Minimum Wage issue claimed to vex SMEs

A recent seminar conducted by the Thailand Management Association was told the real impact of the government’s mandatory imposition of a 300-baht per day minimum wage for employees would seriously impact small to medium enterprises (SMEs) in 2013.

The managing director of the Human Intellectual Management Co Ltd, Wirasut Ruknapapong, painted a gloomy economic picture for next year, suggesting the expected growth in wages outlays will be 6.2 percent compared to 5.5 percent this year.

Khun Wirasut even went so far as to suggest SMEs engaged in labour-intensive industries and activities should seriously consider re-locating to near neighbours such as Cambodia, Laos, Myanmar, and Vietnam. “Otherwise they will not compete,” he claimed.

Strangely, Khun Wirasut suggested the 15,000-baht minimum monthly wage for public servants with bachelor’s degrees will also have an impact. Just how a minimum wage level for government employees is going to impact the economic viability of non-government SMEs wasn’t explained.

It was probably no real surprise that the Federation of Thai Industries (FTI) also weighed in on the rocky times ahead if the government didn’t seriously reconsider its minimum wage policy.

A senior spokesman for the FTI insisted on presenting a five-point plan to the government in the hope of either delaying, emasculating, or completely averting the plans of the Yingluck Shinawatra administration to endorse the 300-baht per day minimum wage level across the nation.

The FTI wanted the government to keep the minimum wage level unchanged until the end of 2015. From the beginning of 2016 they want the government to scrap the minimum wage policy and let market forces determine the correct levels for employee wages. If this was agreed to, it would fly in the face of similar wage provisions used in developed nations such as the United States, Britain and Australia, where a minimum wage level has been mandatory for decades.

The FTI also want anyone who is entitled to the minimum wage to be able to prove they have had at least a fourth grade education and can produce a graduation certificate from the Ministry of Education. If this was agreed, it would mean that yet again those at the absolute lowest end of the educational rung, namely the very poor, would be seriously impacted in terms of their ability to negotiate a fair and living wage.

The FTI also wants the government to offer tangible and very defined compensation packages for those SMEs who can show they have been seriously impacted by the minimum wage policy. They want the government to also establish rehabilitation programmes to help affected SMEs transition their businesses if needs be.

At the time of writing the government remains in dialogue only with the FTI and associated industry groups.