Wage rise will sink 10% of SMEs : TCC
At least 10 per cent of the 2.2 million SMEs in the country - about 200,000 - would be forced to shut down or move out to other countries within half a year after the minimum wage was bumped up to Bt300 this month, a leading businessman has claimed.
“About 98 per cent of all companies will suffer from the higher wage as they are SMEs. Construction and security will be hurt the most since they have made advanced contracts for a job, but they have to increase their spending on staff,” Bhumindr Harinsult, vice chairman of the Thai Chamber of Commerce, said yesterday.
The TCC reported that about 5.6 per cent of all SMEs – companies employing 1-25 workers – would go out of business and 5 per cent would relocate overseas, as they cannot shoulder the higher costs in this country following the government’s policy to boost wages.
The higher wages would create difficulties for most enterprises as they would need to shoulder higher labour costs, but their return would remain unchanged.
According to the chamber’s study, only 1 per cent of all companies would feel no pressure from the wage hike, and those are large firms with more than 500 workers. Bhunmindr said the higher wage policy – which did not get the nod of the tripartite wage committee but came from the government’s propaganda during the general election – will scare off foreign direct investment.
FDI to Thailand would drop by 25 per cent from the average of Bt400 billion a year. Some foreign investors, particularly those in labour-intensive industries, would look at other countries in Asean with lower personnel costs.
The impact would be more severe early next year as the Bt300 wage hike is applied nationwide, he said.
The chamber urged the government to set up a fund to help SMEs in particular.
The fund may subsidise the cost of workers for SMEs for a period so that they have more time to adjust.
The government should also reduce regulations to facilitate trade and implement quickly the plan to improve the efficiency and productivity of companies, especially SMEs.
Thailand should also urgently develop its education system to improve human resource productivity along with the higher wages.
The chamber warned the government to carefully consider the wage hike policy in the future, as it will create a huge impact on all industries. The government should not use wage hikes to gain popularity during elections. Any policy to adjust wage costs should be based on a fair agreement among all stakeholders.
Agriculture is the biggest employer with 38.2 per cent of the country’s workforce, followed by services with 24.7 per cent, industry with 20.7 |per cent and trading with 16.4 per |cent.
