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Thailand: Academics support wage rise proposal
Bangkok Post

July 26, 2011
View the Original Article

Academics and labour leaders have thrown their weight behind the Pheu Thai Party's policy to raise the daily minimum wage to 300 baht, but recommend that measures be drawn up to cope with employer concerns.

Lae Dilokwitthayarat, a lecturer at Chulalongkorn University's faculty of economics and an expert in labour affairs, said wages for workers accounted for less than 10% of total production costs. Thailand has suppressed local wages to attract industrial investors and in turn worsened inequality in society, he said.

Pheu Thai's campaign pledge to raise the minimum wage to 300 baht a day nationwide had piqued the interest of workers, spurring them to vote for the party in the recent general election, Assoc Prof Lae said. As a result, the party must make sure it introduces a 300-baht flat rate, or face a crisis of confidence among its supporters.

He spoke during a labour network seminar at Chulalongkorn University's faculty of economics.

Direk Patamasiriwat, of the School of Development Economics at the National Institute of Development Administration, said the Pheu Thai-led government would win over workers if it honoured its campaign pledge.

But, the government will meet resistance from employers who may resort to mass layoffs, he warned.

The government should prepare measures to cope with anticipated layoffs by finding jobs to accommodate affected workers, Prof Direk said.

Local administrative bodies nationwide should be asked to hire people who are laid off due to the wage rises, he said.

Several studies have found that a wage rise of Pheu Thai's magnitude would have a minimal impact on businesses, but it would spark an overreaction from many companies, he said.

Pheu Thai's plan to cut taxes on businesses must be carefully studied, Prof Direk said. He said the party should not use taxpayer's money to subsidise businesses.

He suggested the government set up a committee to study the exact effect on production costs if the daily minimum wage were increased to 300 baht.

Narong Petprasert, a Chulalongkorn University economist, said the minimum wage in Thailand was relatively low, particularly when compared to worker efficiency, which results in huge profits for enterprises.

He cited research which found that 60% of the labour force earned less than 6,000 baht a month. This low income forces many people to work overtime to meet the increasing cost of living.

He called on relevant agencies to help cut non-production costs such as under-the-table fees and personal expenses of company executives that were normally added to production costs.

Labour leader Pawis Pasook said employers had exploited workers for more than 40 years by paying them low wages.

Somsak Thong-ngarm, of Ang Thong provincial wage committee, said workers had decided to vote for Pheu Thai mainly because of its minimum wage proposal.

Wilaiwan sae Tia, deputy chairwoman of the Thai Labour Solidarity Committee, said employers were living comfortably at the expense of workers and if workers dare ask for wage increases they are rejected.Meanwhile, the Northern Industrial Council has voiced concern over Pheu Thai's policy, saying the 300-baht daily minimum wage would hamstring the industrial sector, particularly small and mid-sized factories.

Yutthapong Jeeraprapapong, chairman of the council, said the next government should gradually increase the minimum wage instead of pushing for a quantum leap like Pheu Thai had promised.

Such a drastic increase would push labour costs up to 36% of total production expenses, from the current average of 20%, he said. This, in turn would increase product costs by at least 16%.

He proposed that the wage hike be based on studies by provincial tripartite wage panels and the Central Wage Committee.