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NEWS UPDATES Asean Affairs                   13  September 2011

Wage hike debate continues in Thailand

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A rapid increase in wages would be economically disruptive and could lead to higher unemployment as companies shed jobs to reduce production costs, economists told a seminar yesterday.

Pranee Tinakorn, a Thammasat University economist, said the government's policy of boosting the daily minimum wage to ease income disparities is well intentioned.

"However, it should be phased in over a period of, say, three years to give the private sector time to adjust," she said.

Speaking at an economic seminar hosted by Thammasat's Policy Watch group, Dr. Pranee estimated 23 percent of the labor force or some 3 million people nationwide now work at or below the existing minimum wage.

In recent years, wage growth has also fallen behind inflation, squeezing the lowest segments of the workforce, she said.

The government has announced its intention of setting the minimum daily wage at 300 baht, an increase of 40 percent for workers in Bangkok to as much as 80 percent in Phayao province.

Minimum wages are currently determined by a tripartite committee comprising government, labour and private sector representatives and vary depending on economic conditions and living expenses in each province.

Dr. Pranee added that authorities should expand schemes to help depressed groups to cope with rising costs using targeted measures such as food stamps or subsidised housing.

Sakon Varanyuwatana, another Thammasat economist, cautioned that fiscal spending on populist policies had risen sharply in recent years.

From 2000-04, government revenue rose by an average of 10.3 percent annually, with expenditures rising by 7.3 percent, he said. But from 2005-10, revenue grew by just 5.7 percent annually against 11 percent for government spending.

Meanwhile, new government investment remains relatively low at just 10 percent annual growth, a potential problem for the country's long-term economic competitiveness.

Praipol Khumsap, also a Thammasat economist, said the state Oil Fund should be managed independently of politics and the government, with a clear mandate to stabilise prices.

He warned that if reforms are not implemented, public debt, now standing at 40 percent of the gross domestic product, could rise to 50 percent within the next two or three years and 60 percent within five years due to unsustainable energy policies.

Dr. Praipol said the government's role should be to set broad policy guidelines for the Oil Fund.



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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More


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