The government's announcement that it intends to increase the minimum daily wage to 400 baht nationwide in October has sparked heated debate, highlighting the complexities of balancing economic growth with equitable labour practices.
While the move is part of a larger campaign promise to elevate the standard of living for workers, it has encountered staunch opposition from business operators who fear the potential ramifications.
Central to this debate is the challenge of harmonising the needs of the workforce with the concerns of businesses, particularly small and medium enterprises (SMEs). While adjusting the minimum wage is crucial to keep pace with the escalating cost of living and ensure just compensation, the manner in which these changes are executed is crucial.
The ruling Pheu Thai Party promised during the election to raise the minimum wage to 600 baht per day. But it later clarified this plan would take time until 2027. The increase to 400 baht is seen as a measure to alleviate political pressure on the party to fulfil its promise almost one year since the start of the government's tenure.
Yet the sudden leap to 400 baht nationwide without comprehensive analysis raises valid concerns. As pointed out by Atthayuth Leeyavanich, a member of the tripartite wage committee, the decision lacks the meticulous review and consensus-building necessary for such a significant policy shift.
The committee previously approved an increase to 400 baht a day for some tourist destinations in 10 provinces, effective from April 13. While a wage increase to match the rising cost of living is necessary, the repercussions of a hasty move could extend beyond mere numbers on a paycheque. A wage increase could stimulate the economy by boosting purchasing power, but a sudden spike in labour costs could also trigger a ripple effect across various sectors, leading to inflationary pressures and potentially undermining the purchasing power of consumers.
SMEs, already grappling with the aftermath of economic uncertainties, may find themselves burdened with additional financial strain, jeopardising their sustainability and contributing to unemployment.
To navigate this challenge, Thailand must adopt an approach that prioritises both wage increases and economic stability. Rather than implementing blanket wage hikes, a more nuanced strategy tailored to the specific needs of industries and regions is warranted.
This could involve sector-specific adjustments and targeted support measures for struggling businesses, ensuring the burden of wage increases is distributed fairly. Implementing wage hikes without corresponding improvements in productivity could backfire economically. Efforts to mitigate the impact should extend beyond monetary considerations, encompassing investments in vocational training and skill development to enhance worker productivity and employability.
Prime Minister Srettha Thavisin recently declared his government aims to develop Thailand into a high-income economy. But achieving a high-income economy cannot be accomplished through capricious and arbitrary announcements of minimum wage increases.
While the aspiration to elevate the minimum wage to support labour is commendable, it must be accompanied by prudent planning and comprehensive support mechanisms to mitigate adverse effects. By striking a delicate balance between the interests of workers and businesses, Thailand can pave the way for sustainable and inclusive economic development.