A significant number of Federation of Thai Industries (FTI) members fear they may be forced to shut down their businesses because government measures are not helping them to cope with the higher minimum wage.
About a quarter of 400 firms surveyed by the FTI say they may have to close as the wage increase to 300 baht a day nationwide has pushed up their manufacturing costs by 10-12% on average.
"These companies can't afford to relocate to lower-cost countries," said FTI secretary-general Tanit Sorat.
The survey, conducted from Jan 12-17, covered manufacturing and service sectors including transport, hotel, retail and shipping operators.
It included exporters and those focusing on the domestic market, with labour forces ranging from fewer than 25 people to more than 200.
The garment industry has been affected the most, followed by the food, electronics and ceramic sectors, said Mr Tanit, adding that 35% of small and medium-sized companies expect to post losses due to the wage hike.
A recent survey by the Industrial Works Department found that about 66,000 or 88% of factories have been hurt, according to Mr Tanit.
"Only 37% of these companies have their own brands. That means if subcontractors raise their prices to reflect higher wage costs, their clients may switch manufacturing orders to competitors in other countries," he said.
About half of the surveyed companies say the government's relief measures, including corporate tax reductions, give little help for them to adjust to the increased costs, while another 47% see no benefits from such measures.
"Merely 4.4% of these firms are satisfied with the assistance offered by the government, while as many as 66.67% say they are not," said Mr Tanit, noting that his group met Prime Minister Yingluck Shinawatra on Sunday to discuss the effects of the wage increase.
"We would like to see the government's measures cover both exporters and companies that mainly sell their products in Thailand," he said.
Meanwhile, the stronger baht against the dollar has adversely affected exporters in terms of margins. The baht has appreciated to about 29.5 baht to the greenback from 31 baht early this year.
"The baht tends to appreciate as capital continues to flow into Thailand and Asia. The government and the Bank of Thailand should take steps to manage this, and cutting the interest rate may help," said Mr Tanit.
About the author
- Writer: Nareerat Wiriyapong
Position: Business Reporter