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Wage debate ignores obscene incomes

Apr 10. 2015
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Why executives' pay is never an issue is a mystery

The minimum wage – the lowest payment allowed under the law to unskilled labour – is always linked with how good the economy will be doing and how “attractive” a country is to foreign investors. Whenever workers want more, there’s an outcry. When the Yingluck administration sought to fulfil its election campaign pledge of a Bt300 daily minimum wage, critics rounded on it. Now, it’s the interim Prayut government’s turn to face the often-explosive issue.

Nobody cares how much corporate executives are paid. This is despite the fact that even a fraction of their earnings could significantly boost the income of those at the lowest end of the economy. Executives’ salaries are not legally capped, and figures are often glorified and not cringed at. When the labour movement wants Bt20 more per day for the unskilled workers, it often sends economists scrambling to point out how ominous the |figure is.

The battle will be over something higher than Bt20 this time. A labour advocacy group has called for a minimum wage of Bt360 per day, a Bt60 rise. It has been a tradition for the labour movement to drive a tough bargain at the beginning, so it’s safe to say that the final contentious amount should be around Bt30-Bt40. Even that would make entrepreneurs squirm. The Federation of Thai Industries has come out to baulk at the Bt60 figure, citing weak demand in domestic and international markets.

There are few national issues simpler than the minimum wage. Workers want more but their employers want to pay the least they can. The government is often caught in the middle, as supporting business leaders is always bad politics but backing the workers could be at the expense of “competitiveness” in the eyes of foreign investors. The three parties – the government,

 employers and workers – are represented in the tripartite national committee that will have a final say on how much the unskilled labour should be paid.

When the Yingluck administration was pushing for a minimum wage hike, a key reason cited to defend the plan was that better-off workers could spend more and thus help boost the economy. The other side claimed a drastic rise would first lead to lay-offs, which couldn’t be good for the economy. Both camps could be right. It’s only that the latter rather realistically assumed that the pay hike would make the costs balloon, as there was no way those at the high end of the economy would make any sacrifice.

The supporters of the Yingluck government’s plan were more idealistic. They assumed that the pay increase would not affect employment and thus it should help the economy since a better-paid workforce would mean greater spending power. But with executives unlikely to lower their pays, production costs would naturally rise and “greater spending power” would come at the expense of some job terminations and a higher cost of living.

The minimum wage, therefore, is deeply linked not only to how much workers want but also with the attitude of those at the top of the economic pyramid. It’s too bad that the latter have rarely been taken into the equation. The minimum wage is often about “competitiveness” or “political games” played by labour groups whereas the bottom-line should have been the sharing of good times and bad times between workers and their employers.

As of now, “good times” and “bad times” are so different between the two groups. To one side, a “good time” could mean an extra Bt30 curry on the table whereas the “bad time” of the other side could mean renouncing a Bt8,000 wine and settling for a Bt1,500 bottle.

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