Argy-bargy on wages

Argy-bargy on wages

Union-backed minimum hike to 492 baht scares some bosses

hanging out for more: Workers are seen assembling an overpass at the Na Ranong Intersection. Construction workers receive payment by daily wage — an amount that hasn't increased in two years.
hanging out for more: Workers are seen assembling an overpass at the Na Ranong Intersection. Construction workers receive payment by daily wage — an amount that hasn't increased in two years.

Being paid 340 baht a day, according to Suthichai Pongpinijkul, 26, is not a sufficient wage to live on.

In the past, he could fill his motorcycle with gas for 60 baht, which could last almost a week, but today 60 baht buys enough to last just three days. He can't even afford a savings plan for his future.

He is not alone. Those who earn daily wages feel the value of their incomes has diminished.

Sunisa Chomyong, a 40-year-old saleswoman, said her daily 300 baht in earnings was too little. "Everything is more expensive but my daily wage has stayed still for years," she said.

Workers generally depend on the minimum wage and overtime payments. Without pay rises and with fuel and food prices spiralling, they are suffering.

Wichai Narapaiboon, manager of the Labour Museum, said raising the minimum wage will help improve workers' quality of life, and boost their morale.

The nationwide minimum wage rise to 300 baht in 2013 increased labour productivity but a living wage is traditionally only part of election campaigns to woo voters, he said.

While the government is aware that the daily minimum wage is insufficient and plans to restructure production processes, it has yet to take the issue seriously, he said.

Escaping the middle-income trap as proposed by Prime Minister Prayut Chan-o-cha needs political will, said Mr Wichai.

The wage is used as a basis to calculate workers' benefits from overtime payments to loss of income compensation claims, severance pay and retirement benefits.

The last wage increases were issued in January 2020, ranging from 313 baht to 336 baht.

Chon Buri and Phuket have the highest rate while Bangkok and surrounding provinces get 331 baht. The lowest rate of 313 baht is in the southern provinces of Narathiwat, Pattani and Yala.

Higher wages, higher spending power

Assoc Prof Kiriya Kulkolkarn, an economist from Thammasat University, said many countries have raised wages to reflect higher costs of living and maintain workers' purchasing power.

Thailand's inflation in March increased to 5.73%, the highest in 10 years. This affects low-income house‑ holds especially given soaring fuel and food prices, she said.

However, it is anybody's guess if the rate will be increased again this year, she said.

She said most industries are utilising contract manufacturing and keeping costs including labour low is standard practice.

If production processes are not structured, the country will struggle to attain "developed nation" status.

Lae Dilokwitthayarat, a labour specialist and economist at Chulalongkorn University, said businesses see employees as costs that need to be kept low while workers demand living wages to match the rising costs of living.

"If the wages aren't enough, it's the government's job to restore workers' dignity by guaranteeing their income," he said.

He said several factors used to review and raise wages by the national tripartite wage committee such as inflation, the cost of living, production costs, GDP and labour productivity, are contradictory.

Kritsada Teeragosolpong, a social science lecturer at Silpakorn University's faculty of arts, said workers earning minimum wages or slightly higher are not pinning their hopes on an increase.

They want to put in extra hours for overtime pay to bring extra income and will change jobs if the prospect of overtime pay is good, he said.

"Proper wages should allow workers to make a decent living without having to work overtime so they have time to develop and enhance skills," he said.

He shared the findings of a survey of 1,225 workers, most with a monthly salary, in February which showed that about 75% work as many as 14 hours to boost their income and 25% earn between 3,000-6,000 from overtime.

About 88% of workers have monthly debts to pay and of this group, about 28% have to pay between 10,000 and 20,000 a month and 10% pay about 20,000–30,000 baht.

Mr Kritsada said the national wage committee should review minimum wages at least once a year to match inflation and the cost of living while the government should consider electricity, water or internet subsidies to help ease their burden.

Unions: wage hike is overdue

Ahead of today's Labour Day when workers call for better pay and protections, the Thai Labour Solidarity Committee (TLSC) and the State Enterprises Workers' Relations Confederation (SEWRC) are demanding a new rate of 492 baht nationwide.

Chalee Loysoong, adviser to the TLSC, said labour groups believe the business community can pay the figure which is based on a survey of the cost of living back in 2017.

"Employers can manage and they know how. Eventually the government will roll out assistance, so we aren't afraid about relocation of production bases [to other countries] as a result," he said.

He also said some employers pay daily minimum wages to long-serving workers despite the rate also being applied to entry-level and unskilled ones.

A source in a sub-committee on wages in Chachoengsao said businesses agree with wage increases to retain workers who may otherwise move to higher-paying provinces such as Chon Buri and Rayong.

The current rates range from 313 baht to 336 baht with Chon Buri and Phuket having the highest rate and the southern provinces of Narathiwat, Pattani and Yala, the lowest rate.

"The wage hike should also take into consideration industrial zones. The Eastern Economic Corridor (EEC) provinces should adopt the same rate to avoid migration of workers," said the source.

A source in the sub-committee on wages in Prachin Buri said the wage hike will be a boon to subcontract workers who do not have an annual pay rise review and are paid a daily minimum wage.

Chantana Ek-ua-manee, a coordinator of the Foundation for Labor and Employment Promotion, agreed that wage increases will help informal workers who have little or zero negotiating power.

She said wage hikes also will increase the spending power of other groups of low-income earners such as taxi-motorcyclists and vendors.

Bosses: Big rise could spur job cuts

With the economic slowdown due to the Covid-19 pandemic and the crisis in Ukraine, a sharp increase in wages could do more harm than good, business associations say.

Kriangkrai Tiannukul, chairman of the Federation of Thai Industries, said businesses understand the workers' plight from soaring prices but said the cost of living varies from province to province.

He said a nationwide increase to 492 baht is highly unlikely and if the hike is implemented at the wrong time it will backfire.

If the wages are too high and businesses cannot absorb the costs, price increases will result as firms pass on the cost to customers. And if consumers do not spend and businesses cannot raise revenue to compensate, lay-offs will result, he said.

Thanit Sorat, vice-chairman of the Employers' Confederation of Thailand (Ecot), said the proposed increase is too much for employers to shoulder, and this was not the time to increase the wages. "If the government wants to help workers, it can provide short-term assistance to the groups that are affected," he said.

Thaniwan Kulmongkol, president of the Thai Restaurant Association, said the association disagrees with the proposed increase to 492 baht which will drive up other costs as well.

She said a wage increase has impacts on businesses because when it is implemented it must be done across the board. The proposed increase will badly hurt businesses which are still struggling to get on their feet, she said. "When the operators heard the figure, they felt like someone had hit them. I hope the government will talk to the unions and help them understand the economic situation," she said.

The tripartite national wage committee is expected to finalise a proposal calling for an increase in minimum daily wages in August but it is unlikely to approve a proposed flat-rate wage of 492 baht a day, said one labour official.

Permanent secretary of Labour Ministry Boonchob Suttamanaswong said the committee, which comprises labour, business and government representatives, is expected to reach a decision in August or September.

He said he thinks the wages are likely to be raised, but has no idea by how much.

A source close to the committee said the panel will take into consideration arguments from businesses and labour groups.

The committee sympathises with employers and workers and the committee will propose other measures to help ease the workers' burden if the increase is small, he said. A sharp rise will deal a blow to several businesses particularly the SMEs, said the source.

Academics back wage rises

Somjai Phagaphasvivat, an independent political and economic analyst, said it is time to increase wages to match cost of living which varies from area to area.

He said the economy is on the road to recovery but faces some hiccups from the Russia-Ukraine crisis. The government, he said, should do more to stimulate the economy. About 60%-70% of its spending so far has involved economic rehabilitation, he said.

Sompop Manarangsan, president of the Panyapiwat Institute of Management (PIM), said wage flexibility is important or it will disrupt balance between demand and supply.

"Wages must at least cover inflation to maintain purchasing power because local consumption accounts for more than 50% of GDP. If this factor is weak, the economy will contract and so will GDP," he said.

According to Mr Sompop, the country cannot rely on external factors, be it international trade or tourism. He said wage increases have been small and the influx of migrant workers is likely to be a key factor.

"We must encourage Thai workers to upgrade their skills so their pay will rise to reflect that."

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