Wage hike compounded by tougher labour rules

Tougher enforcement of labour laws is adding to the costs of businesses already shouldering the higher daily minimum wage, says Adecco, the Swiss human resources firm.

Ms Tidarat noted several other payments are now associated with hiring an employee.

"Apart from the wage increase, hiring an employee includes Social Security contribution, worker's compensation and other benefits, in line with Labour Ministry rules," said Tidarat Kanchanawat, regional director for Thailand and Vietnam.

She said these costs are calculated based on the minimum wage paid, causing costs to rise further.

Social Security contributions from companies have risen to 5% this year from 3-4% last year.

Less known to most people, the Labour Ministry last year issued an order requiring employers to hire one disabled worker for every 100 normal workers.

If companies cannot do this, they can either transfer funds worth the entire year's salary of that employee to the ministry's fund for handicapped people or provide an area free of charge for them to sell products, said Ms Tidarat.

She said the latter choice can be carried out only by hypermarkets and other businesses, so most companies opt for the first option.

"Stricter law enforcement has recently contributed to higher latent costs for businesses," she said.

Additionally, companies are required to undertake training courses for new staff in areas such as health and safety.

"The rules are more about labour protection and not so much about increasing the productivity of the workforce," Ms Tidarat said, adding that Thailand needs to increase worker productivity as the minimum wage rises.

She said high turnover among lower-level staff causes hardship for companies that have undertaken consistent skill development, hindering productivity improvement.

At the same time, a shortage of skilled labour will remain a serious concern for companies next year.

In the first nine months of this year, the most in-demand profession was engineering, followed by sales, accounting and information technology (IT).

The first-time car buyer tax rebate and post-flood purchases have fuelled demand for engineers in the automotive sector.

On the supply side, however, most applications were filed for marketing jobs, followed by engineering, IT, sales and accounting.

About the author

Writer: Soonya Vanichkorn
Position: Reporter