The government insists it will press ahead and raise minimum daily wages nationwide to 300 baht next year.
But the pay rises will be the last minimum wage adjustment until 2015 when the Asean Economic Community (AEC) is launched, Labour Minister Padermchai Sasomsap said Friday.
Padermchai: Last raise before 2015
Mr Padermchai, who met with industry groups Friday to discuss the government's wage policies, said policymakers were trying to accommodate the needs of both employers and employees.
"Some business leaders have actually proposed raising the minimum wage to 500 to 700 baht a day. But we're not doing that, since it's clear that some businesses simply couldn't adjust," he said.
"So we're asking to raise rates to 300 baht per day, and after that, we won't have any new adjustments until the launch of the AEC."
Mr Padermchai said authorities will meet next month to discuss possible mitigation measures for small businesses affected by the wage hike.
Earlier this month, minimum wages in Bangkok and six other provinces were lifted to 300 baht a day.
Wages in all other provinces, which currently range from 222 baht in Phayao to 273 baht in Chon Buri, are to be raised to 300 baht a day from the beginning of next year, representing increases of 10 per cent to 35 per cent.
The wage rises represent a key plank of the Yingluck Shinawatra economic policy platform. Authorities expect that higher minimum wages will help increase spending power among low-income workers, while encouraging companies to invest more in skills training, machinery and productivity improvements to help spur overall economic growth.
But industry groups have lobbied heavily against the plan, arguing that the wage boost will result in bankruptcies, layoffs and capital flight to lower-cost neighbouring countries.
Federation of Thai Industries (FTI) secretary-general Sommart Khunset warned that many businesses may have to close due to higher labour costs.
Larger companies, particularly those in labour-intensive industries, will likely shift their manufacturing bases to lower-cost countries in the region, he added.
The FTI has drafted a nine-point plan in response to the government's wage policy, including that the increase be delayed by two years to 2015, a call to establish a low-interest loan fund of 10-20 billion baht to help small businesses upgrade their technology and the easing of restrictions on the use of foreign labour.
Other proposals include a call to lower corporate income taxes for small businesses to 15 per cent to 18 per cent, reduce current payments to a state-run workers' disability fund and bring down taxes for commercial properties.
Tanit Sorat, an FTI vice-chairman, said the federation also wants the government to separate wage policies from politics.
"We want a law or ministerial announcement that will stipulate that politics should not use wage policies as part of campaigning and to pressure the private sector," he said.
"If we change governments again within the next two or three years, and we see another wage policy enacted, the private sector will find it very hard indeed to adjust."
Small businesses, who represent the overwhelming majority of Thailand's companies, are expected to be among the hardest hit by the wage increases.
Phumin Harinsut, another FTI vice-chairman, estimated that the wage hikes and subsequent boost in consumer spending could help push economic growth higher by 1.3 to 1.4 percentage points next year.
Higher growth in turn will help raise tax revenues by an additional 35 to 40 billion baht, which could be used to help finance assistance funds for small businesses.
Mr Phumin noted that 60 per cent of small- and medium-sized businesses were outside of the corporate tax system and therefore received no benefits from the government's existing tax rate cut.
The government slashed the corporate tax rate to 23 per cent from 30 per cent this year and will reduce the rate to 20 per cent beginning in 2013.