Workers will be thrilled if the minimum wage in Thailand is increased to 450 baht per day, but business owners won’t be, as seen by the disapproving comments made by various business groups.
The hike in the minimum wage, which was promised by parties during their election campaigns, could make potential foreign investors second-guess their plans to invest in Thailand, according to Poj Aramwattananont, vice chair of the Thai Chamber of Commerce.
Compared to the earnings in Thailand, check at the minimum wages in the Philippines, Vietnam, and Indonesia. The minimum wage in Indonesia is higher than in Thailand, but considering the size of the country’s estimated 300 million population, there are more opportunities for both domestic and international trade than there are in Thailand.
While Vietnam’s minimum salary is lower at 343 baht per day, the Philippines’ is comparable to Thailand’s at 353 baht per day. Poj claims that the proportion of young people in Vietnam is higher.
He cautioned that even Thai investors may contemplate transferring their manufacturing bases to Myanmar or Cambodia if the minimum wage is raised to 450 baht.
The Thailand Development Research Institute (TDRI), a think tank in Thailand, advises on human resource policy, and associate professor Yongyuth Chalamwong claims that wages are not the sole factor influencing decisions to invest in Thailand.
Citing his analysis of minimum wage increases between 2012 and 2013, which saw wages increase by about 80%, from 170 to 215 baht to 300 baht, he claimed that the increases made Thailand’s the third highest in ASEAN, behind Singapore and the Philippines, and that this led to the relocation of several labor-intensive industries, such as textiles and shoes, to Cambodia and Vietnam, where labor costs are much lower than in Thailand.
However, he pointed out that things are different now than they were ten years ago because business owners have responded by spending more on machines to replace labor and moving away from labor-intensive industries like food processing and textiles. In the meantime, Thai workers in these labor-intensive industries have been displaced by migrants from nearby nations.
Before considering compensation hikes, Associate Professor Yongyuth advises business owners to boost productivity by enhancing the abilities of their workers to make sure they are deserving of the pay raise.
The high electricity costs, which are three times higher than the rate in Vietnam, and business taxes are the major concerning problems for business owners.
The Generalized System of Preferences (GSP), which rich economies like the United States provide to emerging and underdeveloped nations for their exports to the US market, is another significant incentive to draw in foreign investors.
He claimed that because Thailand is no longer classified as a developing country, the Thai government must attempt to negotiate with the US to reinstate the GSP status for Thai products that have been revoked.
