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Thailand: Contractors raise wage hike alarm
Contractors are crying foul over key political parties’ campaign promises to raise the daily minimum wage to higher than 400 baht, saying it will raise people’s cost of living and those enjoying the most benefits will be foreign workers.
Wirot Charoentra, managing director of SET-listed contractor Pre-Built Plc (PREB), said a rise in the daily minimum wage would have a strong impact not only on construction companies but also on the cost of living and the labourers themselves.
“We hope the [minimum wage] will not rise, as it affects construction costs, of which 30% is from labour,” he said. “If it is not necessary, then a sharp hike should not be implemented by a new government. The increase should be made gradually.”
According to campaign policies for the daily minimum wage proposed by the Pheu Thai Party, the Palang Pracharath Party and the Democrat Party, the daily minimum wage would increase to 400-425 baht if they won the election and formed a new government.
Mr Wirot said foreign workers will benefit the most from such promises because they make up the majority of people paid a minimum wage. The bulk of Thai labourers are already paid wages of 450 baht per day or higher based on their skills, he said.
Some 80% of labourers at Pre-Built’s construction sites are foreign workers who are paid 315 baht a day, Mr Wirot said.
“Some [of the rise in minimum wage] will be passed on to project owners, but some will be unable to do so, as contracts have already been signed,” he said. “A sharp rise in minimum wage will drive up the cost of living, which affects everyone as well as labourers. It is no good for the country.”
Mr Wirot said that if the minimum wage rises to a level that contractors can no longer pay, they will invest in automation and artificial intelligence. This will reduce dependence on labourers permanently, likely causing unemployment among construction workers.
A source at the Thai Contractors Association said campaign promises related to labourers should focus on improving labour productivity, skills and expertise.
“In the construction sector, the daily minimum wage is usually paid to unskilled labourers, most of whom are foreign workers because Thais will not do this work,” the source said. “Most Thai workers are paid a wage for a skilled job that is higher than the minimum wage.”
The source, who asked not to be named and whose firm usually takes construction jobs from the state, said any policies related to labourers should seek to help improve workers’ productivity so they can have higher wages.
“Many contractors who take state construction jobs are affected by previous rises in labour wages, as the minimum wage was raised by 30% but the median price for state construction jobs was raised only at a single-digit rate,” the source said. “It also took two years for the rise in median price for state construction jobs after the minimum wage rose.”
The source suggested that if the new government wants to hike wages it should raise the median price for government construction jobs in tandem, otherwise many contractors will leave the sector.
“Whoever forms the new government should think twice because the rise in minimum labour wage will affect many sectors,” the source said. “It will push up living costs.”
Mr Wirot said Pre-Built shifted to property development in 2017 because construction is no longer a growth driver.
Source: https://www.bangkokpost.com/business/news/1647604/contractors-raise-wage-hike-alarm