Firms lament Thailand's minimum wage hike

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Up to 100,000 firms may go under

The increase in the minimum wage may force 100,000 small and medium-sized enterprises (SMEs) out of business or force them to relocate their factories, according to industry representatives.

The daily minimum wage in Bangkok and six other provinces rose to 300 baht Sunday; the rate will be applied throughout the country next year, according to the Labour Ministry.

People working as security guards, maids and construction workers are at risk of losing their jobs because they are subcontractors, said Thai Chamber of Commerce vice-chairman Bhumindr Harinsuit.

Providers of security and cleaning services will be hit particularly hard as they usually calculate their costs and service fees in advance.

Generally, the rise in daily wages will raise costs by 7.2% for companies.

The new law may lead to staff cuts as costs rise sharply and as companies are unable improve productivity fast enough to keep pace, Mr Bhumindr said.

According to a chamber study, 98% of Thailand’s 2.2 million companies are SMEs with fewer than 25 employees. Less than 1% of companies that employ 500 to 1,000 workers are expected to be affected by the rise.

Mr Bhumindr said he has asked the government to set up a 10-billion-baht fund to support SMEs in improving labour skills.

The corporate tax rate will be cut from 30% to 23% this year, and then to 20% next year, and that will help reduce the burden of increased wages, he said.

Thanit Sorat, vice-chairman of the Federation of Thai Industries (FTI), said the fund should loan money to SMEs for spending on machinery to reduce labour costs. The fund should also help SMEs invest in neighbouring countries, such as Laos, Cambodia, Vietnam and Myanmar.

Phayungsak Chartsuthipol, FTI’s chairman, said the federation is gathering information regarding the impact of this policy on the private sector and will propose that the government take additional measures to soften the blow of the wage increase, particularly on SMEs.

The FTI will re-evaluate the situation in six months.


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