Govt wage plan faulted

The government should increase minimum wages in percentage terms to better reflect productivity, says a labour expert at the Thailand Development Research Institute.

Yongyuth Chalaemwong, the TDRI's labour development research director, says the government should scrap its policy of increasing the daily minimum wage to 300 baht a day, which could hurt employment in provinces where productivity is lower than wage rates.

The government should raise the minimum wage rate in percentage terms depending on the province, or increase it by 70% nationwide instead of fixing the wage hike at 300 baht a day, he said.

The proposed 70% increase would help ease the pressure on the government's wage policy.

See also: Employers resist 'overnight' salary rises

Wage rates vary by province. A 70% increase would take the minimum wage rates in central provinces and Bangkok to higher than 300 baht.

Workers in small provinces with low industrial productivity will also receive higher wages even though the figures may still be lower than 300 baht, Mr Yongyuth said.

The average minimum wage nationwide is 175 baht a day and if the minimum wage increases by 70%, the new average wage will be 297.5 baht, which is close to the 300 baht figure promised by the Pheu Thai Party, which is forming the next government.

The minimum wage ranges from 159 baht a day in Phayao to 221 baht in Phuket.

Pheu Thai's proposed 300 baht a day wage is 50-90% higher than current rates.

This has raised concern among academics and businesses that the policy would force many entrepreneurs out of business as they would be unable to afford to pay the higher wages.

Some fear the policy could also increase inflation, although Pheu Thai has promised to offset the impact of higher minimum wages by cutting the corporate tax rate from 30% to 23% by next year, and 20% by 2013.

Mr Yongyuth said a 300-baht flat rate increase across the country would fail to encourage productivity of small provinces where wages paid are higher than worker productivity.

He said a study had found that wage rates in the central region and Bangkok are lower than productivity while wage rates in the North and the Northeast are already suitable.

Meanwhile, Amnart Nanthaharn, deputy secretary-general of the Federation of Thai Industries, said the FTI will meet the government to discuss possible repercussions which its wage policy could have on the businesses.

Mr Amnart said the government must come up with measures to help entrepreneurs.

He also suggested the government announce new special economic zones in border provinces to help labour intensive industries which demand foreign workers.

Special labour measures should be put in place to govern employment of foreign workers there, he said.

Somsuk Kongkachen, vice-chairman of the Samut Sakhon industrial council, said the proposed 300 baht minimum wage is also likely to cover foreign workers, which could hurt businesses employing them.

The government should be aware of the risk, he said