Promising voters a rise in wages is a supposed curtain-raiser for national election campaigning. However, Pheu Thai's election pledge to lift the minimum daily wage from just over 300 baht to 600 baht has run into a barrage of criticism. The private sector, namely the employers, who will have to foot the bill, countered by saying the pledge would do more harm than good and won't help the country in the long term.
Sanan Angubolkul, chairman of the Thai Chamber of Commerce, warned that many entrepreneurs running SMEs struggled when the minimum wage was raised in 2011 which also saw some large industries move their production bases to other countries as a result.
He was referring to the impact of the daily wage rise introduced by former prime minister, Yingluck Shinawatra, who increased it from 215 baht to 300 baht.
Although strong companies survived the sharp hike and the economy did not crash, Mr Sanan's warning deserves attention.
The current Thai and global economic landscape is quite different from 2011. The country's GDP growth has shrunk -- 1.5% last year and 3.2% this year -- while economic projections for next year aren't rosy either. Thailand has seen manufacturers move their factories to Vietnam -- a country with more middle-class consumption and cheaper yet skilled labour. Vietnam's minimum daily wage is 150-205 baht against Thailand's current rate of 328-354 baht. On top of that, the Vietnamese government has signed a number of good free trade agreements.
With the not-so-favourable response to its wage policy, Paetongtarn Shinawatra, head of the Pheu Thai "family" held a press conference to defend it with the slogan: "Capitalism must have a heart". She said the party would increase the pay rate only when the economy was strong enough which should be by 2028, if Pheu Thai is elected to office.
A daily wage hike is going to become a major populist policy issue in the next election. However, Pheu Thai is not alone, as the Move Forward Party sang the same tune recently, while Issara Sereewatthanawut, a Democrat Party list-MP earlier pledged to push a policy to raise the daily wage to 400 baht. There was also a 400-baht pledge made previously by Palang Pracharath during the 2019 national election campaign.
Make no mistake, workers deserve higher wages. The Thai Labour Solidarity Committee (TLSC) and the State Enterprises Workers' Relations Confederation (SEWRC) have reportedly called for a new rate of 492 baht. That said, the current rate is not enough to help the majority of low-income labourers live a better life let alone help them climb the social ladder into the middle class.
One solution that policymakers rarely touch upon is reducing the cost of living for low-income workers. The Ministry of Commerce can help by fixing the price of basic food items for blue-collar workers. The government can also help provide good yet affordable housing for low-earners. Improving public transit and reducing transportation costs can also help workers save money. Meanwhile, related ministries can also help small- and medium-sized companies. Tax deductions could be given to companies that provide good welfare for workers -- such as uniforms, free lunches or training courses.
To be fair, Pheu Thai has challenged politicians to be bolder in their labour policies. Yet, it is hoped that political parties can go beyond populism and create election promises that can not only upskill low-income labourers but help SMEs modernise and remain truly competitive.