UTCC: SMEs can handle minimum wage hike

UTCC: SMEs can handle minimum wage hike

Firms increasing IT use to minimise impact

Thai small and medium-sized enterprises (SMEs) are expected to survive the negative impact of the daily minimum wage hike, as many have shifted to rely more on information technology, robots and online shopping, according to the latest survey by the University of the Thai Chamber of Commerce (UTCC).

Thanavath Phonvichai, vice-president for research at the UTCC, said higher consumer spending based on higher wages, the government-sponsored welfare scheme, active investment projects both from the government and private sector, growing exports and tourism are expected to boost SME sales this year.

However, SMEs will inevitably be affected by higher costs from the wage increase, he said.

"Most Thai SMEs insist they can manage to stay afloat and some may even be profitable despite the minimum wage increase," said Mr Thanavath. "More importantly, many have adjusted their way of doing business by investing more in IT systems, bringing in robots and automated systems to replace humans, and introducing online or e-commerce systems for product distribution."

The UTCC study predicted the minimum wage hike of 5-22 baht per day will increase circulation in the economy by about 30 billion baht and raise economic growth by 0.1-0.2%.

The higher wage is expected to lift spending for 6 million workers, reinforcing GDP growth of 4.2-4.5% this year.

The tripartite national wage committee agreed on Jan 17 to increase the minimum daily wage nationwide from April 1 by 5-22 baht, depending on the province.

Phuket, Chon Buri and Rayong will get the highest rate of 330 baht a day.

The government has insisted the new wage hikes are appropriate for the economic conditions.

Nonetheless, a group of business leaders recently asked the government to review the daily minimum wage hikes approved by the tripartite national wage committee, saying they will hit SMEs, farms and the service sector especially hard.

The group also called on the government to decide wage hikes based on the discretion of each provincial wage committee.

In a related development, the UTCC yesterday reported the SME Competitiveness Index stayed at 47.9 points in the fourth quarter of 2017, up 0.2% from the previous quarter.

Thai SMEs during the period were found to improve raw material stocks and debt-to-equity ratios as well as liquidity and sales.

"We believe SMEs will improve this year although the improvement needs time," said Sauwanee Thairungroj, UTCC president.

Thailand has about 3 million SMEs that employ 11 million people.

SMEs account for 99.7% of businesses, with some 2.74 million found nationwide.

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