Pledges to hike the daily minimum wage made by major political parties during their election campaigns raised the hopes of blue-collar workers, but sparked grave concerns among businesses.
The effects could be felt by white-collar workers should the increase in the daily minimum wage lead to a higher cost of living.
Key business leaders, though not completely disagreeing with the wage hike, want the new government to first listen to their suggestions before pushing ahead with this controversial policy.
If the wage is raised judiciously and the new rate is provided to the most appropriate groups of workers, it will not only save entrepreneurs from a big financial burden but also strengthen their businesses.
IMPACTFUL RISE
The plan to increase the minimum wage threatens to cause a far-reaching impact on investments, small and medium-sized enterprises (SMEs) and even white-collar employees if the new administration goes ahead without first considering possible negative effects of raising the rate.
The Move Forward Party (MFP), which received the most votes in the May 14 general election, promised to increase the minimum wage to 450 baht a day while the Pheu Thai Party proposed a more controversial increase to 600 baht a day.
Currently, the minimum daily wage in Bangkok is 353 baht, while workers in Chon Buri receive 354 baht a day. Workers in other provinces receive lower rates.
Sangchai Theerakulwanich, president of the Federation of Thai SMEs, suggested the MFP launch other measures to help people cope with the high cost of living rather than continue with its pledge to raise the daily minimum wage.
Higher wages can cause manufacturers to increase the prices of their products, which would eventually affect the consumer directly.
"In fact, we do not totally agree with a wage rise, but it can serve as a financial help for labourers, including migrant workers. However, the increase wouldn't really be able to avoid some subsequent unpleasant impact," said Mr Sangchai.
"White-collar employees with a wage higher than 450 baht [per day] may need a pay rise, too, because of the higher cost of living caused by the minimum wage hike."
The Federation of Thai Industries (FTI) is concerned the daily minimum wage hike would deal a particularly harsh blow to SMEs, which were hit hard by the impact of Covid-19 as well as seeing their electricity bills surge as a result of higher oil prices globally after the Russia-Ukraine conflict escalated in February 2022.
A daily wage hike would heap more pressure on the operating costs of SMEs, which help drive the country's economy. Such a rise would eventually affect the recovery of their business activities that were subdued during the pandemic, said Montri Mahaplerkpong, vice-chairman of the FTI.
In terms of investment, higher wages could discourage foreign businesses from investing in Thailand and lead existing manufacturers to consider relocating their production facilities to neighbouring countries where the wage rates are lower.
"New investments that need to hire a number of workers will not happen in Thailand," said Tanit Sorat, vice-chairman of the Employers' Confederation of Thai Trade and Industry (EconThai).
Many companies in the country still depend on labour as they have yet to transform their manufacturing by using more new technologies, particularly automation and robotic systems, to replace it, he said.
The export sector, which plays a key role in driving the Thai economy, will also be affected if the new wage hike is enforced because the country will find it more difficult to take advantage of low labour costs to compete with other countries in the global market, according to Kriengkrai Thiennukul, chairman of the FTI.
300-BAHT NIGHTMARE
The promises to hike the daily minimum wage made by the Move Forward and Pheu Thai parties reminded Mr Tanit of the unpleasant impacts caused by the previous increase -- to 300 baht a day -- implemented in 2013 by the Yingluck Shinawatra administration.
Almost 2,500 workers were laid off in the first five days after the 300-baht daily minimum wage was enforced nationwide on Jan 1, 2013, said the Labour Ministry, citing a report from the Social Security Office.
Indeed, layoffs had taken place since April 2012, when the authorities first implemented the wage hike in seven pilot provinces, including Bangkok.
More than 243,000 workers were laid off between April and December, according to the ministry.
Construction workers are transported to their workplace in the Bon Kai area on Rama IV Road in Bangkok. A rise in the daily minimum wage is expected to help such workers better deal with the high cost of living. Apichart Jinakul
HIDDEN COST
If the MFP pushes ahead with its package of labour wage and welfare policies, it will create additional financial burdens for manufacturers in addition to the actual hike in the daily wage.
"There are some implicit costs that should be included in operating costs," said Mr Kriengkrai, referring to the MFP's election campaign that it claims is aimed at improving the working and living conditions of workers.
The party wants to provide female workers with a 180-day period of maternity leave, an increase from the current level of 98 days. During the six-month period, mothers who are members of the Social Security Fund will receive their salary, to be jointly paid by the employer and the Social Security Office.
The aim is to remove time and financial constraints for female workers who want to have babies, which would eventually help boost the current low birth rate in Thailand, the MFP said.
In a 23-point memorandum of understanding on the new government's policy guidelines signed by the MFP and its political allies, the signatories agree to improve workers' rights and ensure fair wages.
While the proposed six-month maternity leave is positive for women, in terms of the cost and labour management aspect, it would not be easy for employers.
"If one factory hires five workers and one of them leaves for six months. That means the labour force drops by 20% during the period. This is a hidden cost for the factory," said Mr Kriengkrai.
A motorcyclist passes a campaign poster of the Pheu Thai Party promoting a minimum daily wage of 600 baht and an increase of the minimum monthly salary for university graduates to 25,000 baht. Apichart Jinakul
BENEFICIARIES
While the daily wage hike would benefit Thai workers, it would also benefit migrant workers who typically send some of their earnings back to their home countries.
If the wage hike is aimed at encouraging workers to spend more of their earnings in Thailand, the policy would not fully achieve this goal among foreign workers.
It is possible that migrant workers would spend only half of their wages here and send the rest back to their families, which would support the economy of their home countries, said Mr Montri.
There are currently 2.6-3 million migrant workers from Myanmar, Laos and Cambodia in Thailand. Many of these workers carry out the so-called "3Ds", referring to work that is dirty, dangerous and difficult.
"The wage increase tends to help migrant workers rather than Thais who avoid doing the 3Ds," said Mr Montri.
The new government must think carefully how the wage rise will support the domestic economy, he said.
WIN-WIN SOLUTIONS
Using workers' skills to determine how much a wage ought to be increased would bring benefits to both employers and employees, according to the FTI.
The federation does not totally oppose higher wages, but it would be better if the government based the wage rise on workers' capabilities, said Mr Montri.
"Let workers' skills, know-how, educational background, special training and experience determine their wage," he said.
This method will encourage workers to improve and develop their skills and, on the side of employers, it will be easier for factories to find workers with skills that match certain jobs, especially those that support plans to change manufacturing technology.
"Their upskilling will lead to more income and an opportunity for businesses to increase production efficiency and competitiveness," said Mr Montri.
Highly-skilled labour is among the factors that could help entrepreneurs transform their production processes in addition to such technologies as robotic systems and artificial intelligence as well as the investment budget.
The government promotes manufacturing under its Industry 4.0 scheme, which focuses on digital technology and data analysis.
Thailand needs around 5 million highly-skilled workers a year, but only around 10,000 workers, mostly Thais, are able to attend such annual training courses held by the government to upskill them, according to the Federation of Thai SMEs.
"The government should organise more training courses. This will help workers increase their wages, which could be even greater than 450 baht a day," said Mr Sangchai.
Mr Tanit also supports the need to upskill workers, which should be done in tandem with a gradual and prudent increase in wages.