Business operators against 600-baht wage hike policy
The Pheu Thai-led government intends to press ahead with its election promise to raise the minimum wage to 600 baht within 4 years from the current range of 328-354 baht per day introduced in October 2022.
The party first introduced what is regarded as a populist policy back in 2011, when it launched the nationwide minimum wage policy of 300 baht per day. Then, like now, the private sector made its opposition known, citing political interference and uneven investment distribution nationwide.
According to Sanan Angubolkul, chairman of the Thai Chamber of Commerce (TCC), the proposed policy of raising the minimum wage to 600 baht per day and the monthly salary for bachelor's degree graduates to 25,000 baht would be a heavy burden for the private sector. Even though the wage increase would occur over 4 years, or by the year 2027, it would represent an adjustment of 40-60%, averaging a rise in costs of at least 10% per year.
They also believe that this spike in the minimum wage to 600 baht per day could deter foreign business investments in Thailand, pointing out that while such a substantial wage increase could attract labour, it would also impose a heavy burden on the private sector.
The government should first focus on achieving a strong economic performance, as a healthy economy would make the private sector more prepared for a suitable minimum wage increase that aligns with the economic conditions.
Furthermore, there is consensus that the wage increase should be appropriate for each region, and that efforts should be made to enhance workforce productivity concurrently. The new government should make well-rounded decisions in collaboration with state agencies, the private sector, and employees who benefit under the framework of the law, taking into account recommendations from provincial wage committees responsible for adjusting wages to match the local economy.
Implementing an immediate wage increase might not be worthwhile, given the current economic risks. Today, the economy faces numerous challenges, and if employers face increased costs, they might be unable to sustain it. This could lead to job cuts or businesses with high labour usage considering relocating their production bases causing broader economic impacts.
According to Tanit Sorat, vice-chairman of the Employers' Confederation of Thai Trade Industry, adjusting the minimum wage should take into account, the economic conditions of each province; the inflation rate; and employers' ability to pay. It is thus imperative that the government takes account of the current economic situation, which is trending toward a slowdown, and does not consider any increase in 2023.
