Blanket daily wage hike to hurt economy: TDRI
The implementation of the Bt300 daily minimum wage throughout the whole country on January 1 could shrink the economy by 2.5 per cent annually and throw one million people out of work, the Thailand Development Research Institute said yesterday.
The wage hike should be implemented in stages to cushion possible impacts, TDRI president Somkiat Tangkivanich said at a seminar hosted by the Industry Ministry on the competitiveness of Thai industries under the wage hike.
The TDRI’s study showed that if the government goes ahead with raising wages nationwide while industry has yet to prepare adequately for it, GDP would decline 2.5 per cent every year during the next three to five years, he said. Businesses, especially SMEs in the provinces, will not be able to adapt to the rapid rise in cost, he warned.
The affected industries will reduce hiring by 1 million workers, but the loss would not be severe as some industries still demand workers.
Industries should deploy modern machinery in the production process and spend more on R&D and upgrade labour skills. Labour intensive industries should shift production bases to lower labour cost countries, as wages here would continue to climb since that is part of the populist campaign of political parties to drum up votes.
The government should lift wages step by step to give time to businesses to make adjustments, he added.
Chen Namsirichai, vice chairman of the Federation of Thai Industries, said the government has to support the R&D spending of industry. Labour accounts for 30 per cent of the total cost of labour-intensive industries.
The government piloted the daily wage in seven major provinces in April.
