Pita To Push Thailand’s Minimum Wage to 450 Baht

Another controversial issue during the formation of the government came as the Move Forward Party (MFP) was pushing for a minimum wage of 450 baht (13 U.S. dollars) per day.

Pita Limjaroenrat, Leader of the Move Forward Party, met with a network of workers from 45 organisations and over 200 people on Friday, May 26, at the Bang Sao Thong municipal office in Samut Prakan Province to discuss the MFP’s labour policy.

The network of workers participating in the discussion included trade unions from a variety of industries, including automotive, steel, food and pharmaceuticals, electricity and electronics, textiles, publishing, packaging, plastics, state enterprises, informal workers, the service sector, and many others.

Pita Limjaroenrat, Leader of the Move Forward Party, met with a network of workers in Samut Prakan Province on May 26, 2023.

Then, in an interview, Pita stated that he is confident in his ability to enact a wage-increasing policy in the first 100 days of taking office. Considering figures such as the rate of economic growth and inflation rate, as well as labour products over the last 7-8 years, the suitable wage is 450 baht per day.

The 30th PM candidate said this issue must look at both sides of the coin, including the dimension of helping to heal SMEs, as well as evaluating measures following the 2013 wage hike. Following discussions with the Federation of Thai Industries and the Youth Industry Council, he will embark on a tour to meet with the Chamber of Commerce and the Employers’ Council to gain a comprehensive understanding of both sides of the coin.

When asked about the Chamber of Commerce’s concerns about wage increases, which may lead to a shift in production to Vietnam, Pita stated the minimum wage was not the only factor; all personnel must be examined, including corruption, taxation, exports, and the domestic market.

Foreign Direct Investment Has Declined

Previously, Tanit Sorat, Deputy President of the Employer’s Confederation of Thai Trade and Industry (ECONTHAI), reveals that the assembly emphasizes a careful and step-by-step consideration by the new government regarding the proposed minimum wage increase policy.

He stated that the proposed rate of 450 baht per day is considered relatively high, and an immediate adjustment could lead to a repetitive pattern similar to the wage increase in 2013 (300 baht per day nationwide), which resulted in production base relocation to neighboring countries. Similarly, new investments that heavily rely on labor may not materialize.

“When the minimum wage was raised to 300 baht a day, there was a significant relocation of labour-intensive industries, including textiles, footwear, fish canning factories and certain component manufacturers, to neighbouring countries, especially Vietnam.

Tanit Sorat, Deputy President of the Employer’s Confederation of Thai Trade and Industry (ECONTHAI)

This is because most of our industries still rely heavily on local labour. We have lost whole lines of workshops that used to do the sewing work for famous sportswear brands. This time, the same pattern will repeat itself because our industrial structure is still primarily dependent on labour without moving towards high-tech industries,” Tanit said.

He explained that as a result of previous high wage increases, Thailand’s export performance, which used to lead the region, including foreign direct investment (FDI), has declined, leaving Vietnam as the leading agent.

Meanwhile, Thailand’s economic structure relies heavily on high exports. This is the reason why the country’s gross domestic product (GDP) growth has declined over the last 10 years.

“We must not forget another crucial point: The question of raising the minimum wage is about providing for vulnerable workers who currently receive less. If the minimum wage is raised, the wages of those who already earn 450 baht a day must also be raised. however, 90% of the Thai industry is medium and small enterprises (SMEs), which cannot afford such sudden wage increases.

“Consequently, these factors will be reflected in product prices due to increased costs. This situation causes dissatisfaction among the public and also affects the labour force. However, the economy will suffer even more from the increased costs, affecting Thailand’s competitiveness in exports. At the same time, Vietnam enjoys various tax benefits, which further undermines Thailand’s competitiveness,” the Deputy President of ECONTHAI stated.

Danucha Pichayanan, Secretary General of the National Economic and Social Development Council (NESDC), said that wage increases need to be carefully considered as they can have a significant impact on the business sector, including employment policies. The positive and negative consequences of cost increases should be carefully assessed as they can affect FDI and have an impact on the overall economy.

The Secretary-General also acknowledged that the Thai economy is currently facing challenges and uncertainties and that survival in a fluctuating global economy requires strengthening the country’s resilience.