To raise or not to raise the daily minimum wage is an uphill task being mulled by policymakers and employers across the business spectrum.
Broadly speaking, trade unions are proponents of the hike amid demand for a fairer wage resulting from low-income earners' blood-and-sweat efforts. But as usual, employers have voiced opposition on the grounds that a wage hike would derail their business through higher costs.
The daily minimum wage has remained the same for five years. The last nationwide rise was in 2012, when a base rate of 300 baht was adopted by Yingluck Shinawatra's government.
But rises have taken place since then to tackle poverty in certain provinces. Last year, eight provinces didn't get a wage hike at all, while other provinces got rises ranging from five to 10 baht.
Judgment Day for the minimum wage rise will fall on Jan 17, with employees hoping for a favourable outcome.
A minimal hike should not affect small and medium-sized enterprises (SMEs) with a low-tier payment rate, as such an increase should not induce a significant cost hike for businesses, said Yongyuth Chalamwong, research director for labour development at the Thailand Development Research Institute.
"Long-term competitiveness is not associated with the minimum wage, but rather tied to technological innovation and skills of the workforce," Mr Yongyuth said. "Productivity and wages have to go together."
AGREEMENT IN LIMBO
Thailand's national tripartite committee will meet and review the country's daily minimum wage again on Jan 17 after previous negotiations failed, said Tanit Sorat, vice-chairman of the Employers' Confederation of Thai Trade and Industry.
The national tripartite committee, which comprises workers, employers and government officials, recently came to loggerheads over how much the wage should be raised nationwide.
"The national tripartite committee, especially workers and employers, have disagreed on whether the minimum wage should be increased by 15 baht a day or 300 baht a month in some provinces such as Bangkok and Phuket, due to how some companies cannot afford to pay the additional amount to workers," Mr Tanit said.
More than 10 provinces want the current daily minimum wage to remain unchanged, while some provinces want to hike the wage by two baht a day or 60 baht a month.
At present, Thailand's minimum wage ranges from 305 to 310 baht a day, depending on location.
"It is the right time to increase wages for workers in Thailand, but the national tripartite committee can't agree on a monthly figure for such a hike," Mr Tanit said.
The minimum wage is agreed upon by the real sector and analysts, who formulate an appropriate rate to suit the country's economic situation among both employers and employees.
"As we know, the minimum wage in Thailand also depends upon political factors and election campaigns too," Mr Tanit said.
Chen Namchaisiri, chairman of the Federation of Thai Industries (FTI), said the business sector is concerned about the minimum wage hike because such a move will take a toll on SMEs.
"The business sector has agreed to increase the minimum wage for workers in Thailand, but it should not be increased by the same rate in every province," Mr Chen said.
FTI vice-chairman Suchart Chantaranakaracha said Thailand has 2.7 million SMEs, 80% of which are engines driving the domestic economy forward. The business sector is not worrying about large corporations, because they can afford to accommodate such a wage hike.
At present, there are 38 million Thais in the workforce and 3.5 million migrant workers, mostly from Myanmar, Cambodia and Laos.
In 2017, the Central Wage Committee approved minor hikes in the daily minimum wage of five, eight and 10 baht for three respective groups in 69 provinces.
The committee decided to keep the minimum wage in eight provinces unchanged. They are Sing Buri, Chumphon, Nakhon Sri Thammarat, Trang, Ranong, Narathiwat, Pattani and Yala.
Seven provinces had their minimum wage rise by 10 baht: Bangkok, Nakhon Pathom, Nonthaburi, Pathum Thani, Samut Prakan, Samut Sakhon and Phuket.
Thirteen provinces saw their minimum wage increase by eight baht: Khon Kaen, Nakhon Ratchasima, Prachin Buri, Chon Buri, Rayong, Surat Thani, Songkhla, Chiang Mai, Saraburi, Chachoengsao, Krabi, Phangnga and Ayutthaya.
The remaining 49 provinces saw their minimum wage increase by five baht.
NOT ACROSS THE BOARD
Poj Aramwattananont, vice-chairman of the Thai Chamber of Commerce, said manufacturers have voiced support for the government's policy to raise the daily minimum wage, but suggested that such an increase should be determined by the provincial committees chaired by each governor.
The rate of the minimum wage should be different depending on the cost of living in each province, Mr Poj said.
He said many provinces have not been identified as industrial manufacturing bases, as they depend largely on agriculture and tourism.
Businesses related to agriculture and tourism will thus be hurt by higher production costs incurred from the wage hike.
For instance, Mr Poj cited the provinces in northern Thailand such as Phrae, Nan, Lampang, Uttaradit, Mae Hong Son, Chiang Rai, Phayao, Chai Nat, Pichit, Nakhon Sawan and Kamphaeng Phet.
"Increasing the daily minimum wage will eventually have a negative effect, causing a higher cost of living and [weakening Thailand's] competitiveness, he said.
Internal Trade Department director-general Boonyarit Kalayamamit said the department is studying the impact of the wage hike on the production costs of various product categories, particularly those related to daily life such as food, electrical appliances, construction materials and consumer goods.
Any wage increase is unlikely to hurt overall production costs, except for businesses categorised as labour-intensive, SMEs or those in the farm sector.
Mr Boonyarit said consumer products overall will see insignificant changes because of the wage hike, as manufacturers mostly rely on machines.
Nonetheless, the department has pledged to monitor the impact to prevent any negative effects on people's cost of living.
The department has threatened to take serious legal action against traders or manufacturers who take advantage of the wage hike by raising prices to levels that do not reflect actual production costs.
UPSETTING RESTAURATEURS
Taniwan Koonmongkol, president of the Thai Restaurant Association (TRA), urged the government to keep the same daily minimum wage this year, or wait until the economy picks up at a faster pace, which could take months.
Mrs Taniwan warned that if the government increases the minimum wage as planned, it could hit the restaurant and food sector nationwide with higher daily operating costs.
"Each food shop or restaurant will have to shoulder higher costs and expenses, while facing a difficult [economic] situation," she said.
Waiters take orders at a Japanese restaurant. The president of the Thai Restaurant Association is a strong opponent of any rise in the minimum wage until at least 2019. (File photo by Somchai Poomlard)
Based on the TRA's rationale, increasing the minimum wage will reshape Thailand's labour cost structure, meaning when one staff member gets a new pay rate, the wage earned among all other employees in the same restaurant or food stall will have to increase accordingly. As a result, business owners will face higher costs. If operators refuse to adjust wages, their staff will depart and look for new jobs at other places.
Workers at restaurants and street food stalls are largely not Thai, according to the TRA. These jobs are for migrant workers mostly coming from Myanmar, Laos, Cambodia, the Philippines and China.
But the cost of labour is not as cheap as it once was, as employers who hire migrant workers will have to manage other expenses such as food, accommodation and work licences for agents and their staff.
"Based on a minimum rate, the cost of an employee should be 9,000 baht per month, but the actual figure is as high as 12,000-15,000 per month," Mrs Taniwan said. "If the government endorses the new rate, daily operating costs will be even higher."
In June 2017, the government moved to crack down on illegal migrant workers, causing a labour exodus in which 250,000 non-registered workers returned home. Still, millions stayed on to continue working legally in Thailand.
It is estimated that over 350,000 restaurants and food shops are operating across the country, but only 5,000 are operating with registered migrant workers, mostly located in big shopping centres, community malls, tourist areas and stand-alone shops.
According to TRA data, 2-3 million locals and foreigners are working in restaurants and food stalls. Of that total, 300,000 are classified as migrant workers. Many more are working in other businesses such as mobile phone shops, souvenir stores and tourism service providers.
Instead of hiking the daily minimum wage, the government should promote micro businesses to foreign tourists so they can generate greater profits, Mrs Taniwan said, adding that this would help strengthen the workforce and small businesses, especially restaurants and street food stalls.
The government has also been urged to help small restaurants and food stalls by offering tax incentives or encouraging customers to organise meetings or conferences in these eateries, she said.
MINIMAL IMPACT FORESEEN
Paisarn Aowsathaporn, executive vice-president of SET-listed Oishi Group Plc, the operator of Oishi Japanese restaurants under the Thai Beverage Group, said the company is likely to experience a slight impact from the increase in minimum wage, with a handful of staff affected.
In general, the company pays wages based on work experience, he said.
"We pay more than the minimum wage to draw people to work at the company to accommodate our yearly expansion," Mr Paisarn said.
He said the company has already gleaned experience from the previous wage hike, which indirectly affected the company's operations, as suppliers had adjusted the prices of raw material and ingredients.
"We tackled the problem by increasing logistics efficiency and lowering other operating costs instead of increasing product prices," he said.
But Hester Chew, chief executive of McThai Ltd, the operator of McDonald's restaurants in Thailand, said the company will inevitably be affected by the wage increase, citing how wages account for 10-20% of the company's operating costs.
He said it was determined at a recent board meeting that there was no urgent need to raise menu prices this year.
"Higher wages may affect our operating costs, but a positive factor is higher consumer spending power," Mr Chew said. "We agree with the government's policy of a daily wage increase. It really makes sense to increase the daily wage, because Thai people are facing higher costs of living. If they get higher pay, they can spend more money covering their daily expenses."
But Mr Chew said he disagrees with any idea of pushing a flat rate increase across the country, as the cost of living differs across provinces.
Mr Chew said McDonald's Thailand has not increased the price of its products over the last two years, even as labour costs have risen by 4-5% annually, while the cost of raw materials has grown 5-7%.
Atip Bijanonda, president of the Housing Business Association, said the effects from a daily minimum wage increase would be negligible because the current wage paid to those working in the property sector is higher than the minimum wage.
"The effects will be minimal, as wages account for less than 10% of total development costs," he said. "Larger proportions of development cost are mainly derived from land prices and construction materials."
Mr Atip said the impact from a wage hike would be larger for SMEs, which are smaller in scale and rely more on labourers than on automation. These businesses are mainly clustered in the agricultural and fishery sectors.
An increase in the minimum wage should depend on location, particularly in Greater Bangkok and major provinces, he said, adding that it would have an impact on skilled labourers who will ask for higher rates.
Additional reporting by Pitsinee Jitpleecheep, Suchat Sritama and Kanana Katharangsiporn