Durakij Pundit University’s Research Center (DPU Poll) has revealed that the government’s minimum wage increase in 7 pilot provinces could prompt around 1/3 of employers to dismiss workers in the next 12-18 months.
DPU Poll Director Kiat-anan Luankaew said that a recent survey on the effects of the implementation of the wage hike in the 7 pilot provinces revealed that production cost has shot up by 16.2%. The study also found that in the next 8 months, 39% of the existing 900,000 SME entrepreneurs in these provinces might stop hiring minimum wage workers, aged less than 20 years old. Meanwhile, over 76.6% of the employers have chosen to adapt to the wage hike by enhancing workers’ skills to match with the higher pay, 61.3% are attempting to reduce other initial costs, and 45% are planning to replace manual labor with machinery and equipment during the next 12-18 months.
Once fully implemented, the 300-baht minimum wage policy will raise Thailand’s minimum wage rate to be on par with that of the Philippines while setting it higher than other ASEAN countries. Thailand’s rate will be 14% higher than that of Malaysia, 92% higher than Indonesia, 220% higher than Laos, 284% higher than Vietnam and 380% higher than Cambodia. The wage hike will impact the competitiveness of Thai entrepreneurs in the long run, especially those whose businesses rely mainly on the labor workforce.
Meanwhile, the assistance provided by the government to SMEs has yet to meet the demands of entrepreneurs. Despite its loan issuance for the acquisition of new machinery, the government has not adopted any measure to buy back old machinery at an appropriate price, which has caused the production cost of new machinery to soar. Additionally, only one out of three SMEs are benefiting from the existing assistance measures. The government, thus, needs to monitor production cost, promote production efficiency and improve SME operation process, as well as find new markets and develop workers’ skills to correspond to the changing business structure.