Wage rise to 300 Baht: Production costs in Thailand up 16 %

Entrepreneurs’ production costs in Thailand have risen 16 per cent on average due to the minimum wage rise to Bt300/day, causing higher prices of goods of almost 14 per cent, according to Dhurakij Pundit University Research Center (DPURC). Director Kiatanan Luankaew spoke of the university’s research on ‘Minimum Wage: Lessons, Impacts, and Adjustment’ in seven Thai pilot provinces.

The research also indicated that as a result of the wage rise, some 38 per cent of 900,000 small and medium-sized entrepreneurs (SMEs) in the seven provinces might have had to stop hiring workers who are under 20 years old in the next eight months, for they will have the right to a wage increase within 12-18 months.

Some 5.5 million people working in factories, trade and services sectors are entitled to receive the government's minimum wage of Bt300/day, according to the Ministry of Labour and Social Welfare.

Some 76 per cent of employers have chosen to adjust by encouraging their employees to work more efficiently, 61 per cent have tried to reduce other production costs apart from labour costs, and 45 per cent will start using machinery in their businesses instead of labour.

Mr Kiatanan said that the Bt-300 minimum wage has made Thailand’s minimum wage similar to that of the Philippines and higher than other countries in the South East Asian region. Such payment is 14 per cent higher than that in Malaysia, 92 per cent higher than Indonesia, 220 per cent higher than Laos, and 380 per cent higher than in Cambodia. The wage increase will affect Thailand’s ability to compete in the long run, particularly entrepreneurs depending mostly on labour, Mr Kiatanan added. Read More