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Bangkok Post
Bangkok Post
Business

Sudden wage hike 'may lead to job losses'

Workers led by the State Enterprises Workers’ Relations Confederation and related labour groups call for an end to violations of workers’ rights and demand a substantially higher minimum daily wage increase. The groups held a May Day parade from the Democracy Monument to Government House to highlight their cause on May 1. (Photo: Wichan Charoenkiatpakul)

The Move Forward Party (MFP) should let Pheu Thai handle the country's economic policy, business leaders said, warning that raising wages too high and too fast could lead to job losses due to workers being replaced by machines.

Pratheep Watcharachokkasem, deputy chair of the United Chinese Clans Association of Thailand, said he had written to MFP leader Pita Limjaroenrat.

The party is expected to lead the next coalition government after emerging from the May 14 election with the most votes.

The open letter said the new government's economic policies, including the minimum wage, should be left to Pheu Thai, the party with the second most votes in the proposed coalition line-up, given its experience in managing the economy.

The MFP should be willing to compromise by agreeing to meet halfway in the cabinet seat allocation process, it said. "It's difficult to bring about an abrupt change in the country," it said.

It added that Pheu Thai's minimum wage policy, to progressively lift the rate to 400 baht a day, was preferred over the MFP's, which advocated a 450 baht wage to be implemented immediately along with a 40-hour maximum work week.

The letter said these plans would hurt businesses already dogged by sluggish sales and a high cost of living. "If businesses go under, the government will be unable to collect as much tax, the country's financial lifeline," it said.

Post-pandemic, industries were struggling while small and medium-sized enterprises (SMEs) face a similar plight, it said. "An excessively high wage would drive away investors and employment will plummet," Mr Pratheep warned in the letter.

Peerapong Charoon-ek, chair of the Thai Condominium Association, was also concerned about abrupt wage hike plans, including the MFP's plan to boost the current 337 baht a day to 450 baht, or about 30%.

He said the rate should gradually go up by 10% per year at most to stave off inflating the prices of new houses and condominiums. A 450-baht hike in the minimum wage would instantly trigger a 1.5% increase in housing prices, he said.

Isare Rattanadilok na Phuket, vice chair of the Federation of Thai Industries, said the rates proposed by both parties were worrisome.

While the business sector recognised the need to revise the minimum wage to ease the burden on workers, there should be measures suitable for all stakeholders, Mr Isare said. In the past, talks between all sides were vital for thrashing out a wage hike before any new rate was announced, he said.

A wage increase would also push up the prices of consumer products, he said, adding that a wage hike, currently determined through a tripartite discussion involving the government, employers and workers, would require careful consideration.

An immediate hike would risk reducing the country's competitive edge and hurting SMEs, while large firms that can afford the hike would be compelled to replace workers with machines in the long run, Mr Isare said.

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