As the government last week approved long-awaited increases in the minimum wage, it must also roll out staunch measures to ensure the cost of living is well under control, with minimal impact on the public.
The hikes are slated to take effect on Oct 1 and had been suspended over the past two years for fears that they might have aggravated the economic situation especially since Covid-19 struck.
The Ukraine-Russia war has worsened global economic hardship with soaring prices of commodities and services.
The tripartite labour committee last Thursday reached a compromise on the wage increases, for a 5.02% average, lower that the 8% demanded by workers.
The Labour Ministry insists the newly approved rate is appropriate, taking into consideration employers' viability, workers' welfare improvement and a boost in purchasing power that will drive the economic engine in general.
Some provinces, including Chon Buri, Rayong and Phuket, will have the highest rate of 354 baht while the lowest rate, 328 baht, will be applied in the three southernmost provinces of Yala, Pattani and Narathiwat, as well as Nan and Udon Thani.
Workers in Bangkok and the satellite provinces are to get 22 baht more or 353 baht a day.
According to the Kasikornthai research centre, some businesses especially labour-intensive ones such as fishery and farming, and retail trading, restaurants, hotels, and construction, will face an unavoidable impact from the hikes, with a likely hit to profits of 5-15%.
It will be a challenge, in particular, for the hotel sector which was whipped hard by the pandemic. Covid-19 has prompted the government to impose a series of travel restrictions and other lockdown measures to contain infections since 2019.
It's a tough time indeed for operators with rising costs in several production areas such as electricity bills, petrol and raw materials.
In particular, electricity prices have soared by over 18%. The FT rate has already dealt a heavy blow to business operators who urged the government to gradually increase the rate and provide assistance measures to those in the SME sector.
Some foresee price rises in goods of around 10% by the end of this year. In fact, food prices have been up for some time.
The government gave the nod to instant noodle manufacturers who want to increase their product prices by one baht a packet, which will hit those on lower incomes.
Food prices generally have been rising for some time, even though the Commerce Ministry tries to downplay the matter.
Nevertheless, the wage increase cannot be withheld further as current wages are not enough to sustain a living.
At the same time, the new minimum wage, if well managed, will give an incentive for workers to leave their home provinces to return to the cities. This could help solve a severe labour scarcity in certain sectors and will come as a relief to bosses.
Yet there are concerns that some business operators will unjustly take advantage of the wage increase, seizing the chance for profiteering.
The government must keep an eye on these profiteers and take swift action to minimise adverse impacts, or the new wages will not help cover the higher cost of living.
