TCC study finds little pay-off from wage hike

Moreover, more than 94 per cent of enterprises have not yet received any assistance from the government, which the TCC – which has consistently opposed higher labour wages – claims could lead to layoffs, relocation of businesses, and shutdowns in the near future.

"Instead of boosting economic growth, the government’s measure to raise wages has caused slower consumption, since labourers are worried about their future employment after their employers have faced financial difficulty because of higher wage payments," TCC vice chairman Bhumindr Harinsult said yesterday.

A TCC study found that 94.5 per cent of enterprises had not received any compensation from government. Only 5.5 per cent have benefited from government remedy measures.

The only enterprises that have enjoyed any relief are large companies that have benefited from the reduction in corporate tax. Meanwhile small and medium-sized enterprises have suffered from higher labour costs, the TCC claims.

To relieve their burden, enterprises say they must adjust their operations by reducing their workforces, relying more on machinery and technology, increasing prices, and either exploiting foreign workers who will work for less or freeze hiring altogether.

Bhumindr added that more SMEs would soon suffer from higher payments to their workers next year, as every province must increase the minimum wage to Bt300 per day on January 1, 2013.

Jakkarin Cherdchay, chairman of the TCC in Nakhon Ratchasima, said enterprises in the remaining provinces were in for a shock on that date.

"Many provinces will have to [nearly] double their pay from Bt156-Bt183 per day to Bt300. They will face serious impacts if they cannot adjust within a short period," Jakkarin said.

He called for the government to postpone the wage increase for three more years to provide time for enterprises to adjust.

The chamber also called for the government to provide additional assistance for entrepreneurs by supporting more training programmes for employees, providing soft loans for SMEs, and waiving some import tariffs for machinery imports.

Thanavath Phonvichai, director of the Economic and Business Forecasting Centre, said that most enterprises, which are SMEs, were seriously hit by the higher wage requirement.

He said many businesses would suffer and generate less revenue and profit. Enterprises would be weakened as they lacked financial liquidity because of higher costs amid lower business income, he warned.

In addition, the chamber study found that the current political conflict had caused many enterprises to suspend or delay their investment plans because of lower confidence.