Thread: Minimum wage to increase by April 2011

Originally Posted by Butterfly

the problem is that we are paid in nominal terms, so nominal exchange rates is what bring real impact for everyone

Amd exactly WHO are they?

As usual "pupa" yet another astounding post from our TD finance chocolate manufacturing belgie plumber!

Originally Posted by Tom Sawyer

Only bottom-feeders should be worried about this. Sadly they tend to be the majority of the SMEs in Thailand.

Bottom feeders? Once again you show you know nothing.

An idiot may think a boss would get away with raising only the wages of his lowest paid. For us it will mean a rise of a similar percentage for everyone.

Our suppliers will also be raising wages and passing most of this on to us. Over the past few months we've already seen materials go up considerably due to fuel prices.

Then consider that over the past few years exporters have seen Western currencies and their economies dive. Europe and America will cannot accept a price rise, they simple stop ordering.

It may be difficult for the tefler's and blog addicts to understand, but for anyone in business it's clear.

^ Indeed, Tom isn't exactly the brightest spark....some folks, and he may be one of them, seem to think businesses will do the right thing, not put up prices and reduce their profits, for the good of the country

Businesses are well known for their altruism.

Originally Posted by StrontiumDog

^ Indeed, Tom isn't exactly the brightest spark....some folks, and he may be one of them, seem to think businesses will do the right thing, not put up prices and reduce their profits, for the good of the country

Yet another patronising comment from someone who IS without doubt "Seriously Dumb"

^ Yet another stupid comment from someone who is without doubt lacking in anything worthwhile or intelligent to add.

It isn't patronising. It is what it is.

Anyone who really, truly believes businesses give a crap about anything other than profit margin lives in cloud cuckoo land. And Tom's comments about SME's is not only wrong, but utterly naive and ignorant.

Originally Posted by StrontiumDog

It isn't patronising. It is what it is.

Exactly..so add something NEW instead of parroting the same old hymn sheet!

Rodney has escaped the patient ward again

Aide to Thaksin- "they were saying that last time too sir"

Originally Posted by sabang

Aide to Thaksin- "they were saying that last time too sir"

Last time, when was that? What was the highest percentage min wage rise during the Thaksin years? Bureaucrats wages go up to a 12k min, uni grads start on 15k. Has there ever been a country that has raised wages so steeply? If so what were the results?

Clearly, labor intensive & low mark-up industries will be most affected.

Care to name some of these industries? Agriculture and export garments are two that spring to mind.

Thai-ASEAN News Network

Steep Wage Hike Feared to Spur Mass Layoff

UPDATE : 1 August 2011

The furniture business association warns that the push for the daily minimum wage to 300 baht could result in a layoff of some 300,000 workers in the sector.

Vice president of the Thai Furniture Industry Association, Arak Suksawad, said the planned daily minimum wage hike to 300 baht by the new government will cause severe and immediate impact on 50 percent of operators in the sector and related businesses, such as home decoration.


Arak said the wage hike policy will move labor cost up by 40 percent and total cost by 16 percent, so product prices may need to be adjusted.

Arak stated this could result in cancellation of purchase orders as the prices of products from other countries remained unchanged.

This could lead to roughly 100 billion baht in damage for the furniture and garment businesses.

He said 12 industrial associations do not agree with implementing the wage hike policy straight away while noting that consideration on the matter should rely on the tripartite panel made up of representatives from the government, employers and employees.

Arak said the panel's decision must not be interfered with by politicians while the hike should be made in steps as proposed by business operators.

He suggested the new government improve workers' welfare via existing means, such as the the social security fund

He said if the government enforces the 300-baht wage policy, more than 1,000 furniture manufacturers will have to close down and roughly 300,000 workers will be laid off.

Thai-ASEAN News Network



Private Sector Ponders Joint Stand on Mimimum Wage

UPDATE : 1 August 2011

The Joint Standing Committee on Commerce, Industry and Banking holds another meeting today to discuss the 300-baht daily minimum wage before submitting its recommendations to the new government for consideration.

Meanwhile, the industry minister has reported the lowest number of new factory permit requests as investors are concerned about possible higher labor cost.

The Joint Standing Committee on Commerce, Industry and Banking, consisting of the Federation of Thai Industries, the Thai Bankers Association and the Thai Chamber of Commerce, held a meeting to discuss possible consequences from the implementation of the 300-baht daily minimum wage.


The committee announced its opposition to the new minimum wage during its previous meeting held on July 20, claiming that it would severely affect the economy.

President of the Federation of Thai Industries, Payungsak Chartsutipol, said that the committee will consider how industries can prepare for the wage hike and submit recommendations to the new government for consideration.

In its last meeting, the committee announced its opposition to the 300-baht minimum wage on the grounds that it would have adverse effects on the country's economic structure and advised that the wage hike should follow market mechanisms.

The committee also said that if the new government is adamant about the implementation of the policy, it should roll out measures to assist the private sector to cover the higher cost.

Meanwhile, according to the latest report from the Industry Ministry, the number of new factory permit requests has dropped to a record low in July at only four with a total investment value of 209 million baht.

The figure dropped by more than 14 times from the same period last year.

The ministry believes that this was largely due to investors' concern about the 300-baht daily minimum wage and the 15,000-baht monthly minimum salary policies which would bring up production costs.

Most investors are waiting to see how the new government will proceed on the matter.

Director of the Industrial Economics Research Office, Ithichai Yodsri, pointed out that a recent survey among industrial operators on the new government's policies found that most respondents expected inflation to increase by four percent from the current rate of lower than three percent.

However, Ithichai does not expect the industrial sector to be affected much as most businesses are export-oriented but the higher prices of goods will have an impact on consumers' purchasing power.

Originally Posted by Tom Sawyer

Originally Posted by Buksida

Originally Posted by Tom Sawyer

Only bottom-feeders should be worried about this. Sadly they tend to be the majority of the SMEs in Thailand.

Bottom feeders? Once again you show you know nothing.

An idiot may think a boss would get away with raising only the wages of his lowest paid. For us it will mean a rise of a similar percentage for everyone.

I am in business. I can only guess you're running a bottom end low or no skilled enterprise where pretty much all your staff at at or near the present min wage. But if you are running an added value business (with at least semi-skilled workers as the main workforce) you would be paying most of them well above the minimums.

So the cleaner goes from 203 to 300 THB per day. Five cleaners - so another 500 per day.
The assembly line staff are around 290 per day so it's a tiny increase. There are 30 of them so the big increase is a total of 300 baht.
The semi and skilled staff including the office staff - salespeople, accountant, office manager and production manager and a couple of secretaries and driver make up the other half of the payroll - maybe 20 and they are already earning nearly twice the others. Why would you increase thei pay?

Do you think your assembly line staff will be happy being paid the same as the cleaners? If you increase assembly line and cleaners pay by 40 to 50 percent, whatbwill your office staff think of their pay then?

increased wage/overhead costs get passed on to the customers.
Its the same the whole world over.

Originally Posted by Tom Sawyer

I am in business. I can only guess you're running a bottom end low or no skilled enterprise where pretty much all your staff at at or near the present min wage. But if you are running an added value business (with at least semi-skilled workers as the main workforce) you would be paying most of them well above the minimums. So the cleaner goes from 203 to 300 THB per day. Five cleaners - so another 500 per day. The assembly line staff are around 290 per day so it's a tiny increase. There are 30 of them so the big increase is a total of 300 baht. The semi and skilled staff including the office staff - salespeople, accountant, office manager and production manager and a couple of secretaries and driver make up the other half of the payroll - maybe 20 and they are already earning nearly twice the others. Why would you increase thei pay?

You may be 'in business' but you seem to have very little understanding of how pay structure works. You also have an arrogance towards small businesses that are able to operate due to low overhead (salaries being a major part of that overhead) and turn a modest profit IN THAILAND- that might mean less that $2000 per month for the owner, which isn't a lot in the States or other western countries but is a very comfortable income over here.

Businesses that earned the owner 60K (~$2,000) per month will now earn that owner ~36K per month (say, in a small restaurant or shop, using an 800 baht per day salary increase, which would be the equivalent of eight employees who were earning 6K bumped up to 9K)- profits will have effectively dropped 40%- if you owned that business, what would you do?

Originally Posted by Bettyboo

At the (your) local level, you could consider: increasing turnover, diversifying, increasing costs to customers, cutting production costs, the list goes on. I'm not suggesting that you don't know all of this already, and have not looked into it in detail, I'm just saying that there are many many more factors than have been stated thusfar.

As I said earlier in this thread, I've already done that- I'll be cutting some staff (I now keep more people on than I necessarily need because, frankly, it's cheap to do so- there are areas where I pay three people 6K that will change to two people being paid 9K- it won't make a lot of difference to me, but it will make a big difference to the person who will be unemployed, and the two remaining will have to pick up the slack)- in one case I will probably close one small business entirely as it won't be worth it to me anymore as increased salaries will eat my already small profit (and cutting staff won't work)- that will mean a further six people out of a job (I won't be able to compete with 'family-run' businesses in the same market anymore as their costs will not increase like mine will as their workers are 'off-the-books').

The wage increase will end up hurting the middle-class businessman and increase the unemployment rate for the lower classes, while not making much of a difference to the upper-class 'elite'.

Originally Posted by Bettyboo

Some companies will struggle under these changes, and your company may well fit into that area. The reality is that social changes provide opportunity for some and hardships for others, and yes, some layoffs will occur...

I will make the necessary changes to keep my losses to a minimum- I would guess that my current work-force of ~80 people will drop to ~65 people (maybe even 60)- it won't be easy for those 15-20 workers to find new jobs as I sure won't be the only business owner cutting staff.

TS, you imply you're running an 'added value' business with skilled workers, yet you don't have a clue about the basics of employing ppl and making a profit.

BB, all this stuff about 'increasing turnover, diversifying, increasing costs to customers, cutting production costs,' is straight from a book. In business you just do them automatically, without all the fancy lingo.

Bottom line is, PT is likely to back down on it's wage policies.

Originally Posted by Buksida

PT is likely to back down on it's wage policies.

I wonder. My bottom line is, Yingluck appears to have access to a stronger economic team than the Dem's, hidebound as they are by being the party of the established hierarchy. No surprise of course, because so did Thaksin.

They say money talks and bullshit walks, and the Thai stock market (up 7% post election as of yesterday) is money talking. I, incidentally, have a considerable clue about employing people and making a profit, and perhaps of human nature too. It is rather disengenous of a Democrat supporter exhibiting considerable sour grapes over the election result to give such a draconian estimate of the staff he will need to drop, if Yingluck's onerous new minimum wage comes into being. The plain fact is, if all of those staff are that marginal Buksida it is not really a commercial business at all, rather a charity you can no longer afford.

The wage rise will provide a spur in one aspect of Thai employment practise though- being productivity. With wages here so low, employers have been quite content to hire two or three people to do a job that one competent person could easily do. You see overstaffed businesses everywhere here, I mean everywhere. Also, wages being so low, there is absolutely no job loyalty, or incentive to stay. People come and go all the time in most small businesses- but if you contrast that with multinationals like Toyota, who pay decent wages & benefits and put their employee's through ongoing training (ie invest in them) you will see it is the opposite in their case, they have considerable employee loyalty and retention. So this is not a cultural Thai phenomenon at all.

I'm not sure how the wage rise will be introduced, there may well be concessions, stages, regional variations etc. I think it will happen though. I see the policy entirely in line with the overall Thaksinite vision of Thailand's development along 'western' liberal economic terms. This contrasts quite sharply with the more closed shop, centralised, oligopolistic practise of the Democrats controlling influences. It is definitely a fact that employers are entitled to expect that a fair wedge of the 40% wage rise for the lowest paid to be recuperated from increased productivity.

^^
My businesses are certainly over-staffed- I would be happy to pay 2 people 9K each rather than three people 6K each for an increase in productivity, but how will the increase in unemployment be dealt with (your scenario will certainly cause it to rise)? I agree that the 'cream will rise to the top' and only the best workers will be kept around, but if one or two workers can do the job of three current workers, it bodes poorly for the 'third man out'.

^
There has been mention of it- tax reductions will not come close to off-setting the wage increase.

Originally Posted by StrontiumDog

Meanwhile, the industry minister has reported the lowest number of new sweat shop permit requests as investors are concerned about possible higher slave labour cost.

The above translation reads better now...