Thailand: FTI frets over looming minimum wage hike
The Federation of Thai Industries (FTI) does not agree with the Labour Ministry’s plan to enforce a new minimum wage hike on Oct 1, which is earlier than originally anticipated, as businesses will be flooded with too many financial burdens, notably a rise in the Bank of Thailand’s policy rate and higher electricity bills.
Kriengkrai Thiennukul, chairman of the FTI, made the comment yesterday when the central bank’s Monetary Policy Committee resolved to raise the rate by 25 basis points to 0.75% as the Thai economy is on track to recover.
The higher interest rate will lead to higher financial costs for businesses if commercial banks follow the central bank by increasing their interest rates.
In the energy sector, although a source at the Energy Ministry said last week the government would postpone a plan to apply a new higher power tariff — which is used to calculate power bills — in order to relieve the cost of living for the public, manufacturers remain concerned.
The Energy Regulatory Commission earlier said it expects the power tariff to increase to a record high of 4.4 baht per kilowatt-hour (unit) between September and December, up from 4 baht per unit.
The rise is being driven by the higher fuel tariff (Ft), due to the higher energy prices that have followed in the wake of the Russia-Ukraine war.
If electricity bills go up and factory owners have to pay a higher daily minimum wage, it will be difficult for them to deal with the higher costs.
“The daily wage and Ft are two key factors determining business costs. The government needs to pay heed to the effects of these two factors together,” said Mr Kriengkrai.
If the government were to go ahead with its original plan to enforce the new minimum wage in January, businesses, especially small and medium-sized enterprises, would have more time to plan and adjust operational costs, he said.
“The FTI is aware the wage needs to be increased under the current economic conditions. We don’t oppose that, but the new wage should not be enforced in October at a time when many businesses remain financially weak,” said Mr Kriengkrai.
Food manufacturing and other industries which are labour intensive will face the significant impact of higher wages as their operational costs will increase by 2-5%.
The FTI yesterday reported that the Thailand Industry Sentiment Index in July rose for the second consecutive month to 89 points from 86.3 points in June.
The increase resulted from more production and purchase orders to meet higher demand for goods in domestic and overseas markets.
The easing of lockdown measures in China also benefited Thai exporters.