Will SMEs avoid new minimum wages? | Bangkok Post: learning

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Will SMEs avoid new minimum wages?

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Small businesses not inspected by government (informal sector) may simply not pay the new 40% higher minimum wages. Official SME employment may drop from 81% to 70%. 

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LABOUR

Wage policy 'will hurt unskilled workers'

7/04/2012

The government's 300-baht minimum wage policy can narrow the income gap but many unskilled workers will lose their jobs, a Thailand Development Research Institute study says.

The TDRI study conducted by Dilaka Lathapipat said the minimum wage rise, which came into effect on April 1 in seven provinces, is a good policy but an immediate increase in wages without efficient cushions might bring about an "unexpected severe impact", particularly on unskilled workers.

Dr Dilaka said real minimum wages (inflation adjusted) in Thailand had fallen continuously after the economic crisis in 1997.

According to the study, the minimum wage hike would reduce income inequality significantly, particularly for low-income and unskilled workers in formal producing sectors. The study said the 300-baht minimum wage has no major effect on employment rates in the overview but it has significantly affected employment reduction in small and medium manufacturing enterprises (SMEs) with no more than 100 workers.

Many workers in these SMEs have moved into the agricultural sector and do not receive salary payments as they are working for their families. Some were forced to work in poorer conditions in informal private enterprises with less than 10 employees and are overlooked by government inspection.

The study said employment in SMEs would drop significantly to 70% from 81% as a result of the government's 40% minimum wage increase policy.

Dr Dilaka said the minimum wage hike is fairer for workers but its implementation without efficient measures to deal with its impact would see many workers laid off or forced to work in worse conditions in informal sectors without labour law protection.

He suggests the government implement urgent measures to help business operators increase production efficiency and capability so that they would not cut workers to control costs.

(Source: Bangkok Post, LABOUR, Wage policy 'will hurt unskilled workers', 7/04/2012, link)

Minimum Wage Vocabulary

wage - the amount of money earned per hour or day by a worker ค่าจ้าง
minimum wage - the smallest amount of money that can legally paid to a worker for their work (See Wikipedia)
policy - a set of plans or action agreed on by a government, political party, business, or other group นโยบาย
(See Wikipedia)
300-baht per day minimum wage policy

Wage policy 'will hurt unskilled workers'

formal sector -
bigger companies that provide permanent employment and follow all the labour laws
formal producing sectors
informal - not official
informal sector - small businesses that often offer short-term employment without the benefits and rights of full-time employees
informal private enterprises

narrow - not wide; having a small distance from one side to the other, especially in comparison with the length แคบ
income - money that people receive from work or some other source, used for household consumption and savings
gap - a space or opening in the middle of something or between things; a large difference between people or groups ช่องว่าง
narrow the income gap - reduce the difference between rich and poor

The government's 300-baht minimum wage policy can narrow the income gap but many unskilled workers will lose their jobs, a Thailand Development Research Institute study says.

efficient - produces a lot from few resources; doing a task with no waste of time, money or energy
cushions - things that make something soft, less damaging; lessen the impact
efficient cushions
severe - very serious and worrying ที่รุนแรง ที่น่าเป็นห่วง
impact - an effect or influence ผลกระทบ
unexpected severe impact

The TDRI study conducted by Dilaka Lathapipat said the minimum wage rise, which came into effect on April 1 in seven provinces, is a good policy but an immediate increase in wages without efficient cushions might bring about an "unexpected severe impact", particularly on unskilled workers.

inflation - the level of prices rising in the economy as a whole ภาวะเงินเฟ้อ
inflation adjusted - amount reduced by inflation (rising level of prices over time) to give a meaningful comparison
crisis
- an urgent, difficult or dangerous situation วิกฤตการณ์
economic crisis in 1997

Dr Dilaka said real minimum wages (inflation adjusted) in Thailand had fallen continuously after the economic crisis in 1997.

income - the money a person gets from a job or running a business
inequality - not equal; some people have a lot more than other people
income inequality - when some people are a lot richer than other people
significantly
- in an important way อย่างสำคัญ

would reduce income inequality significantly

employment - having a paid job
no major effect on employment rates - will not increase number of people without jobs (unemployment)
overview - description of main features of something
enterprises - companies

According to the study, the minimum wage hike would reduce income inequality significantly, particularly for low-income and unskilled workers in formal producing sectors. The study said the 300-baht minimum wage has no major effect on employment rates in the overview but it has significantly affected employment reduction in small and medium manufacturing enterprises (SMEs) with no more than 100 workers.

sector - a part of a country's economy or business activity ภาคเศรษฐกิจของประเทศ
agricultural sector
salary - a fixed amount of money that you earn each month or year from your job เงินเดือน
inspection - an official process of checking that things are in the correct condition or that people are doing what they should การตรวจสอบตรวจตรา

Many workers in these SMEs have moved into the agricultural sector and do not receive salary payments as they are working for their families. Some were forced to work in poorer conditions in informal private enterprises with less than 10 employees and are overlooked by government inspection. The study said employment in S#s would drop significantly to 70% from 81% as a result of the government's 40% minimum wage increase policy.

implementation - the process of making something such as a plan, system, idea or law start to work and be used การบังคับใช้ (กฎหมาย)
measures - actions taken to deal with a problem มาตราการ

Dr Dilaka said the minimum wage hike is fairer for workers but its implementation without efficient measures to deal with its impact would see many workers laid off or forced to work in worse conditions in informal sectors without labour law protection.

implement - to make something such as an idea, plan, system or law start to work and be used นำ แผนหรือนโยบายมาปฏิบัติ
urgent - needing to be dealt with immediately ที่เร่งด่วน
implement urgent measures
operators - businesses doing this business
business operators

efficiency - waste little time, energy and resources in doing a task (minimize time, energy and resources in performing a task) (See glossary) การทำงานอย่างมีประสิทธิภาพ คุ้มค่าเวลาและใช้พลังงานหรือต้นทุนในการผลิตน้อย เพื่อให้ได้ผลผลิตมาก
capability - the ability to do something ความสามารถ

He suggests the government implement urgent measures to help business operators increase production efficiency and capability so that they would not cut workers to control costs.

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