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Thailand: Minimum wage waiver floated to sustain SMEs
The government is being advised to waive the daily minimum wage requirement for six months to help entrepreneurs maintain employment during the pandemic.
Thanit Sorat, vice-chairman of the National Labour Development Advisory Council, said the council estimated that the country’s total unemployed could reach 9-10 million by the end of this month after the government declared a state of emergency and curfew nationwide, up from 6.5 million in March.
Some 2.75 million of that total would be from the tourism sector, with the rest from the manufacturing and service sectors. The estimates exclude 500,000 new graduates and 400,000 existing unemployed workers, Mr Thanit said.
The cabinet approved a hike in the daily minimum wage of 5-6 baht nationwide last December. The highest increment applied to Phuket and Chon Buri, bringing the wage to 336 baht. A five-baht hike in Narathiwat, Pattani and Yala set the wage at 313 baht.
The National Economic and Social Development Council reported on Feb 28 that 37.5 million people were employed in the fourth quarter of 2019, down 1.1% year-on-year from the fourth quarter of 2018. This marked the third straight quarter of decreases.
Employment fell by 1.6% in the agricultural sector and 0.9% in non-agricultural sectors.
Mr Thanit said the government’s latest aid measures for small and medium-sized enterprises (SMEs) may be impractical if commercial banks still require collateral to lend to those enterprises.
The cabinet on Tuesday passed an executive decree allowing the Bank of Thailand to extend 500 billion baht in soft loans at 2% annual interest for two years with a six-month interest-free period to SMEs for a credit line of no more than 500 million each.
Commercial banks and specialised financial institutions will also offer six-month deferment periods for SMEs with a credit line of up to 100 million baht each.
Mr Thanit said that as long as commercial banks require collateral for their lending, few SMEs will to be able to access the soft loan scheme.
“I’ve talked with many bankers and found they remain concerned about their costs and the capability of SMEs, and the higher non-performing loans that could result,” he said.
He proposed the government instead implement additional measures and set up a special fund to lend to SMEs, as this would be more practical than lending through commercial banks.
Mr Thanit also suggested state-owned Thai Credit Guarantee Corporation’s credit guarantee coverage be raised to 40% from 30%.
The higher coverage will help SMEs access credit from banks, he said.
Source: https://www.bangkokpost.com/business/1896070/minimum-wage-waiver-floated-to-sustain-smes