The University of the Thai Chamber of Commerce (UTCC) said that if the government raises the minimum daily wage to 400 baht nationwide, it may lead to GDP growing at at a rate below 2.6% and increase the rate of inflation to 3%, affecting consumer purchasing power.
Thanavath Phonvichai, president of the UTCC, said a survey of 403 business operators across the country, carried out between April 22-26 and comprising manufacturing (36.9%), trade (33%), and the service sector (30.1%), found that an appropriate minimum daily wage would be 370 baht per day.
A surge in the minimum daily wage to 400 baht per day would cause 70% of business operators, especially small and medium-sized enterprises, to be very concerned, while 30% were less concerned.
The private sector is worried that production costs would increase and profits would fall due to a decline in sales as there would be a tendency for business operators to shift the burden of the wage increase by raising the prices of their products, which would have an effect on inflation.
Since Thailand dramatically increased the minimum wage by 40% in 2010, there is still no empirical evidence from the government sector of any positive impact, apart from increasing inflation, according to the UTCC.
The wage hike would affect at least 7.5 million workers and would pose an additional cost to the private sector of 9 billion baht per month, or 300 million baht per day. Even though workers earn more money, the increase in product prices may dampen their purchasing power.
It is expected that the Thai economy will grow by only 2.5%, below the target of 2.6%. However, if the wage hike is introduced to only 10 pilot provinces, the effect of inflation is likely to be minimal.
A wage hike to 400 baht per day for all provinces rather than for selected areas would have a negative effect on the economy as inflation is projected to increase from 1% to 3% this year, and this policy adjustment would have a significant impact on the country's economic restructuring as well as competitiveness.
A uniform wage hike from 350 baht to 400 baht per day would make Thailand's minimum daily wage the highest within Asean, excluding Singapore and Brunei. Malaysia's minimum daily wage stands at 392 baht per day, followed by Vietnam (230 baht per day), the Philippines (360 baht per day), and Indonesia (350 baht per day).
According to the UTCC survey, it is expected that as of May 1, 2024, there will be 2.12 billion baht in circulation.