BANGKOK, April 1 – The Federation of Thai Industries (FTI) criticised the government’s implementation of minimum wage increase which took effect nationwide today, warning that the hike would adversely affect small and medium-sized enterprises (SMEs) and workers will eventually feel the pinch.
The 300-baht minimum wage rise kickstarted in seven designated provinces including the capital Bangkok, while workers in other 70 provinces will receive daily wage increase of 35-40 per cent from the current level.
Sommart Khunset, FTI secretary-general, described the wage hike as “unreasonable” which would inevitably effect employers, particularly small and medium-sized enterprises which mainly belong to Thai entrepreneurs. They will have to eventually shut down their businesses with their employees out of jobs in the end.
Lamenting that the government’s policy implementation was simply to “win votes with enterpreneurs’ money,” he warned that the effects would be clearly realised in the next few months as a large number of SMEs would stop doing business as a result of costs rising by 20-30 per cent.
Sommart also pointed out that some SMEs went out of business and began laying off their workers prior to May 1 to avoid paying additional compensation by 40 per cent. The Joint Private Sector which comprises Thai Bankers Association, Thai Chamber of Commerce and the FDI earlier advised the government that the minimum wage hike should be gradually implemented in four years but to no avail.
Sommart said it remains to be seen how the government would deal with the looming negative fallout as its corporate income tax reduction by seven per cent would not help cushion those businesses from rising production costs.
Meanwhile, Department of Export Promotion director-general Nantawan Sakuntanaka conceded that the 300-baht daily wage hike would impact some export businesses, in particular small enterprises and labour-intensive businesses such as the food industry which have felt the heat of rising production costs from spiking fuel prices and Thai baht appreciation.
Permanent Secretary for Labour Somkiat Chayasriwong however said he expected the 300-baht daily minimum wage hike will help workers coping with the rising cost of living with higher incomes. Without daily wage increase, those workers would spend less and tighten their belts. Although the employers would feel the pinch during the transition period, he assured it would not last long.