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Wage rise will boost Thai economy

An academic has predicted that the B300 wage will act as a mild stimulant to the country’s economy, adding 0.5-0.6 per cent to GDP. But he also painted a bleak picture of the immediate economic future.

Thursday 5 April 2012, 03:14PM


Thanawat Polwichai, director of the Economic and Business Forecasting Center (EBFC) at the University of Thai Chamber of Commerce said that between 3.5 million and 5 million labourers will earn an average of B60 more a day.


This, he said, would result in an extra B7 billion to B9 billion a month circulating in the Thai economy.


On the downside, he said, higher capital costs due to the wage hike were likely to put pressure on businesses to increase prices of goods by 5 to 10 per cent in the second half of the year.


Dr Thanawat also predicted two other possible effects of higher wages: increased automation, replacing labour with machines; and relocation
of some industrial companies to neighbouring countries with lower wages.


The impact of the minimum wage increase on overall employment would become clearer over the coming three years, he said.
Dr Thanawat also warned that inflation has already resulted in increased personal debt.


He cited a recent survey by the EBFC of 1,237 respondents that revealed most of those surveyed had more debt than last year, not as a result of the floods in Bangkok and Central Thailand, but because of the higher cost of living. About 61 per cent said the current cost of living was eating into their savings.

QSI International School Phuket


He also raised concern that workers earning less than B10,000 a month are already having problems repaying debt. With an average debt of nearly B170,000 per household, resulting in monthly repayments averaging almost B11,000, the problem was plain, he said.


He also warned that the higher cost of living will damage consumer confidence, and lower consumer spending will affect the overall economy, making it unlikely that an expected recovery by the third quarter of the year will be achieved.


Meanwhile, Labor Minister Padernchai Sasomsap has warned that any company that does not comply with the minimum wage rates for day workers will face legal action.


Employers who fail to comply, the minister warned, face a fine of up to B100,000 or a six-month jail term.


He added that the ministry is to open centres nationwide to accept complaints from workers who are not being paid the new minimum rates.

 

 

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