There are mixed views about the effect of the recent policy to increase the minimum wage in Thailand to 400 baht per day. On one side, some observers stand firm that this raise will improve worker’s financial situation and stimulate the economy. On the other hand, there are concerns about its potential impact on business costs and consumer pricing. It is clear that the dispersion of effects would not be equal across industries such as manufacturing, agriculture, real estate, and construction; the fate of each sector is tethered to the string of governmental policies and industry-specific responses.
Marisa Sukosol Nunbhakdi, the THA president, points out that while she acknowledges some positive ramifications of a wage increase – for instance, improved labor market conditions and better money flow in the system – she also cautions against an adverse impact on business operation costs, particularly for SMEs. For these reasons, along with the current economic instability and provincial potential realities, she requests that the government rethink the planned wage hike to 600 baht per day by 2027. She also highlights the issue of continuous heightening costs in energy, gas, and electricity alongside the ongoing labor shortage in the service sector.
Logically approaching the situation, Chamnan Srisawat, the President of TCT, supports a smooth, gradual increase in wages rather than a hasty, drastic boost that could cause undue stress for business operators in the tourism and hotel sectors. It is his belief that a wage increase scheme should focus on upskilling and reskilling the workforce, thereby empowering the private sector. Chamnan expects the government to come with measures to alleviate other costs to businesses, and he believes tourism stimulus programs like the government’s previous “We Travel Together” project would help reduce dependency on foreign markets and enhance home market income.
Wasan Kiangsiri, the head of the Housing Business Association, voices his concerns that the proposed wage increase could cause some companies to downsize workforce or make their workers do more. The decision to give a higher wage could deter international investors and potentially drive them to countries where labor costs are lower. Moreover, the inevitable rise of housing prices prompts businesses to put cost management into focus.
Confronting Wasan’s pessimistic view, Peerapong Jaroon-ek, CEO of Origin Property and president of the Thai Condominium Association, thinks that the demand for real estate will be increased by the minimum wage bump, thus improving people’s purchasing power. He affirmed that the market can handle the proposed wage raise of 400 baht per day without needing to adjust prices.
Looking ahead, Sutee Ketsiri, managing director of Built to Build Group, fears that the potential hike in wages to 600 Baht by 2027 would drive up house prices due to higher costs for labor and construction materials. He observed that the Thai economy is showing early recovery signs, with confidence gradually returning to the market. However, the government’s digital cash distribution scheme for economic stimulation can influence price increases for various products, creating an imminent concern.
From a broader perspective, Tritecha Tangmatitham, managing director of Supalai Plc, sees a silver lining in the wage rise. According to him, despite concerns about potential rises in housing prices and other related costs, an increase in wages would improve average wealth, thus stimulating consumer spending once the economy is back on track. He also envisages market growth in the real estate sector alongside infrastructure growth such as new roads and railways if the new government’s economy jumpstart is successful.
Then there is the other side of the coin. Khem Wanglee, managing director of SMS Corporation, a much-respected producer of top-quality modified tapioca starch, recognizes the potential drawbacks the wage increase could have on agricultural sectors, particularly those heavily dependent on a large workforce like cassava cultivators. The labor cost uptick could detrimentally upset the pricing balance for agricultural products. He believes the government should focus on implementing innovative technologies to increase agricultural production value, transitioning the workforce from low to high-wage jobs.
Finally, Pun Paniangvait, Thai President Foods’ general manager, don’t seem to be in favor of implementing a uniform wage increase across all provinces. Citing the 300 baht per day increase in 2011 as a failed policy that led to more centralization rather than decentralization, he argued that the impact would be more negative than positive for businesses and manufacturing. At the same time, he didn’t consider the potential influx of foreign labor into Thailand as problematic considering the current shortage.
The diverse range of these expert opinions illustrates the complex, multifaceted nature of the issue. The only thing that’s certain is that the policy’s ultimate impact will depend largely on how effectively the Thai government and local industries navigate the situation in the coming years.