Minimum wage moves severely hit Thai garment exports

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BANGKOK, Nov 28 – Overseas purchase orders for Thai garments have declined by 20-30 per cent since April when the country’s daily minimum wage was increased to Bt300, according to an industrialist.

Taweekit Chaturacharoenkun, chairman of the labour committee under the Federation of Thai Industries (FTI), said the first phase of the minimum wage increase has covered 40 per cent of the country while the second phase, to be effective January 1, will be in force nationwide.

Some small- and medium-sized enterprises (SMEs) have moved their factories to neighbouring Vietnam and Cambodia, he said, adding that foreign importers have hinted about shifting their orders from Thailand to Vietnam and Cambodia next year.

Mr Taweekit said labour-intensive industries in Thailand will have to adjust their production while the Labour Ministry is not able to help the private sector to reduce their costs.

Citing the northern province of Payao as an example, he said it saw a daily wage increase by Bt70 in the first stage of the minimum wage policy, and another Bt80 hike is looming in the second stage.

“Payao business operators will be subject to pay an additional Bt3,661/month to each employee,” he explained.

“The operators will be more than happy if their extra financial burden is relieved by 60 per cent but 10 per cent is the most the Labour Ministry can do.”

Mr Taweekit said that Thai-based TK Garment Co has moved its manufacturing base to Cambodia’s Sisophon province which imposes a daily wage of Bt60-70, while a factory in Tak’s Mae Sot district on the Myanmar border may relocate to Bangkok to save logistics cost.

The higher minimum wage combined with a labour shortage have dashed the hope of Chaiyaphum province to become Thailand’s textile and garment hub as several operators have moved to Vietnam and Cambodia, he said.