The Thai Industries Sentiment Index (TISI) fell to 90.3 points in April, down from 92.4 points in March, with the planned daily minimum wage hike among the factors dealing a blow to business confidence, says the Federation of Thai Industries (FTI).
Entrepreneurs were not only concerned about lower sales and production, but also the government's wage increase, a rise in domestic diesel prices and expensive raw materials.
"If the daily minimum wage increases to 400 baht, it will impact all businesses. Rising diesel prices will further strain operating and logistics costs," said Kriengkrai Thiennukul, chairman of the FTI.
Last month, the cabinet decided to allow the retail diesel price to increase from 30 baht a litre to 33 baht a litre, effective from April 20 to July 31, following the expiry of the diesel excise tax cut of one baht a litre on April 19.
On May 14, the cabinet resolved to acknowledge the Labour Ministry's proposal to increase the daily minimum wage to 400 baht nationwide, scheduled for September or October. The hike remains uncertain as the tripartite wage committee has yet to reach a final conclusion.
The nationwide daily minimum wage rose on Jan 1, 2024, with the new rates varying between provinces, ranging from 330 to 370 baht.
The increases ranged from 2 to 16 baht, averaging 2.37%.
The committee, comprising representatives from the government, employers and employees, later approved an increase to 400 baht for tourism-related businesses and four-star hotels with at least 50 employees in 10 provinces, taking effect on April 13.
The current wage, combined with higher energy and raw material prices, has already affected businesses, said the FTI.
Factories with labour-intensive manufacturing reported higher operating costs by up to 20%, while companies that employ fewer workers recorded cost increases of 5-7%, according to the federation.
Heavy industries such as cement, steel, iron and glass reported costs soaring by 30-40% following the wage hike.
Mr Kriengkrai called on the government to keep its daily minimum wage policy in line with the tripartite wage committee. He said the new wage increase of 400 baht a day should not be applied to all provinces, suggesting higher pay be determined by skills.
The April TISI was based on a survey of 1,268 entrepreneurs from 46 industries under the FTI. The global economy was the top concern, gaining votes from 79.4% of respondents, followed by oil prices (56.6%), the domestic economy (56.4%) and domestic politics (40.2%).