National Minimum Wage Increase In Thailand - Green Door Enterprises

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[Published on 2011-10-18 in Thailand Newsby Jesse Schule]

National Minimum Wage Increase In Thailand

Thai Farmers Working On Paddy FieldThailand was set to implement the new national minimum wage of 300THB, (10USD) per day in October of 2011. Prime Minister Yingluck Shinawatra used the promise of an increase in minimum wage to gain support amongst voters in rural areas of Northern Thailand while campaigning for the recent election. Since the election there has been some confusion regarding if and when these policies will actually be implemented. A recent poll on the Bangkok Post website shows that over 65% of people support the wage increases. Critics say the move will damage the economy and scare away foreign investors, however the Puea Thai Party insists that raising the minimum wage from an average of under 200THB per day to 300THB per day will increase domestic spending and promote growth.

It only seems logical that Thailand's workforce should see wage increases to compensate for inflation and rising food costs

The International Labor Organization (ILO) seems to agree with the move, citing that over the past 30 years, Thai companies have been earning an increase in profits, while Thai workers have been receiving a decrease in the share of those profits. With an unemployment rate of just over 1%, demand for labor is high in Thailand. Thailand's booming industries of manufacturing, food production and tourism should not have any trouble sustaining the increase in minimum wage.

Critics of the government policy have suggested that the new minimum wage will increase inflation and drive companies to hire more migrant workers. The ILO insists that inflation as well as rising fuel costs and an increase in food prices make wage increases necessary. Those who don't agree with the minimum wage increase might want to look at China as an example, after years of suppressing wages, the Chinese government has introduced policies designed to to increase both minimum and average wages. These moves have not had any negative impact on GDP growth or foreign investment.

At first glance, you might think that a minimum wage of just 10USD per day is remarkably low, and surely not enough to live off of. When you compare Thailand's minimum wage to that of western countries such as the United States, Canada, or the U.K., it might sound low, however when you examine the cost of living in comparison to the wage it makes more sense. The average cost of an average meal at a restaurant in Thailand is around 1USD, meaning that a Thai worker earning minimum wage can easily afford to eat 3 square meals per day at a restaurants and still have 70% of their daily wage left over. Modest accommodation is available in Thailand for less than 100USD per month, therefore a person earning minimum wage can choose to rent their own apartment, even in large metropolitan cities where the cost of living is higher. Now imagine trying to pay for a flat in London, or an apartment in Vancouver or New York on a minimum wage salary, it is simply impossible. With the cost of food in restaurants much higher in western countries, it is also not possible for a worker earning minimum wage to eat out on a regular basis.

It only seems logical that Thailand's workforce should see wage increases to compensate for inflation and rising food costs. Unfortunately the country's many migrant workers are unlikely to benefit from these wage increases. While the constitution of Thailand as well as international labor laws are supposed to guarantee equal standards for all workers, including migrant workers, this is not currently in practice and there is little to no enforcement of these laws. So while the current government's policy on wage increase is heading in the right direction, there is still plenty of room for improvement.

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