Govt: Help on the way for SMEs over wage hike

In some provinces the daily wage will increase by nearly 100 per cent, like Phayao, where the minimum wage is Bt159 per day. The new wages go into effect from January 1 nationwide. 

The Cabinet yesterday approved the blanket hike and agreed to set up a committee led by Deputy Prime Minister Kittiratt Na-Ranong, which will help come up with remedial measures for affected business operators as proposed by the Labour Ministry and Federation of Thai Industries (FTI).

“The government is on the right track. The business sector has attacked politicians for this policy. We have to admit that there will be a problem if productivity is not enhanced. We have been waiting for a pay hike for a long time, but without higher productivity wages could not be raised. Now, we have decided to raise the wages first, which should encourage the private sector to enhance its productivity,” Kittiratt said at a seminar hosted by Thammasat University. 

He added that a higher wage would boost the income of workers and should lead to lower subsidies. Higher income is also in line with the government’s policy to rebalance the country’s economic structure, which has been relying heavily on exports rather than domestic consumption.

 

Under pressure

Thailand’s export market has been under pressure due to global uncertainties. The National Economic and Social Development Board lowered its 2012 export-growth projection from 15 per cent to 7.3 per cent, and later settled at 5.5 per cent. Private consumption plus investment from public and private sectors are now driving the economy. 

After a brainstorming session yesterday, FTI chairman Payungsak Chartsutipol announced the proposals that will be submitted for Prime Minister Yingluck Shinawatra’s consideration. The proposals include setting up a compensation fund, lowering companies and employees’ contribution to the Social Security Fund and tax waivers. The government should also ensure that measures are designed to fit SMEs, especially those with assets below Bt200 million and employing no more than 200 workers, in different zones. The FTI has pinpointed 29 of the 70 provinces, where wage increases would be the highest, as those most needing government help. Also, it said, labour-intensive industries like shoes and garments should be first to receive government assistance. 

“During its election campaign, the government promised to boost wages without taking into account the private sector’s demands. The government must come up with remedial measures, as the wage hike will affect many operators, especially the hundreds of thousands of SMEs. The public and private sectors also need to sort out mutually-agreed solutions,” Payungsak said.

There are rumours that Payungsak is facing an ouster, as some members – led by FTI secretary-general Sommart Khunset – are unhappy that he was not able to persuade the government to delay the wage hike. However, FTI vice-chairman Vallop Vitanakorn admitted that nobody could change a government’s policy but could propose measures to mitigate negative impacts. 

Vallop, who has asked all FTI members to jointly work out solutions, said it would take about six to 12 months to gauge the impact. At present, there are some 1,500 textile factories in Thailand and while large operators are in Bangkok, smaller players in the provinces are suffering from high logistics costs for transporting goods to Bangkok. So far, some 25 operators have relocated to Laos, Vietnam and Cambodia.

Yesterday, the Cabinet acknowledged the Labour Ministry’s six key measures along with 27 others, deputy government spokesman Chalitrat Chandrubeksa said, adding that these would be tabled for the newly established committee’s consideration. The measures aimed at reducing employers’ costs include reducing their contribution to the social security scheme, reducing corporate tax and setting up a fund to offset different wage rates on a provincial basis.