Thai wages increases examined

Payungsak Chartsutipol, the chairman of the Federation of Thai Industries (FTI), said higher labour rates could ultimately result in a higher cost of living for the public as companies raised retail prices to maintain profit margins.

Both the Democrat and Pheu Thai parties, the two leading parties trying to form the next government, have promised wage increases in a bid to win votes preceding the July 3 general election.

The Democrats, led by Abhisit Vejjajiva, have vowed to raise minimum wages by 25 percent within two years, while Pheu Thai, led by Yingluck Shinawatra, wants to lift minimum wages to 300 baht per day.

Minimum wages currently range from 221 baht per day for Phuket and 215 baht for Greater Bangkok to a low of 159 for Phayao.

Mr. Payungsak said the FTI wanted the next government to maintain the current system under which minimum wages are set through consultation by a tripartite committee representing labour, the private sector and the state.

He said wages for the 10 million workers in the industrial sector accounted for 10 percent to 30 percent of production costs, depending on the industry.

Hardest hit by any increase in minimum wages would be small and medium-sized companies that employ the bulk of the labour force in the industrial sector.

"Any increase in wages should be tied to efficiency and productivity," Mr. Payungsak said. "Right now, Thai labour has one of the lowest productivity rates in Asia. Productivity growth is just 3 percent per year, a level less than that of Vietnam and Indonesia."

Mr. Abhisit, speaking to Thai and foreign business leaders yesterday, justified the minimum wage policy as necessary to help the public cope with rising living expenses.