Despite the rise in consumer confidence in October, which may generate more spending, many manufacturers complain they won't be able to cope with added labour costs once the minimum wage rises to 300 baht daily from Jan 1.
Consumer confidence in the overall economy for October rose to 68.1 points, from 67.5 reported in September, on the back of positive factors, according to the University of the Thai Chamber of Commerce.
Confidence in job opportunities for the month rose to 69.8 from 68.9, and confidence in future income went up to 95.3 from 94.8, said Thanavath Phonvichai, director of the Economic and Business Forecasting Centre at the university.
However, an index below 100 points indicates consumers are still worried.
Mr Thanavath attributed the slight increase in confidence to several factors including the decline in domestic oil prices and the Bank of Thailand's decision to cut its benchmark interest rate by a quarter point to 2.75%.
Also positive was a report of a trade surplus of US$1.15 billion in September, and the central bank's decision to maintain its economic growth forecast for 2012 at 5.7%.
Negative factors were the weak global economy, concerns over political conflict after the Pitak Siam group announced an anti-government rally on Oct 28, the high cost of living, and the worry that workers would be laid off after the daily minimum wage rises to 300 baht nationwide in January.
The Federation of Thai Industries (FTI) warned on Friday that a large number of small and medium enterprises (SMEs) would probably be forced to shut down once the minimum wage rose.
Chen Namchaisiri, an FTI vice-chairman, said many SMEs had complained to the FTI that they were not financially able to shoulder the added cost of a massive increase in wages in the remaining 70 provinces from Jan 1, 2013.
Small manufacturers who were now paying the daily minimum wage as low as 160 baht in some provinces would be severely affected as their labour costs would increase substantially, by 80%, said Mr Chen.
They could not increase their product prices to help compensate because of long-term purchase contracts made in advance, some of which have many years still to run, he said.
These SMEs could not shoulder the increased labour cost burden and would have no way out but to close down.
Mr Chen said the FTI had submitted a petition to the government asking that it delay the wage hike, but received no response.
When the new wage takes effect on Jan 1, SMEs would have to comply with it, but the government would have to accept responsibility for any negative consequences, he warned.
The minimum wage was increased to 300 baht a day in April in the country's seven most developed provinces: Bangkok, Phuket, Samut Prakan, Nakhon Pathom, Nonthaburi, Pathum Thani and Samut Sakhon.