Abhisit slams 300 baht wage hike policy

The government needs to accept the truth about the negative impact of its policy to suddenly raise the daily minimum wage to 300 baht nationwide, Democrat Party leader Abhisit Vejjajiva said on Wednesday.

"The opposition and critics warned the government about the effects of its wage policy last year but it chose to ignore them," said the opposition leader.

He said the government should not have refused a suggestion by the private sector to set up a temporary compensation fund to help small- and medium enterprises (SMEs) hit by the wage hike. The money needed to set up the fund would be far less than the budget for the rice price scheme.

Thailand had lost its three-decades-old title as the world's top rice exporter last year, falling behind India and Vietnam, as a consequence of to the government's paddy pledging price scheme. 

The former premier warned that an influx of workers would be drawn to places where they think businesses can afford to pay the new wage rate,  such as Bangkok.

"I don't want to see the government repeat the same mistake they made with the rice pledging scheme, which has created problems for the Thai rice industry and farmers," Mr Abhisit said.

Abhisit Vejjajiva, left, and Nattawut Saikuar (Post photos)

Deputy Commerce Minister Nattawut Saikuar argued that the rising number of businesses that shut down last month had nothing to do with the 300 baht daily minimum wage.

Mr Nattawut said 3,838 companies went out of business in December, up 3% year-on-year and up 118% from November. A total of 16,936 companies had closed down last year, up 20% from 2011.

He said 58% of the companies that closed down lacked accumulated capital, while 37% shut down so that they can receive concessions from the state sector, and some that did not get a concession just ended their business. The other 5% closed down because of internal management issues

Fewer than 100 of the businesses that shut down were textile and clothing companies, he added.

"The government began implementing the wage hike policy in seven provinces in April last year and no businesses had liquidity problems at the time.

"The policy has been in effect [nationwide] for just nine days and therefore the closing down of SMEs recently is not related to this policy," Mr Nattawut insisted.

The government will find out why the factories closed and will explain to the public, he said.

Meanwhile, the Surin Chamber of Commerce reported that two factories had already closed in the northeastern province since Jan 1, with more likely to follow suit due to the 300-baht daily minimum wage.

Chamber chairman Kriangsak Palikupt said many businesses were still confused about reports that the government plans to cover 60% of the labour cost hike. The daily minimum pay rate has been raised from 226 to 300 baht in the province, an increase of 74 baht or 32.7%

The government needs to impose price controls on consumer products for the workers to fully benefit from the higher wages, Mr Kriangsak added. He expressed concern that if consumer costs are allowed to increase, most people would be affected.

He said the new wage is causing problems for small and medium businesses, which are mostly located provincial areas. He said that at least two garment factories had already shut their doors in Surin with two more at risk of going out of business because they can no longer shoulder the rise in labour costs. 

He said a large number Cambodian labourers have also been entering Thailand to get work at local restaurants, rice mills and other areas as they were willing to accept less than the minimum wage. He feared that this could bring social problems, including crime.

Related search: minimum wage, chamber of commerce, business failures

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