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New labour laws (like 300 baht minimum wage) driving SMEs underground so they don't pay taxes or social security for employees.

Photo above of a small streetside Bangkok food vendor which has the option of leaving the formal government social security that provides benefits for employees.

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LABOUR

More SMEs going under the radar

6/08/2012
Nanchanok Wongsamuth

The minimum wage of 300 baht a day is taking its toll on small and medium-sized enterprises (SMEs), leading several to close and start doing business without registering with the Commerce Ministry, according to a university study.

''This is because a large number of SMEs are unable to compete, and if they are not in the system they can lower their costs by avoiding taxes and money sent to the social security fund,'' said Kiatanan Luankaew, director of the Dhurakij Pundit University (DPU) Research Center.

According to Mr Kiatanan, once business operators report a closure (to authorities), they generally opt to purchase condominiums or other types of buildings and set up a new firm without registration. Most of these businesses have no more than five or six employees.

The companies place ads on electric poles, telephone booths and websites, providing contact via mobile phone.

''The workers will receive wages of 300 baht per day, but it is worth the payment because they don't have to pay tax and contribute to social security,'' Mr Kiatanan said.

DPU has been surveying SMEs in seven provinces that raised the minimum wage to 300 baht a day this year. They are Bangkok, Nonthaburi, Pathum Thani, Samut Prakan, Samut Sakhon, Nakhon Pathom and Phuket.

According to the survey, 4,000-5,000 SMEs from a total of 880,000 in the seven provinces have turned to the non-formal system, while some considering entering the official system have changed their minds.

''If the government remains committed to its policy to increase the minimum wage nationwide next year, SMEs will increasingly leave the system in order to lower costs. Businesses upcountry are not prepared to handle the sudden increase in costs,'' Mr Kiatanan said.

If the pattern persists, he said, future governments will receive less revenue from tax and the unlucky ones will be merchants such as noodle stalls where officials will count the number of bowls sold to calculate tax.

Increased living costs have prompted SMEs to adopt promotions and discounts to boost sales, but these are not as useful when grass-roots consumers are cutting their own costs.

This is in contrast to large businesses and malls that use similar promotions but are more successful because their customers are middle- and high-income people, Mr Kiatanan said.

''Many SMEs are cancelling their promotions because they have lost profits and resort to other measures such as cutting workforce and welfare,'' he said.

(Source: Bangkok Post, LABOUR, More SMEs going under the radar, 6/08/2012, Nanchanok Wongsamuth, link) 


SMEs and Labour Vocabulary

under the radar - becoming invisible (so that people cannot see what you are doing, like an airplane, flying "under the radar")
going under the radar

more SMEs going under the radar

wage - an amount of money that you earn for working, usually according to how many hours or days you work each week or month ค่าจ้าง
minimum wage - the lowest wage that can be legally paid to a worker

toll - normally the number of people killed or injured in an accident or disaster (but in this case, it refers to economic damage) 
taking its toll

register - getting permission from the government to do some activity (and adding yourself to the official list)
registering with the Commerce Industry

The minimum wage of 300 baht a day is taking its toll on small and medium-sized enterprises (SMEs), leading several to close and start doing business without registering with the Commerce Ministry, according to a university study.

social security - a government system of social insurance, money is taken from worker paychecks and the employee receives money if they have a health problem and when they retire
social security fund - the money collected under the social security scheme

''This is because a large number of SMEs are unable to compete, and if they are not in the system they can lower their costs by avoiding taxes and money sent to the social security fund,'' said Kiatanan Luankaew, director of the Dhurakij Pundit University (DPU) Research Center.

enterprises - companies
business operators - businesses doing this business

close (verb)
closure (noun)

authorities - government officials; the police or people in official organisations who have the legal power to make people obey laws or rules เจ้าหน้าที่ (ตำรวจ หรือผู้มีอำนาจ)

opt - to make a choice or a decision from a range of possibilities เลือก
purchase - buy

opt to ... - choose to do ...
opt to purchase - choose to buy

firm - a business or company บริษัท

registration - recording in an official list
set up a new firm without registration

According to Mr Kiatanan, once business operators report a closure (to authorities), they generally opt to purchase condominiums or other types of buildings and set up a new firm without registration. Most of these businesses have no more than five or six employees.

telephone booths - the small glass places on side of road to make phone call with with payphone (that people do not use since mobile phones becamse cheap)
contact - to communicate with someone ติดต่อ
contact via mobile phone - call someone on their mobile phone to talk to them about something

The companies place ads on electric poles, telephone booths and websites, providing contact via mobile phone.

wages - the amount of money earned per hour by a worker
contribute - to make a regular payment
contribute to social security

''The workers will receive wages of 300 baht per day, but it is worth the payment because they don't have to pay tax and contribute to social security,'' Mr Kiatanan said.

survey - gathering information about what people think about different subjects (public opionion) by asking large numbers of people questions and counting their answers, and then using statistics, graphs, and tables to present results (See Wikipedia) การสำรวจความเห็น

surveying SMEs in seven provinces

official - approved by the government or some authority ที่เป็นทางการ
official system
entering the official system

non-formal system - the system that is not official

committed - loyal and willing to give your time and energy to something that you believe in
committed - promised (a sure thing)

policy - a plan of action to guide decisions and achieve outcomes นโยบาย (See Wikipedia)
nationwide - throughout a whole country ทั่วทั้งประเทศ

changed their minds - changing what you believe or think about an issue or situation  

DPU has been surveying SMEs in seven provinces that raised the minimum wage to 300 baht a day this year. They are Bangkok, Nonthaburi, Pathum Thani, Samut Prakan, Samut Sakhon, Nakhon Pathom and Phuket. According to the survey, 4,000-5,000 SMEs from a total of 880,000 in the seven provinces have turned to the non-formal system, while some considering entering the official system have changed their minds.

committed - when you've made a plan and a promise to do something  continue doing it (not stopping or quitting)
remains committed

policy - a set of plans in government or business to achieve goals and outcomes
policy to increase minimum wage nationwide

handle - solve a problem (deal with a new problem when it happens)
not prepared to handle the sudden increase in costs

''If the government remains committed to its policy to increase the minimum wage nationwide next year, SMEs will increasingly leave the system in order to lower costs. Businesses upcountry are not prepared to handle the sudden increase in costs,'' Mr Kiatanan said.

pattern - a series of actions or events that together show how things normally happen or are done
persist - continue for a long time (without stopping)
pattern persists

revenue - income from taxes or business activities รายได้

stalls - large tables or small shops with an open front from which goods are sold in a public place แผงขายของ
noodle stalls - small places that sell noodles on side of road

calculate - to discover a number or amount using mathematics คำนวน
calculate tax

If the pattern persists, he said, future governments will receive less revenue from tax and the unlucky ones will be merchants such as noodle stalls where officials will count the number of bowls sold to calculate tax.

adopt - to accept or to start using something new นำมาใช้
adopt promotions

boost - to increase; to strengthen เพิ่ม; ทำให้มีกำลังมากขึ้น
boost sales - increase sales

discount - reducing the price of a good to help sell the good
discounts to boost sales

grass-roots - ordinary people (not rich)
consumers - people who buy things (individuals and families)
grass-roots consumers

Increased living costs have prompted SMEs to adopt promotions and discounts to boost sales, but these are not as useful when grass-roots consumers are cutting their own costs.

contrast - a difference between two things when you compare them ความแตกต่าง
in contrast to .... - which is different from ....

income - money that people receive from work or some other source, used for household consumption and savings
middle- and high- income people

This is in contrast to large businesses and malls that use similar promotions but are more successful because their customers are middle- and high-income people, Mr Kiatanan said.

workforce - แรงงาน all the people in an area or country available for work, all the people who work for a company

welfare - 1. employee benefits; extra things given to employees in addition to wages or salary such as health insurance สวัสดิภาพ 2. living in good conditions (with health, wealth, and happiness) ความสะดวกสบาย, ความมีสุขภาพด
cutting workforce and welfare - reducing the number of employees and "employee benefits" such as health insurance 

measures - actions taken to solve a problem มาตรการ
resort to - take some extreme action (do something you would not normally do, because you have a big problem, for example)
resort to other measures

''Many SMEs are cancelling their promotions because they have lost profits and resort to other measures such as cutting workforce and welfare,'' he said.

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