Foreign chambers of commerce opposes hiking minimum wage to THB400

THURSDAY, MAY 16, 2024

The Joint Foreign Chambers of Commerce in Thailand (JFCCT) has voiced concerns over a Thai government plan to raise the minimum daily wage to 400 baht nationwide, warning of inflation and negative impacts on the economy.

The group called for the improvement in productivity and skills of the local workforce, as well as the freer movement of foreign skills.

“The economy is not ready for a 400 baht/day level nationwide minimum wage. Unavoidably, wage increases and minimum wage policies must go with productivity gains. If not always as a pre-condition, policies must be in place for productivity gains based on committed plans. Otherwise, the economy is just paying more for the same task, which then contributes to inflation, but not much else,” JFCCT chairwoman Vibeke Lyssand Leirvag said in her letter.

The letter, dated May 15, was addressed to Sanan Angubolkul, chairman of the Thai Chamber of Commerce and the Board of Trade of Thailand.

Leirvag pointed out that the lack of skills is one important cause of low productivity. She cited a February 2024 World Bank report on skills in Thailand that showed a lack of foundational skills was dragging down the country’s GDP by 20%.

“Productivity gains in smaller companies may take longer to implement than for larger companies; regional and sectoral variances also impact the ability to implement productivity, but that journey must be ramped up. Digitalisation, technology upgrades and the use of leading technologies are factors,” the JFCCT chairwoman said in her letter.

The letter suggested that the relevant authorities should promote measures to help businesses improve their productivity. Also, there should be grants or subsidies to help improve skills, technical capacity, and innovation so that new technologies and processes can be used.

“Workforce development has to combine local training and skilling with the freer movement of foreign skills. The infusion of foreign skills contributes to the upskilling of the workforce, including the transfer of know-how,” said the JFCCT chairwoman’s letter.

She called for changes in Thailand’s policy to allow work permit and visa reform, as well as revisions of the long-term resident visa for foreign skills.

The JFCCT, which describes itself as “the umbrella organisation for the foreign business community in Thailand”, has 34 foreign chambers and business associations representing more than 9,000 member companies.

On Tuesday, the government decided at a mobile Cabinet meeting in Phetchaburi province to approve the Labour Ministry’s proposal to raise the minimum daily wage to 400 baht nationwide starting October 1.

The decision has met with opposition from almost 200 trade groups and business organisations, including the Thai Chamber of Commerce, the Federation of Thai Industries, the Thai Bankers Association, as well as provincial chambers of commerce across the country.