Companies keen on floating wage rate

Construction News

A worker at a condominium construction site in Bangkok. Business operators like the idea of a floating daily wage based on growth in a province and labour skills. PATIPAT JANTHONG

Businesses are voicing support for the National Wage Committee’s decision to cancel the fixed 300-baht minimum daily wage next year and replace it with a floating rate, with 300 baht to remain the daily floor.

But Supant Mongkolsuthree, chairman of the Federation of Thai Industries (FTI), said the floating rate should depend on the strength of the economy in each area, with provincial wage committees considering whether their rates should be increased.

The more economic growth in a province, the higher the minimum wage should be, he said.

“The FTI agrees with the National Wage Committee that the fixed rate should be cancelled. However, the new minimum daily wage should be floated and increases should be in line with costs of living in each area,” Mr Supant said.

He said businesses, especially small and medium-sized enterprises (SMEs), had already suffered from the high 300-baht rate for a couple of years, with many being forced out of business.

Some parts of the country with higher economic growth and industries that require skilled workers would be willing to pay more than 300 baht a day, Mr Supant said.

In contrast, small enterprises that cannot afford more than 300 baht a day would not be forced to pay a higher rate or could even move to areas where wages were lower in order to survive.

The Labour Ministry said analyses of a higher wage rate would be based on inflation rates and the cost of living in each province, just as they were now. The ministry will forward the proposed rates to the National Wage Committee for consideration, and its decision will be forwarded for cabinet approval.

The Thai government raised the minimum daily wage to 300 baht on April 1, 2012 in seven provinces initially including Phuket and Greater Bangkok.

The nationwide hike was implemented in January 2013.

Some parts of Thailand previously operated with a 150-baht daily wage, which caused a few businesses, especially SMEs that could not afford the 300-baht wage, to move to neighbouring countries for their cheaper labour costs.

These companies were mainly in labour-intensive industries such as garments and textiles.

The 300-baht minimum wage is estimated to increase labour costs to 16.1% of total production costs from 11.9%, Industry Ministry data show.

Kalin Sarasin, secretary-general of the Thai Chamber of Commerce, said the TCC planned to conduct a feasibility study on the effect of a floating minimum wage rate on businesses, which should be completed next month.

“The TCC is about to collect information from several businesses and industries on the impact of the floating rate system, with 300 baht the minimum rate,” he said.

“It’s too early to gauge the impact at this moment.”