Following the Cabinet’s move to increase the nation-wide daily minimum wage to Bt 300 from January 1, 2013, the Thailand Government has stepped forward to help the small and medium-sized enterprises (SMEs), including textile and garment businesses, to cope with the sharp rise in the production costs. The hike would result in almost two-fold rise in wages in some of the provinces like Phayao, where the minimum wage now prevails at Bt 159 per day.
The Thailand Government has now set up a committee, under leadership of Deputy Prime Minister Kittiratt Na-Ranong, to suggest remedial measures for entrepreneurs, impacted by the hike, as suggested by the Labour Ministry and Federation of Thai Industries (FTI). Vallop Vitanakorn, Vice-Chairman FTI, said presently about 1,500 textile units are functioning in Thailand. While most of the large-scale enterprises remain concentrated in Bangkok, smaller enterprises located in different provinces incur high logistics and transportation costs for shipping their goods to Bangkok. Unable to bear this high cost, around 25 enterprises have relocated to neighbouring countries like Laos, Vietnam and Cambodia.
Speaking at a seminar hosted by Thammasat University, Mr. Kittiratt said increased wages would lead to a rise in workers’ incomes and mitigate the need for subsidies. However, he accepted that the wage hike would cause the businesses to face problems if they fail to increase their productivity. He said the Government for long was looking at increasing the wages, but it felt that the same should not be raised till the productivity is enhanced. However, now it has decided to first hike the wages, expecting that the move will encourage businesses to increase their productivity.
He said enhanced wages also correspond to the Government’s policy to rebalance the economic structure of the country, which highly relies on exports instead of local consumption. Mr. Vitanakorn said it is not possible for anyone to change the Government’s policy, but ways can be suggested to cut its negative effects. He urged all FTI members to work together to find solutions to the issue, while adding that it would take about 6-12 months to assess the exact effect of the new wage policy.
