Drop costly populist ploys, businessmen tell parties

They are worried that if there is a change in government in the current political climate, the parties will again use such populist policies in a bid to win over the electorate.

Thanavath Phonvichai, director of the Economic and Business Forecasting Centre at the University of the Thai Chamber of Commerce, said the government should not increase the minimum wage again next year, as the current market mechanism had already adjusted some wages to as much as Bt350-Bt400 a day. The current daily minimum wage across the country is Bt300.

“The economy is quite fragile and susceptible to any negative impacts from both outside and inside. The industrial sector should not have to face any additional [and avoidable] burdens, as consumer confidence is on a downward trend,” he said.

If a political party or the government announced any further increase in the minimum wage, it would shock private enterprises. Consumers would also face a higher cost of living, since enterprises would not be able to shoulder the additional cost burden amidst slower economic growth, he explained.

The current government won the election in 2011 as it employed a populist programme by announcing plans to increase the minimum wage to Bt300 a day, as well as setting a high pledging price for rice at Bt15,000 per tonne of paddy. This approach has led to problems for many industries, in particular agricultural processing, garments, footwear, electronic goods and furniture, Thanavath said.

 

‘Cancel rice scheme soon’

He said the government should urgently cancel its rice-pledging scheme, or reduce the pledging price, as soon as possible, as the project would only cause serious and long-term financial problems for the country.

The high pledging price has already destroyed the quality rice, he said, adding that it had also caused Thailand to lose global market share with between 2 million and 4 million tonnes a year now going to other rice-exporting nations. Thanavath warned that if the government proceeded with the pledging programme with such a high price for paddy, it would face a combined loss of Bt1 trillion from five years of pledging.

Stanley Kang, chairman of the Joint Foreign Chamber of Commerce, said that if there were to be any further increase in the minimum wage, the government should consider the matter very carefully and discuss it with the private sector.

“The hike to Bt300 a day early this year was a very sharp increase. Thailand needs time to adjust after the policy has been employed for a year. If wages rise too fast or too sharply, it will force companies and both local and foreigner investors to go and do business overseas,” he said.

Any future wage increase needs to be considered based on performance and the development of labour in each industry, he added. 

Grisada Suptuaychone, secretary-general of the Thai Electrical, Electronics, Telecommunication and Allied Industry Club under the Federation of Thai Industries, said private enterprises were concerned about the prospects of a further wage hike if there were to be a change of government. The government should clearly set up a systematic method for deciding on future wage increases by allowing private enterprises to take part in the decision-making, he said. 

The political parties should not use the promise of a wage hike as a strategy to win votes, as such a measure would hurt business growth, he added.