The Thai government, known for its string of populist policies including rice and fuel subsidies, is delighting working class voters (those with a job, anyway) with the introduction of a national minimum wage, which kicked in on January 1.
The policy has already triggered fierce criticism in business circles and reports of job losses, particularly in rural provinces. Yet, some experts argue that despite short term pain, a hefty national minimum wage increase will raise both living standards and productivity.
The 300 baht ($9.88) daily wage is 36 per cent higher than the previous urban minimum wage of 221 baht ($7.26) per day and in some rural areas, nearly twice the wage previously paid to workers. According to the National Economic and Social Development Board, a Thai government agency, approximately 5.37m workers were paid less than 300 baht a day in the third quarter of 2012.
The governor of Thailand’s central bank, Prasarn Trairatvorakul, expressed concern in December that the minimum wage increase would endanger the small- and medium-sized enterprises that drive Thailand’s economy.
Meanwhile, Thai corporates are issuing dire predictions. The vice chairman of the Federation of Thai Industries, Taweekit Chaturacharoenkhun, predicted last week that 5 to 10 per cent of Thailand’s labour-intensive businesses would be forced to close in the first quarter of 2013 due to the sharp rise in labour costs.
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via Thai minimum wage: short term pain | beyondbrics.
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