FTI slams proposed Bt300 minimum-wage hike, warns of serious impact

Yesterday, it echoed concerns that the measure could damage new investment and force business activity into a dead end.

The FTI meeting came out with strong objections to the wage-hike proposal. The objections include: the hike was a significant one - [the government] should let market mechanism manage wage levels; it should allow the Wage Tripartite Committee to fix a minimum wage without intervention; the government should lift its price control policy - if it increases at a rate lower than the commitment, the government should subsidise labourers' income in other ways such as by increasing social welfare.

Special meeting

Coming from an influential private organisation, the ideas will top the agenda at the special meeting of the joint-private standing committee next week.

The new government should face up to a worst-case scenario of the minimum wage hike forcing many SMEs to shut operations. SMEs employ about 10.5 million people, or 78 per cent of the country's total workers.

The FTI suggested that the government create a timeframe for the wage increase, to allow manufacturers to manage their costs in advance. The strategy should be to ensure a lower impact on the manufacturing sector and strengthen the Kingdom's competitiveness.

The FTI called for an urgent meeting yesterday concerning the wage-hike policy when more than 80-90 per cent of enterprises shared the same comments, pointing out that this policy would destroy their business growth, said FTI chairman Payungsak Chartsuthipol.

He said the government should have more flexibility and room to delay a hike in the wage for another 3-4 years.

"The government should not be concerned with only its populist [image], but also other important factors of increasing wages, inflation, consumer spending power, economic growth, labour development, and living standard development," said Payungsak.

Losing competitiveness

Sukij Kongpiyacharn, chairman of the Federation's Garment Industry Club, said an unreasonable jump in wages would lead to Thailand losing its competitiveness in attracting new investment. Enterprises would not expand their businesses, while many industries would shift investing to countries with lower wages.

"The new government should concern itself more with a policy that would encourage SMEs to employ illegal labour from neighbouring countries," Sukij said. He emphasised that "the populist policies will create bad behaviour among politicians and finally result in foreign investors losing faith in the country where politicians have power over the country's minimum wage".

According to a survey of 513 enterprises in 40 industries, more than 70 per cent of SMEs said they would be impacted by a hike in minimum wage. About 67 per cent of large enterprises would also be affected. Twenty per cent of respondents would have to reduce the number of people they employed as they could not shoulder the higher costs.

Regarding Pheu Thai restricting the daily minimum wage increase to Bangkok only, Sukij said it would attract labour to the capital rather than stay in their own provinces.

Chayo Trangadisaiskul, chairman of the Rubber-based Industry Club of the FTI, said the policy was unreasonable and directly destroyed the country's export competitiveness. Businesses would be forced to close down.

"Every industry would face difficulties. The policy is unreasonable. Pheu Thai is only concerned about the labour side, but is ignoring the employers' and consumers' points of view," he said.

Many small and medium enterprises also shared the same views yesterday against the controversial election promise of a wage hike. They said an immediate raise in the daily minimum wage to Bt300 would seriously affect SMEs.

Also, it will create not only high unemployment but an influx of illegal labour into Thailand in the near future.