FTI rejects call for wage increase

FTI rejects call for wage increase

A man works at a construction site near the Singkhorn checkpoint on the border with Myanmar. A proposal to increase the minimum daily wage to 360 baht has brought a cool response from the Federation of Thai Industries. PATIPAT JANTHONG
A man works at a construction site near the Singkhorn checkpoint on the border with Myanmar. A proposal to increase the minimum daily wage to 360 baht has brought a cool response from the Federation of Thai Industries. PATIPAT JANTHONG

The business sector has rejected a proposal to raise the minimum daily wage above 300 baht, saying an increase would have adverse effects on small and medium-sized enterprises (SMEs).

Up to 100,000 companies could be put out of business by rising labour costs, it is claimed.

Vallop Vitanakorn, vice-chairman of the Federation of Thai Industries (FTI), said it was not a good time to increase the daily wage as it would increase production costs at a time when the economy had not fully recovered.

It would force SMEs to move their production bases to neighbouring countries where wage costs are lower, he said.

The Thai Labour Solidarity Committee (TLSC) has urged the government to raise the daily minimum wage from 300 to 360 baht nationwide from January next year to meet higher living costs.

It conducted a wage survey of 2,933 labourers in 12 provinces: Bangkok, Ayutthaya, Samut Prakan, Samut Sakhon, Nakhon Phanom, Prachin Buri, Chachoengsao, Saraburi, Chon Buri, Nonthaburi, Rayong and Ang Thong.

"In the past, the government has distorted the structure of wages by populist policies to attract votes," Mr Vallop said.

"To increase the daily wage again now is not good timing as the economy has not yet fully recovered. Rising wages would not only fail to lift purchasing power at a time of gloomy demand but would also hurt Thai businesses and put them out of business.

"Everybody complains about rising living costs at a time when the government claims it has used all means to curb inflation, as it knows that rising living costs would hurt the Thai people. It is not clear that the cost of living is the major problem that would have to be solved by increasing wages."

In fact, rising household debt incurred from the first-time car buyer programme has made people cautious about spending more money, damaging demand and the economy in general, Mr Vallop said.

He said more than 50% of the business sector comprised exporting companies that would have to bear increased costs immediately. That would cut their competitive advantage and damage exports and the economy.

He said the FTI agreed that the government should consider whether the minimum daily wage should be adjusted in order to reflect the real living costs that were detailed by the TLSC.

However, the FTI wanted the government to consider thoroughly three key factors before taking any decisions: the inflation trend, the cost of living and the country's competitiveness.

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