Survival calls for 8% increase in output after wage hike: TDRI study

Companies must increase the productivity of their workers by 8 per cent if they want to survive after the new daily minimum wage of Bt300 is implemented on April 1, according to a study by Thailand Development Research Institute (TDRI). 

The study, which will be submitted to the government after a brainstorming seminar to be held next month, also states that the government should collaborate with the private sector to increase labourers’ productivity. 

Yongyuth Chalamwong, TDRI labour development research director, said yesterday that without support from the government, the private sector might have to initiate a training programme itself to increase productivity. Companies that cannot adjust their costs and improve labourers’ productivity by 8 per cent are likely to face difficulties in operating their businesses, he said. 

The government’s policy to hike the minimum wage to Bt300 will be implemented as planned as of next Sunday in seven provinces – Bangkok, Phuket, Nakhon Pathom, Samut Prakan, Samut Sakhon, Pathum Thani and Nonthaburi – after the Administrative Court rejected a private-sector petition seeking to block the April wage hike. The wage in other provinces will be increased next year. 

According to the Labour Ministry, there are roughly 38.7 million labourers in Thailand, of whom 14.6 million are in the labour system, and 24.1 million are outside the system. 

Yongyuth said small and medium-sized enterprises would inevitably be affected by the wage hike. According to the study, in 2010, more than 40 per cent of labourers worked for enterprises with fewer than 10 workers, and 40 per cent of them received below-standard wages. Once the wage hike is implemented, the unemployment rate will increase, he said. Low-productivity workers will move to other sectors such as agriculture and construction. 

The government must have training programmes to improve the skills of these workers, he said. 

“There will be an impact on low-productivity labourers in the short term, but it will be good in the long term as the private sector and the government will together help improve efficiency and productivity. However, the government has to prepare a social policy to support low-level workers who may be laid off because their productivity cannot meet the requirements,” Yongyuth said. 

He said that according to a Bank of Thailand study submitted to the TDRI, the wage policy would lower the country’s gross domestic product by 1.7 per cent, while employment will decrease by 4.5 per cent, accounting for about 600,000-700,000 workers. Inflation is likely to increase by 1 percentage point, while the consumption demand from the private sector will drop by 1.7 per cent. “We will recommend that the government launch training programmes to relieve the impact of the wage-hike policy. We have nine months to see the results of the wage hike before other provinces see their new wage rate next year. So if there are any impacts that the government should consider, we will study and suggest them later,” he said. 

Worawan Chandoevwit, TDRI research director for human resources and social development, said the government’s policy to raise the salary for bachelor’s degree holders to Bt15,000 would increase the government’s costs by Bt5.6 billion this year. About 900,000 civil servants will benefit from this pay rise.