The cabinet on Tuesday approved a proposal to impose the minimum wage of 300 baht per day all over the country from Jan 1, Budget Bureau director Voravidh Champeerat said.

He said Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong was appointed chairman of a committee to plan measures to help business entrepreneurs affected by the wage increase.

From April 1 this year, the 300-baht wage was implemented in seven provinces - Bangkok, Nonthaburi, Samut Prakan, Samut Sakhon, Nakhon Pathom, Pathum Thani and Phuket.

Federation of Thai Industries (FTI) chairman Payungsak Chartsutipol will propose the government measures to reduce the impact on the private sector after the government approved the pay rise.

The FTI will seek the establishment of a fund to compensate for some labour costs to the private sector. It also wants a reduction in the cash burden, particularly on cutting the contribution to the Social Security Fund to 2.5%, down from the normal rate of 5%, for three years. However, the Social Security Office announced earlier that for 2012, the average contribution from both employees and employers to the fund is 3.5%.

Photo by Somchai Poomlard

Rising costs from this policy should be deducted as expenses for value added tax calculation at two times of the actual cost for three years. The government should also reduce building and land taxes as well as local development tax by 50% for three years.

The federation members also want to see the creation of a matching fund that will help the private sector increase their production efficiency through machinery modernisation.

Wallop Witanakorn, an FTI vice president, said the government's decision to carry through with the 300-baht wage next year will force textile and garment manufacturers to adjust, particularly through improvement in production efficiency, while large manufacturers will need to transfer technology to small companies. It is possible that more companies will move to other countries or relocate to provinces in the central region in order to reduce logistic costs. 

Hassanai Kaewkul, chairman of Phayao Chamber of Commerce, said the government's 300-baht policy is likely to produce no positive outcome as workers are unlikely to improve their skills. 

He said a survey in the province showed that employers' costs will increase between 10-15% as the rate increase must be applied to all workers, though many of them already earn higher than the new rate.

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