Chamber worried about politicians' wage-hike promises

Meanwhile, a survey by the University of the Thai Chamber of Commerce (UTCC) showed that the Thai Consumer Confidence Index (CCI) had dropped for the third consecutive month from 79.8 points in March to 79.6 points in April mainly because of the higher cost of living.

UTCC vice president Phongsak Assakul said the campaign to raise labourers' incomes was not a solution to drive economic growth. The new government must balance wages between lower-income earners, particularly farmers, and rich people. In addition, it should focus skill development and strengthen their competitiveness.

"Political propaganda on raising minimum wages is vague and inefficient. It will only spoil labourers, while destroying the country's competitiveness in the long run," Phongsak said.

For instance, the Democrat Party has announced plans to increase minimum wages by 25 per cent, or Bt50 per day, within two years. The Pheu Thai Party is committed to increasing labour wages to Bt300 a day, an increase of Bt80.

Phongsak said those policies would push the burden on to private sector, as businesses would have to pay an additional labour employment rate at Bt90 billion a year. The figure is based on the fact that at least 5 million Thai workers earn the minimum labour wage.

He said increasing labourers' wages was a good policy, but the government needed to have a plan to develop workers' skills as well. Thai labourers will not develop skills if the government only spoils them with higher incomes.

In the end, private enterprises will be forced to mechanise to reduce employment costs. As well, more enterprises will opt to invest overseas or employ other foreign workers after the Asean Economic Community allows the free flow of labour by 2015. High labour wages and low skill development will directly affect foreign direct investment in Thailand.

He added that if private enterprises found that they have to shoulder higher costs, they would increase the price of the goods they produce. In the end, consumers will face a higher cost of living.

To ensure fairness and efficiency, the chamber said the government should allow wages to increase in line with the development of labour skills as well as market mechanisms.

Saowanee Thairungroj, vice president of the UTCC's Research Division, said increasing minimum wages without developing skills would add 0.5 percentage point to the inflation rate.

In addition, Saowanee said Thai consumers have a lot of concern over the rising cost of living. The CCI is expected to remain unchanged in the next few months because of higher goods prices.

However, consumers have a more positive outlook for the future after the upcoming general election and continued recovery of the glob?al economy. The UTCC survey showed that confidence in Thailand's overall economy was down from 71 points in March to 70.5 points last month. Confidence in job opportunities also decreased from 71.6 to 71.1 points last

month, while confidence in future income was up slightly from 96.8 to 97.2 points last month.