Panel backs wage-hike plan

The Wage Tripartite Committee yesterday voiced initial support for the Pheu Thai Party's controversial election promise to raise the daily minimum wage to Bt300. However, its provincial sub-committees later proposed a two-step approach - one for major provinces and another for the rest of the country - far below the Pheu Thai plan.

The panel, which brings together representatives of the government, employers and workers, proposed that the daily wage of Bt300 should start in Bangkok, nearby provinces and Phuket as a pilot project.

However, the panel's provincial sub-committees were apparently not prepared for the big increase. After the meeting, Labour Ministry permanent secretary Somkiat Chayasriwong disclosed that sub-committees in 75 provinces had proposed an increase of Bt2 to Bt28 for 35 key provinces, while the remaining 40 provinces should get gradual adjustments to the same rates starting early next year. The proposed increase is a far cry from the Pheu Thai Party's Bt300 minimum-wage proposal.

The WTC will call another meeting early next month to consider the issue further.

Somkiat said the Wage Tripartite Committee agreed that hiking the wage to Bt300 should start in some provinces, including Bangkok and nearby provinces and Phuket. The minimum wage in Bangkok and nearby provinces is currently Bt215 and in Phuket it is Bt221. The remaining provinces would then be gradually adjusted, he said.

"We should wait until the new Labour Minister comes into office to manage the way the adjustment [is handled]," Somkiat said.

Somkiat warned that the minimum-wage policy would draw more labourers from neighbouring countries such as Cambodia, Laos and Burma, because they would also be entitled to reap the benefits of the higher wage environment. "I met Pheu Thai Party secretary-general Jarupong Ruangsuwan, to exchange views on this issue, but he didn't put any pressure on the ministry."

Meanwhile, the Centre for International Trade Studies at The University of the Thai Chamber of Commerce warned yesterday that Pheu Thai's populist policy to increase the minimum wage was likely to undermine exports, especially from labour-intensive industries. An increase in the minimum wage will mean higher costs and decreased revenue and efficiency, it said.

Centre director Aat Pisanwanich revealed that increasing the daily minimum wage to Bt300 and the starting salary for bachelor's degree graduates to Bt15,000 per month would increase costs of production by a monumental 28 per-cent. Production costs would soar by 31.5 per cent in the services sector and by 26.5 per cent for manufactured goods. Hence, exporters of food and tobacco goods will have to contend with a 35-per-cent rise in costs, the embroidery industry with 34-per-cent higher costs and the paper industry with a rise of 22 per cent.

As a consequence of the 39.5-per-cent increase in the minimum wage alone, hiking it from Bt215 to Bt300, costs of production will increase by an average 22 per cent; 29.6 per cent for manufactured goods and 19 per cent for the service sector, Aat said. Labour-intensive industries will suffer most from the minimum-wage increase.

Similarly, the increased starting salary for bachelor's degree graduates, raising it from Bt11,000 to Bt15,000, or an increase of 36 per cent, will prompt an overall increase in production costs of 5.7 per cent - 1.9 per cent for manufactured-goods industries and 7.3 per cent for the service sector, Aat said.

The paper industry will be hardest hit, with costs rising by 5.4 per cent, followed by textile and garment industries, with a1.5-per-cent rise in costs, and the tobacco industry, with costs rising by 0.8 per cent.

The UTCC's Centre for International Trade Studies said the value of Thailand's exports was likely to grow by 13 to 17 per cent, to between US$221 billion and $229 billion (Bt6.69 trillion and Bt6.94 trillion). It predicted that export industries would grow by 9.5 per cent to a value of $112 billion during the second half of 2011.

Although export industries have recorded significant growth of 21.5 per cent over the first half of this year, it is expected that industries will grow by a mere 9.5 per cent throughout the third and fourth quarters of 2011.

Moreover, the slow recovery of the global economy due to skyrocketing crude-oil prices and persisting public debt problems in European nations will stimulate the decline in Thailand's export growth, it said.