Thai minimum wage jumps
Thailand is raising the minimum wage for workers in a move to increase spending power and offset higher living costs. On Sunday, April 1, 2012, the new minimum wage in Thailand became effective. From this date, every worker will be paid at least 300 baht (approximately $9.80) per day, a raise up to 40 per cent in certain industries sectors and regions. This lifts the monthly minimum wage of Thailand’s workers closer to India, Malaysia, and China and is now almost triple the minimum what workers are paid in Vietnam and Cambodia.
The new daily minimum wage will take effect in seven Thai provinces: Bangkok, Nonthaburi, Samut Prakan, Samut Sakhon, Nakhon Pathom, Pathum Thani and Phuket. Increases in other provinces will follow later.
Thailand’s prime minister Yingluck Shinawatra said on Saturday, March 31, that the raise is “necessary” as it is “aimed at improving living standards at a time when the cost of living is increasing.”
The prime minister added that most large manufacturers were already paying daily wages in excess of the new minimum wage. However, small and medium enterprises would be affected by the policy, and the government would come up with measures to support them.
Analysts have said that operating spending for affected companies – with the higher wage come higher social security contributions and overtime payments – would increase by four per cent in average. To alleviate this burden, the government has cut the corporate tax from 30 per cent of profits to 23 per cent and will fruther reduce it to 20 per cent in 2013.
Meanwhile, the Bank of Thailand left interest rates unchanged at a meeting on March 21, deciding against adding to the cuts made at the two previous meetings and warning about inflation risks due to high oil prices and the minimum wage rise, calling the latter a “populist measure” that would just reduce competitiveness as the higher costs of labour are transferred to the consumers in the form of higher good prices, driving core inflation up by at least 0.3 per cent.
Industry officials have said that the wage hike should go in tandem with an improvement of labour productivity to offset the higher costs. International investors could from now on miss the country’s attractivness of cheap labour, and with the EU and US debt crisis, the chances to relocate their Thai factories elsewhere are becoming inevitable.
However, the era of cheap labour in East Asia seem to come to an end anyway. In China,during the first three months of 2012 alone, workers’ minimum wages rose more than ten per cent, reaching an average of $303. Wage hikes of 13 per cent per annum are part of the five-year plan in China, as the populous nation strives keep people satisfied and join the ranks of the rich countries.
The Philippines and Indonesia also increased their minimum wage recently. In Manila, the current minimum wage is about $9 per day, and in Jakarta, it is about $182 per month.
The Vietnamese government raised the minimum wage in October by 42 per cent. The average minimum salary now stands at $107. In Cambodia and Myanmar, average monthly wages are still low at $54 and $41, respectively.
Malaysia has no minimum wage yet, but Prime Minister Najib Razak was expected to announce one soon. It is likely to be set at between $266-300 a month, which is in the range of what most workers are already paid.
[caption id="attachment_2711" align="alignleft" width="300"] Thailand's prime minister Yingluck Shinawatra said that the new minimum wage should help offset higher living costs for Thais[/caption] Thailand is raising the minimum wage for workers in a move to increase spending power and offset higher living costs. On Sunday, April 1, 2012, the new minimum wage in Thailand became effective. From this date, every worker will be paid at least 300 baht (approximately $9.80) per day, a raise up to 40 per cent in certain industries sectors and regions. This lifts the monthly minimum wage of Thailand's workers closer to India, Malaysia, and China...
Thailand is raising the minimum wage for workers in a move to increase spending power and offset higher living costs. On Sunday, April 1, 2012, the new minimum wage in Thailand became effective. From this date, every worker will be paid at least 300 baht (approximately $9.80) per day, a raise up to 40 per cent in certain industries sectors and regions. This lifts the monthly minimum wage of Thailand’s workers closer to India, Malaysia, and China and is now almost triple the minimum what workers are paid in Vietnam and Cambodia.
The new daily minimum wage will take effect in seven Thai provinces: Bangkok, Nonthaburi, Samut Prakan, Samut Sakhon, Nakhon Pathom, Pathum Thani and Phuket. Increases in other provinces will follow later.
Thailand’s prime minister Yingluck Shinawatra said on Saturday, March 31, that the raise is “necessary” as it is “aimed at improving living standards at a time when the cost of living is increasing.”
The prime minister added that most large manufacturers were already paying daily wages in excess of the new minimum wage. However, small and medium enterprises would be affected by the policy, and the government would come up with measures to support them.
Analysts have said that operating spending for affected companies – with the higher wage come higher social security contributions and overtime payments – would increase by four per cent in average. To alleviate this burden, the government has cut the corporate tax from 30 per cent of profits to 23 per cent and will fruther reduce it to 20 per cent in 2013.
Meanwhile, the Bank of Thailand left interest rates unchanged at a meeting on March 21, deciding against adding to the cuts made at the two previous meetings and warning about inflation risks due to high oil prices and the minimum wage rise, calling the latter a “populist measure” that would just reduce competitiveness as the higher costs of labour are transferred to the consumers in the form of higher good prices, driving core inflation up by at least 0.3 per cent.
Industry officials have said that the wage hike should go in tandem with an improvement of labour productivity to offset the higher costs. International investors could from now on miss the country’s attractivness of cheap labour, and with the EU and US debt crisis, the chances to relocate their Thai factories elsewhere are becoming inevitable.
However, the era of cheap labour in East Asia seem to come to an end anyway. In China,during the first three months of 2012 alone, workers’ minimum wages rose more than ten per cent, reaching an average of $303. Wage hikes of 13 per cent per annum are part of the five-year plan in China, as the populous nation strives keep people satisfied and join the ranks of the rich countries.
The Philippines and Indonesia also increased their minimum wage recently. In Manila, the current minimum wage is about $9 per day, and in Jakarta, it is about $182 per month.
The Vietnamese government raised the minimum wage in October by 42 per cent. The average minimum salary now stands at $107. In Cambodia and Myanmar, average monthly wages are still low at $54 and $41, respectively.
Malaysia has no minimum wage yet, but Prime Minister Najib Razak was expected to announce one soon. It is likely to be set at between $266-300 a month, which is in the range of what most workers are already paid.
