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NEWS UPDATES Asean Affairs        16  May 2011

Thai finance chief wants higher wages

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Finance Minister Korn Chatikavanij of the Democrat Party wants to offer companies new tax breaks in exchange for salary hikes for new employees.

The policy would target workers earning less than 15,000 (US$500) baht per year.

Companies that commit to increasing salaries for workers would be allowed to take special deductions against their corporate tax liabilities equal to as much as four times the additional cost in payroll expenses.

Mr. Korn said that unlike a policy floated by the Democrats' main rival, the Pheu Thai Party, this plan would target all low-income workers.

Pheu Thai earlier said that it would offer guaranteed starting salaries of at least 15,000 baht (US$1,500) for new bachelor's degree holders entering the workforce.

"Our aim is to help ensure that all workers earn at least 15,000 baht per month," Mr. Korn said. The finance minister added that the programme would be a voluntary "win-win" venture between the private sector and the state.

Participating companies would benefit thanks to tax breaks, while the economy overall would gain a boost from the increase in household incomes.

Mr. Korn said the programme would effectively eliminate any added cost for participating companies while directly benefiting workers and the public.

And while the policy would seem to come at the cost of tax revenues, Mr. Korn said it would have no broad impact on fiscal discipline or commitments to return to a balanced budget by 2015. The Democrats and Pheu Thai will campaign heavily on economic issues in the runup to the vote on July 3.

Recent data shows the Thai economy continuing to expand well thanks to strong exports and domestic spending, the rising cost of food, fuel and other basic essentials has shaken consumer confidence.

Both parties have rolled out lavish platforms to win votes using subsidies and wage hikes, prompting warnings from the private sector about the potential cost to businesses. The Thai Chamber of Commerce last week warned that raising minimum wages by 50 baht per day for 5 million workers would cost companies 90 billion baht a year. It said policymakers would do better to focus more resources on skills training and tax reforms to increase competitiveness.

But Mr. Korn insisted that while the two parties may have similar aims, the difference is in the details.

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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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