EDITORIAL: BANGKOK POST- Wage hike offers only small relief

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The new minimum daily wage rate, with a few baht increase depending on location, will take effect as of Wednesday in what is dubbed a tiny new year’s gift for labourers.

The new structure which is announced in the Royal Gazette on Friday will see minimum daily wages going up to 313-346 baht from the current 308-330 baht rate which is applied to 10 clusters of provinces.

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The first cluster where the top 346 baht rate is applied covers Phuket and Chon Buri; followed by Rayong where workers are to get 335 baht. Workers in Bangkok and five satellite provinces, namely Nakhon Pathom, Nonthaburi, Pathum Thani, Samut Prakan, and Samut Sakhon, will be paid 331 baht. Chachoengsao, a province in the eastern economic corridor scheme will get a rate of up to 330 baht.

Three southernmost provinces, including Narathiwat, Pattani and Yala, are in the 10th cluster where the wage will be raised to 313 baht.

The new rates which are lower than the 400-baht pledge previously made by the core coalition party Palang Pracharath during the election campaign comes as a relief for many investors and policy makers. Some people have raised fears about negative impacts arising from the new rates, which account for less than 2% of current wages, though in principle such an increment may be too small to significantly the increase cost of living.

Among those voicing support for the new wage is the National Congress of Thai Labour (NCTL) which insists the rise was acceptable, and will not affect the employment sector or the overall economy. It said the closure of some 3,000 factories (over the past year) is not related to the change in minimum daily wage. On the contrary, it stressed the business closures resulted largely from mismanagement and overall economic conditions as wages have not changed for two years.

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The Internal Trade Department, at the same time, dismissed worries about a big impact, saying the wage hike is estimated to raise production costs for manufacturers by 0.0061-0.6041% and the agency was adamant it would not “allow price hikes without good reason.”

But the fact is many operators in certain business sectors especially small and medium entreprises (SMEs) may still have a hard time dealing with possible detrimental effects regarding dim economic forecasts next year. A number of plants have been closed and there may be more to follow next year if the economy plummets further in the wake of depressed exports.

The new rates are unavoidable given the hardship of a large number of workers who cannot make ends meet. It must be conceded that the increment which is small is hardly a panacea, as it will only alleviate the plight on one condition: there must be no significant rise in the cost of living. That remains a question given the fact the state has never had strong and efficient mechanisms to deal with higher cost of living as a result of a wage hike.

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What the government, especially the Internal Trade Department, needs to do is to sharpen its fangs, by not allowing operators to take this opportunity to increase the price of products in a way which causes wide impacts to society, or the new hike will be useless while other groups of people, especially those with fixed salaries in both the public and private sectors, will suffer. In addition, it’s necessary the state continues to improve assistance in the form of welfare packages, which should cover debt repayment support and savings for workers on the daily wage. Improvements in the area of healthcare, in particular, should be made.

In addition, policy makers should be aware that minimum wage-earners need sources of affordable food and some state policies such as the one banning street food have a direct impact on this particular group. It would be better if state agencies find ways to accommodate those poor workers but at the same time maintain order and tidiness. Transport costs are another important matter. In Bangkok, it’s known that state policies have pushed a group of low-income people to the outskirts of town and transport costs have become a big burden to those families. Such problems need to be addressed and policies and assistance worked out accordingly.

Such assistance which requires an integration of policies under different state agencies is preferable than a wage increase as it will go straight to those in need without affecting the cost of living that may deal a heavy blow to a larger group of people.