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Pay policy worries manufacturers

Manufacturers are worried that the new government's policy to hike wages would push up the whole pay scale, which could make them lose their cost-competitiveness while consumers would inevitably have to shoulder higher prices.
Nalin Viboonchart, Petchanet Pratruangkrai
12 Jul 11
The Nation

"This means that we'll be in a difficult situation, as human-resource expenses will definitely surge. We may have to think about revising our production in Thailand to reduce the impact from higher costs," Anusorn Muttaraid, executive director of Delta Electronics (Thailand), said yesterday.

Raising the minimum daily wage to Bt300 is not an insurmountable problem, but the biggest impact will be on the company's workers who are currently receiving more than Bt300 per day, he said.

"Delta has to think about those workers' feelings, so it may have to raise their wages so that it can keep the gap between skilled workers and the newcomers," he said.

Delta employs about 7,000 daily workers, of whom roughly 1,000 get the minimum wage of about Bt200. The rest are paid more than Bt300 per day as they have worked with the company for years and have developed their skills.

Delta, one of the country's largest private employers, also carries about 13,000 full-time staff, whose salaries are not less than Bt15,000 per month. It seems that the company would not face any hardship paying a starting salary of Bt15,000, but that is not the case.

If Delta offers a higher salary to fresh graduates, it may have to think about adjusting the salary for holders of bachelor's degrees.

Paiboon Ponsuwanna, former chairman of the Food Industry Club of the Federation of Thai Industries, said hiking wages would send ripples through industry and end up hitting consumers and exports.

The food industry has more than 2 million workers, both skilled and unskilled, on the payroll now.

"Many buyers have asked whether Thailand will increase prices after hiking wages. We will destroy our own competitiveness if we quote higher prices when economic growth is sluggish in many import markets," he said.

Half of small and medium-sized enterprises might go out of business, particularly in the food and beverage industries. Millions of migrant workers will flow into Thailand. Exports this quarter will likely fall, Paiboon warned.