FTI calls for any wage hike to be considered province by province

The FTI’s Thai Industries Sentiment Index (TISI) dropped to a one-year low in May, when the decline from 86.2 to 85.4 points was the fifth consecutive monthly fall.

"The minimum wage should be maintained in the current economic circumstances. If a change is to be made, it must be considered by all parties, while many factors should be given weight, including inflation, each province’s situation, labour capability, and supply and demand," FTI chairman Supant Mongkolsuthree said yesterday.

He said there were currently many areas of concern over economic growth, including the expanding impact of drought around the Kingdom, the MERS (Middle Eastern Respiratory System) outbreak, and the delayed repayment of Greek debt, with the business sector closely monitoring each of these factors.

The MERS outbreak has not yet impacted on Thai tourism, while the euro-zone debt situation should not have much of an effect on the Thai economy, as exports to the European Union have in any case declined since the country’s loss of Generalised System of Preferences tariff benefits, he said.

As to wage adjustment, the FTI chairman suggested that a tripartite committee composed of representatives from the government, employers and employees should consider any increase in the minimum wage, and that a single figure should not be imposed nationwide.

Instead, the situation in each province should be considered by provincial sub-panels, taking local factors fully into account.

Rather than an across-the board increase in wages, the government should focus on increasing skills among the workforce and adjust wage rates in accordance with labour efficiency, said Supant.

He said the government should set up a tripartite panel that would enable business owners, workers and the government to discuss the consequences of a wage hike and reach the most effective decision for all parties.

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According to a survey co-conducted by the National Institute of Development Administration and the FTI among 1,303 respondents from June 13-18, the current nationwide minimum wage of Bt300 – introduced under the previous government – had left small and medium-sized businesses in a difficult situation.

More than 61 per cent of the SME respondents said they had suffered from the decision to raise the minimum wage to Bt300 a day.

Of the suffering businesses, 33.3 per cent said the hike had resulted in higher production costs, while 16.96 per cent faced financial-management difficulties and other increased costs.

On the other hand, 38.68 per cent said they were not affected by the policy.

Large companies can adapt well to the situation because of their sufficient cash flow, but SMEs can do relatively little about it, the FTI said.

Increasing the minimum wage can have a domino effect on the economy not only in respect of higher production costs, but also in terms of investor sentiment, it added.

Last month, the federation’s TISI declined continued to decline due to worry about the global economy, the impact of the drought on consumer purchasing power – particularly in the agricultural sector – rising production costs, and concerns over the Thai fishery sector.

However, the index in the southern region moved in a positive direction due to higher rubber prices.

The confidence index for the next three months for all industries decreased from 100.9 points in April to 102.1 in May.

The FTI reported that auto production in the Kingdom had contracted by 8.76 per cent year on year to 135,045 units last month.

In the first five months of the year, auto output also declined, by just 1.1 per cent year on year to 783,553 units.

Surapong Paisitpattanapong, FTI vice chairman and spokesman for its Automotive Industry Club, said lower production had resulted from slowing domestic sales, as well as a model change for a best-selling pickup brand.

Domestically, auto sales in May totalled 56,939 units, down 18.3 per cent year on year due to unrecovered agricultural markets and banks’ rigid lending regulations, he said.

Surapong said that with household debt currently at more than 80 per cent of gross domestic product, the banks were being more careful about lending to individual clients.

The government should accelerate its ongoing investment agenda in order to improve purchasing power in the agricultural sector, he added.

The number of vehicles exported in May was 88,937, representing a a drop of 6.17 per cent from the same period last year.

However, exports are expected to recover in the second half due to huge orders already placed, he said.