Wage hike a blow to 80% of small Thai industries


BANGKOK, April 13 – Thailand’s small and medium enterprises (SMEs) are in deep trouble, with 80 percent reporting losses in this year’s first quarter and 10 per cent on the verge of shutdown, an industrial organisation said on Friday.

Thanit Sorat, secretary general of the Federation of Thai Industries (FTI), said the nationwide increase of daily minimum wage to Bt300 since January 1 has struck a heavy blow on SMEs – almost one third of which admitted to suffering from financial constraint.

In a survey by FTI with SMEs operators on the impact of the minimum wage hike, 42.02 per cent said they would hire less workers, 20.28 per cent would scale down production and 15.94 per cent were considering layoffs. Among those contemplating layoffs, 13.04 per cent said they would possibly relocate their production bases elsewhere.

Mr Thanit said the survey was aimed at assessing feedback on the plight of SMEs in order to seek government assistance if necessary.

He said it will take some time to obtain a clearer picture on the employment situation and SMEs’ financial and operational status, as some unemployed workers may find new jobs at larger industrial enterprises or non-Thai businesses which receive promotional privileges from the Board of Investment (BoI).

Mr Thanit added that 58 per cent of SMEs affected by the higher labour cost have adjusted through various measures such as reduction of work force, working hours and welfare while enhancing labour and production productivity.

Sixty per cent of manufacturers said they would maintain their bases in Thailand while 26 per cent were considering relocating to neighbouring countries with cheaper labour costs, including Cambodia, Myanmar and Laos PDR.

Regarding government assistance, 50 per cent said they have never received any contributions from the state, while 28 per cent said government-issued measures did help, but on a small scale.

They called on the government to subsidise part of their labour costs and offer low-interest loans.

On the impact of the new minimum wage, 54 per cent of the entrepreneurs said their overall manufacturing costs increased by 15 per cent, 24 per cent saw an increase by 7-10 per cent, and 18 per cent found the impact minor at 3-5 per cent. Only 4 per cent of the manufacturers said they did not feel the pinch from the wage hike.

During Q1, 52.94 per cent of the enterprises surveyed said they could increase their product prices but only slightly, while 47 per cent had to maintain the same prices.