Firms hit by wage hike, labour shortage

The daily minimum wage hike to 300 baht nationwide will seriously hit small and medium enterprises, while labour shortage has become a bigger concern for large-scale operators.

The Federation of Thai Industries (FTI) has said industrial manufacturers will wait for six to 12 months to reassess the impact of the wage increase and decide whether it will have to close down branch offices in the provinces.

The Labour Ministry has proposed 27 relief measures, but the FTI has claimed the measures provide little help for affected companies. The measures include lending money to help improve production, seeking new marketing channels, lowering corporate income tax and expanding the time frame for loan repayment.

The private sector has also called on the government to set up a committee to study the wage hike's effects.

With employment rising continuously since the middle of last year, the industrial sector has faced a shortage of labour especially in the construction, textile, furniture and footwear sectors.

According to the Labour Ministry, the wage hike has caused productivity to increase by twofold from 3-4% to 8%, partly because manufacturers have adopted new machinery and better technology.

Yongyuth Chalamwong, labour expert at the Thailand Development Research Institute (TDRI), said the wage hike is a challenge facing business operators, especially as the Asean Economic Community (AEC) draws near.

If they have their costs increased, the manufacturers have to find ways to increase the efficiency of labour, Mr Yongyuth cited.

The government will provide measures to help SMEs from 2014-2015 when there will be no increase in wages, so they can improve their efficiency.

The government should focus on encouraging people to work harder. One measure that might be helpful is lowering the amount put into social security funds, he said, adding that the measure should be implemented during the two years that wages will remain unchanged.