The Federation of Thai Industries (FTI) still supports the national tripartite wage committee's daily minimum wage hike proposal, though there was disagreement among the cabinet on Tuesday.
The cabinet is demanding a reconsideration of the proposed 2.37% increase to better match the economic situation, according to media reports citing Labour Minister Phiphat Ratchakitprakarn.
The 2.37% gain is equal to an increase of between 2 and 16 baht a day, depending on provinces where labourers work.
The Pheu Thai Party, which leads the coalition government, earlier proposed a wage increase to 600 baht a day by 2027, starting with a hike to 400 baht next year.
The current daily minimum wage in Bangkok is 353 baht, while workers in Chon Buri receive 354 baht a day. Workers in other provinces receive lower rates.
If the government wants to increase the wage to 400 baht a day, it is required to discuss the issue with the wage committee, said Kriengkrai Thiennukul, chairman of the FTI.
The committee consists of representatives from employers, employees and the government.
"The Joint Standing Committee on Commerce, Industry and Banking warned earlier that a hike to 400 baht would affect businesses and employment in Thailand," he said.
Half of the 46 industries under the FTI are involved with labour-intensive manufacturing. If the daily minimum wage soars, entrepreneurs may not be able to pay their workers, said Mr Kriengkrai.
These industries include garments, shoes, fashion and food processing.
The federation is worried some businesses may be forced to shut down while others may need to relocate their production facilities to neighbouring countries.
Employers' representatives earlier suggested the government consider using the average inflation rate, which should be 3% for three years for a wage calculation. This means the daily minimum wage should increase by 3% a year.
The Prayut Chan-o-cha government planned to approve a wage increase of 5.02% last year, which was acceptable to the Employers' Confederation of Thai Trade and Industry as it was in line with the inflation rate in 2022.
Apichit Prasoprat, vice-chairman of the FTI, said earlier the government must carefully consider the plan to raise the daily minimum wage as it could land reeling small and medium-sized enterprises (SMEs) in further trouble.
Authorities must base the increase on the inflation rate and GDP, and not follow campaign pledges, he said.
The economy has yet to fully recover following the pandemic, said Mr Apichit.
This year manufacturers are also facing weak exports.
IMPACT ON HOTELS
Suksit Suvunditkul, president of the southern chapter of the Thai Hotels Association, said as the Chinese market has recovered to 30% of 2019 levels, a minimum wage hike would particularly impact three-star hotels or smaller accommodation.
He said hotels in Phuket have had an unequal post-pandemic recovery as beachfront hotels and large hotels with four stars and above already had an occupancy rate of more than 70%, while small hotels in the city centre only claim 50% occupancy.
Mr Suksit said labour costs are the largest expenditure for hotels, followed by electricity and other items, such as food ingredients.
If the government wanted to raise workers' income, it should roll out other measures that help absorb separate rising costs along with a wage hike, such as lowering electricity costs or controlling prices of other necessary items for consumption, he said.
"Most hotels along the Phuket beachfront already hire workers with an average daily rate higher than the 400 baht that the government targets, as they can draw tourists with high purchasing power and gain more revenue from service charges for employees, thanks to expensive room rates from good locations and their brands' reputation," said Mr Suksit.
However, the situation of small hotels is totally different as they faced a wage hike last year, which heavily affected their businesses. They had to absorb rising costs on their own, instead of pushing additional costs onto room rates, as those hotels still have to compete for limited tourism demand due to weak Chinese and Thai markets.
"As the tourism situation in Phuket has yet to fully recover, another wage hike, which will be the second time in two years, will leave a burden for small players in particular," said Mr Suksit.
He added that employment in Phuket's hotel industry is also getting more intense as large hotels that closed during the pandemic have started to reopen and are recruiting more employees.
However, he said that even though Phuket has the highest minimum wage rate, it might not draw workers from other provinces as the cost of living on the island is quite high.
If the government successfully raised the minimum wage across all provinces, there might be some workers who go back to work in their hometown if they have lower living costs.