The pledge by the main opposition Pheu Thai Party to raise the minimum wage from around 350 baht per day to 600 baht within five years, or by 2027, if elected to run the next government, has raised a lot of eyebrows and ignited a fierce debate as to whether it is appropriate or even realistic and whether it will do more harm than good to the Thai economy or not.
My reaction is one of cautious support.
I support the move in principle because the minimum wage of 350 baht per day clearly is not enough for a person to lead a humane life with dignity given the current costs of living.
At present, the cheapest street food meal will cost around 50 baht – times that by three meals and that is already nearly half the daily minimum wage. Those relying on a minimum wage cannot really afford to use the BTS or MRT to commute on a daily basis as it can easily cost over 60 baht per day, roundtrip.
The cheapest and smallest condominium now costs just south of a million baht, making it virtually out of reach of workers relying on minimum daily wage. Many minimum daily-wage workers also have little or no hope of getting a higher wage as a good number of them are working on short-term or even daily contractual basis.
This is a life of little or no hope for a better future for tens of millions of these Thai (and migrant workers from neighboring countries). Debt has become widespread. On Monday, a 29-year-old male factory worker hang himself to death from a roadside tree in Rayong province. The man’s mother said her son took a loan from an online app which snowballed from two thousand baht to nearly 100,000. She said she was trying to sell her car to assist her son, but it was too late.
Humans deserve better than this and a roughly 12 percent annual wage increase per annum for the next five years is not something astronomical or insanely populist.
The last thing poor people living on a minimum wage, working hard overtime, want to hear is the rich or upper middle-class Thais telling them to be content with what they have – and do not have.
Nevertheless, one must be cautious to consider various factors, domestic and foreign, in deciding on the amount of annual wage increase. Just like no central bank can keep printing more monetary notes in a limitless manner before the currency collapses and not worth anything, any minimum wage increase must take issues like export competitiveness, foreign investment attractiveness, inflation, and more into consideration.
Basically, you cannot just come up with any figure you like without considering whether factory owners, Thai and foreign, will end up deciding that it might be more economical to relocate their plants elsewhere outside Thailand or not – thus potentially having less minimum-wage jobs available in the kingdom.
What about the competitiveness of Thai agricultural goods? This will also be another factor to consider.
To get through the minimum-wage trap (and not just middle-income trap), both the government and the private sector will have to invest more in R&D. Thailand needs better quality fruits and agricultural produce to earn more and have a higher profit margin. The tourism industry must be upgraded and make it less reliant on cheap tourism and offer itself as a medium and upper-market tourist destination. Business owners must also ask themselves if they can profit a little less so their employees can lead a marginally decent and humane life as a result of a higher minimum wage.
We have no other options because trying to raise the minimum wage without upgrading Thai economic performance and competency will lead Thailand nowhere. On the other hand, keeping millions of the threshold of poverty will eventually teardown the social fabric of Thailand.