation.

He said it was inflation that was now putting pressure for higher wages.

He said Thailand's daily minimum wage had clearly not risen in line with the country's inflation rate during the past decade.

In 1995, wages accounted for 72 per cent of the country's total income. By 2006, they accounted for just 63 per cent of total income.

Wang also pointed out that the Gini coefficient of Thailand, a measure of inequality of income or wealth, was the highest in Asia.

"It's at 0.43," he said.

According to Wikipedia, Gini coefficients for income ranged from around 0.23 (Sweden) to 0.70 (Namibia) although not every country has been assessed.

Wang said although some economic sectors would offer less job opportunities if the minimum daily wage rose, workers would still be able to switch to other economic sectors.

"Higher wages will mean higher consumption. It will stimulate the country's economy too," he said.

[Admin]

Better skills will make Bt300 wage worth it
The Nation 2011-09-08

In order to make Bt300 daily minimum wage fair on employers, a skill-enhancement exercise and evaluation strategies should be put in place in large provinces before the hike can take effect nationwide, the Labour Ministry told a Bangkok seminar yesterday.

Workers and employers should try to make compromises in the meantime because the higher wages will possibly burden employers and likely force tens of thousands of small businesses to immediately close down, permanent secretary Somkiat Chayasriwong said. Therefore, he added, skill enhancement and evaluation should become part of the national agenda and be implemented throughout 2012.

The Bt300 daily wage should then be introduced in Bangkok in 2013 and in other large cities before it is extended to the rest of the country, he said. The Labour Ministry will propose to the government that it tentatively make 2012 the "year of increased productivity" and make skill enhancement and evaluation part of the national agenda.

"More skilled labour will make employers feel it is worthwhile having to shoulder higher expenses because they will get better returns," he added.

A budget of Bt3 billion is being sought to improve the ministry's 12 skill-development institutes and 65 provincial skill-training centres. More emphasis will be placed on regional centres to develop labourers' skills in relevant fields, such as planting and producing rubber in Region 12 based in Songkhla, and in the assembly of vehicles and machinery in Region 1 based in Samut Prakan.

Under a planned joint cooperation between the Labour Ministry and waterworks and electricity agencies, small- and medium enterprises that agree to pay a daily wage of Bt300 to workers who undergo training will be given discounts in utilities as well as tax incentives, he said.

Asst Prof Wichai Thosuwannajinda from Kasem Bundit University (KBU) said government subsidies for SMEs should be a short-term measure because it would not be fair to taxpayers.

He said another populist policy guaranteeing that every university graduate would make a minimum monthly salary of Bt15,000 would result in fewer students studying arts and humanities and more focusing on skills needed in the employment market.

Anusorn Thamjai, dean of KBU's Economics Faculty, said he was all for increasing the daily wage to Bt300 because it would lift the standard of living and help cut down problems associated with poverty. He called for cost-related incentives for SMEs and government-assisted improvement of logistical structure for them.

Meanwhile, a clay-doll factory with no labour union in Nakhon Pathom is planning to cut down on work incentives and meal subsidies once it starts paying the Bt300 daily wage, local labour counsellor Daorueng Chanok said.

[Admin]

THAI TALK

Minimum wage plan: Where's the tripartite committee?
By Suthichai Yoon
The Nation 2011-09-08

If Deputy Premier Kittiratt na Ranong had to "go down on my knees and beg" the private sector to comply with the government's pledge to pay the proposed Bt300 daily minimum wage to workers, it means there is still a long way before the Pheu Thai Party's election pledge on this issue can be fulfilled.

As soon as the Labour Ministry said last week that the plan would be implemented in phases, starting with a "pilot project" for seven provinces, the labour unions came out to say that that wasn't what the election promise had stipulated in the first place. They want the Bt300 minimum wage scheme to be applied to "all provinces throughout the country" without exception.
The seven provinces are Bangkok and five outlying provinces of Samut Sakhon, Pathum Thani, Nakhon Pathom, Nonthaburi, Samut Prakan, plus Phuket.

A well-known labour academic, Lae Dilokvihdyarat, chimed in: "If it's a pilot project, does it mean that if the experiment with the first seven provinces doesn't work out, then the rest of the country won't get the Bt300 wage? It doesn't sound like it's going to go down too well with the labour leaders."

This will become a classic case for all politicians. The lesson learned should be: Never ever offer a specific pledge that could return to haunt you. A labour union leader put it matter-of-factly: "It was because most workers believed Pheu Thai could deliver on the minimum wage pledge that they all cast their votes for the party. Now it's time to show that it wasn't just an empty political gimmick."

The seven provinces that come under the first test will have their minimum wages raised by about 40 per cent. It's not clear by what yardstick the Labour Ministry will consider the "pilot project" a success or failure. But it's clear that the government will still have to be able to persuade the private sector to go along with the plan.

Big conglomerates such as CP and SCG have expressed their readiness to be part of the government's major experiment. But the Federation of Thai Industries (FTI), which represents a significant part of the private sector, has raised a few reservations, including the concern that small and medium-sized enterprises (SMEs) will stand to suffer the most as a result of the increase in production costs.

The government's initial plan to reduce their tax burden in exchange for compliance has not pacified the struggling companies: because of their negative bottom lines, they haven't had to pay corporate taxes anyway.

The crucial question that the Yingluck government hasn't addressed in its approach, at least in public, is how it will handle the Wages Tripartite Committee, which has had the legal authority to decide minimum wages for many years.

The three parties in the joint committee represent employers, employees and the government. The committee has drawn up at least nine benchmarks on which it decides the minimum wage. The committee has done a reasonably good job so far - as a legitimate balancing force to reach the kind of compromise that's acceptable to all three parties concerned.

With the government announcing its plan to raise the minimum wage to Bt300, is it sending the signal that the tripartite panel will be abolished? If that's the case, the existing law will have to be scrapped - and that requires a legislative process that can't be implemented overnight.

To get rid of the "independent" three-party body on minimum wages could be risky politically, for it means that there won't be a neutral body to act as a buffer for the government in the highly controversial and complicated process of annual negotiations over minimum wages. Is the government ready to remove that buffer and adopt a face-to-face relationship with the country's labour force on all major issues?

I am all for offering better welfare and remuneration - and upgrading skills - for the country's labour force. But for the Pheu Thai Party, that Bt300 minimum wage policy seems to have got stuck, because the guys who drew up the party's campaign slogans aren't the ones who are supposed to implement them now.

The electorate may appreciate that fact, but they aren't supposed to be so understanding as to distinguish between "electioneering techniques" and "election pledges", and then declare: "Let's forget about the promises".

Are they?

[Admin]

Bt300 wage push will hit SSO contributions, govt warns
The Nation 2011-09-13

The government may cut its contribution to the Social Security Office (SSO) fund because of the financial burden from the Bt300 minimum wage - but retirement and medical treatment payments would not be affected, Labour Ministry permanent secretary Somkiat Chayasriwong said yesterday.

The government would subsidise medical treatment to beneficiaries if SSO funds were insufficient, while payment of retirement returns starting in 2014 would not be affected, he said.

Somkiat did not say how much the government's SSO contribution - currently at five per cent - would be reduced by.

He did not support his statement by explaining what he or the SSO would do to secure a government subsidy, or provide a guarantee that the government would subsidise SSO treatment funds.

Somkiat was speaking at a Bangkok seminar for employers and owners of small-medium businesses worried about their operations being affected or forced to shut down because of the Yingluck government's election promise to raise the daily wage to a flat Bt300.

The seminar was told that a number of foreign electric appliance firms were preparing to move operations to locations in Burma, across from Kanchanaburi and Tak's Mae Sot district, and to Cambobia's Poi Pet and Koh Kong Island, where an Bt80 daily wage is allegedly paid to local assembly workers.

"The foreigners are all worried about the flat Bt300 to be imposed in Thailand. They vow to move when the new rate is in effect, because they will have to shoulder higher costs," said Chianchuang Kalayanamitr, a partner with a foreign company.

Dragan Radic, a senior International Labour Organisation official, suggested a government measure be put in place immediately to assist around 300,000 SME owners in Thailand who will be affected.

Help would also be needed for a large number of new graduates who could be without jobs for many years, as employers would seek only experienced workers to get full value for having to pay them Bt300 a day, he said.

Labour Minister Phadermchai Sasomsap said a request was made to the Financial Ministry on ways to cut corporate tax from 30 to 27 per cent next year - and to reduce electricity and water bills for SME owners, hopefully with the cooperation of electricity and waterworks agencies.

Phadermchai said skill enhancement would be crucial for all parties involved, and a request for Bt3 billion had been made to the government to improve existing skill and career training centres or to build new ones.

Anantachai Khunananthakul, chairman of the Employers Confederation of Thailand, said subcontractors likely to be hit hard by the push for a flat Bt300 a day wage should be granted immediate assistance, because they relied solely on labourers and the increased cost would be a big burden.