State salary hike to put pressure on SMEs

State salary hike to put pressure on SMEs

New state employees to get 10% increase

The cabinet resolution to approve a 10% increase in state officials' salaries is likely to cause businesses to consider increasing wages accordingly to attract talented individuals, says Sanan Angubolkul, chairman of the Thai Chamber of Commerce.

New state employees are set to receive 16,500 baht monthly in their first year, rising to 18,000 baht in their second year.

"Raising monthly salaries for state employees to 18,000 baht will have a significant impact, particularly on small and medium-sized enterprises [SMEs], which may face financial liquidity issues if they want to attract talented individuals," he said. "In addition, the private sector will have to adjust the salaries of existing employees earning less than 18,000 baht per month to bridge this gap. This will pose a financial burden on employers."

Mr Sanan said for private schools and universities, where starting salaries for holders of bachelor's degrees currently begin at 15,000 baht per month, adjustments will be necessary. This will impact production costs, but a detailed assessment is required for each company and sector, as the cost of hiring varies, he said.

"The government's salary adjustment for new civil servants will have a ripple effect prompting the private sector to take immediate action. Businesses will need to adjust salaries to attract talented individuals, and they must find ways to increase productivity and enhance skills in the future," Mr Sanan said.

As for the impact on inflation, he said it was likely to be minimal as the salary increase applies only to new government employees.

The pay rise in the state sector will boost officials' purchasing power, but should not affect the daily minimum wage hike, which is determined by the national tripartite wage committee, said the Federation of Thai Industries (FTI).

"It is good the cabinet approved an increase in salaries for state officials because many of them receive low salaries," said Kriengkrai Thiennukul, chairman of the FTI. "Over the long term, the government should find ways to raise its revenue to increase its budget."

He said the state official salary increase is not related to the daily minimum wage.

"The daily minimum wage will be decided by the tripartite wage committee, not the cabinet," said Mr Kriengkrai.

The committee consists of representatives of employers, employees and the government.

He said the salary increase for officials will boost the economy and ease their financial burden resulting from a high cost of living.

Rangsun Puangprang, executive vice-president of local oil retailer PTG Energy Plc, said he believes the pay rise will not significantly affect oil sales, but may lead to more spending during the high tourism season.

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