Padermchai rejects wage compo request

Employers must bear pay hike costs alone

The government has ruled out setting up a 50-billion-baht fund to help businesses cope with the recent minimum wage hike.

Labour Minister Padermchai Sasomsap said Friday the government had rejected a request from the private sector to set up the compensation fund using public money.

Mr Padermchai made the comments yesterday after meeting Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong at Government House.

The daily minimum wage was increased to 300 baht nationwide on Tuesday. The policy has been in place in seven pilot provinces, including Bangkok, since April last year.

Labour Minister Padermchai Sasomsap (Photo by Pattanapong Hirunard)

The government still wants at least three months to assess the consequences of the nationwide policy, at which point it will reconsider measures to help businesses, Mr Padermchai said.

The joint committee of the Federation of Thai Industries, the Chamber of Commerce, and the Thai Bankers' Association had proposed the compensation fund to help ease the impacts of the wage hike. The committee argued that small and medium-sized businesses (SMEs) would be particularly hard-hit by higher labour costs, and needed government help.

The fund was one of 27 measures which the committee proposed to help ease the wage rise burden.

Mr Padermchai said the government had now agreed to 16 of those measures. Of them, 11 are measures that were already in place in the seven pilot provinces. These measures will be extended for another year across all provinces.

The measures include a cut in employers' contributions to the Social Security Fund from 5% to 4%, as well as tax cuts equal to one and a half times the added labour expenses resulting from the wage hike plus two times the cost of skills training expenses.

Mr Padermchai said the government has finalised five more steps which will go before the cabinet on Tuesday.

They are a three-year, 50% cut in fees which authorities collect from small- and medium-sized hotels, developing skills training clinics at education outlets and workplaces, increasing the budget for state agencies to hold seminars, promoting caravans of cheap goods, and cutting the withholding tax for SMEs from 3% to 2%, which would result in a cut of 20 billion baht in state revenue.

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About the author

Writer: Chatrudee Theparat
Position: Business Reporter