Wage Hike Dubbed 'disruptive'

[Flashermac]

A rapid increase in wages would be economically disruptive and could lead to higher unemployment as companies shed jobs to reduce production costs, economists told a seminar yesterday.

 

Pranee Tinakorn, a Thammasat University economist, said the government's policy of boosting the daily minimum wage to ease income disparities is well intentioned.

 

"However, it should be phased in over a period of, say, three years to give the private sector time to adjust," she said.

 

Speaking at an economic seminar hosted by Thammasat's Policy Watch group, Dr Pranee estimated 23% of the labour force or some 3 million people nationwide now work at or below the existing minimum wage.

 

In recent years, wage growth has also fallen behind inflation, squeezing the lowest segments of the work force, she said.

 

The government has announced its intention of setting the minimum daily wage at 300 baht, an increase of 40% for workers in Bangkok and as much as 80% in Phayao province.

 

Minimum wages are currently determined by a tripartite committee comprising government, labour and private sector representatives and vary depending on economic conditions and living expenses in each province.

 

Dr Pranee added that authorities should expand schemes to help depressed groups to cope with rising costs using targeted measures such as food stamps or subsidised housing.

 

Sakon Varanyuwatana, another Thammasat economist, cautioned that fiscal spending on populist policies had risen sharply in recent years.

 

From 2000 to 20004, government revenue rose by an average of 10.3% annually, with expenditures rising by 7.3%, he said. But from 2005 to 2010, revenue grew by just 5.7% annually against 11% for government spending.

 

Meanwhile, new government investment remains relatively low at just 10% annual growth, a potential problem for the country's long-term economic competitiveness.

 

Praipol Khumsap, also a Thammasat economist, said the state Oil Fund should be managed independently of politics and the government, with a clear mandate to stabilise prices.

 

He warned that if reforms are not implemented, public debt, now standing at 40% of the gross domestic product, could rise to 50% within the next two or three years and 60% within five years due to unsustainable energy policies.

 

Dr Praipol said the government's role should be to set broad policy guidelines for the Oil Fund.

 

Authorities last month scrapped surcharges on petrol and diesel in a bid to cut pump prices and fulfil a key election promise made by Pheu Thai.

 

But levies on petrol and diesel have long been used to help offset subsidies on gasohol, biodiesel and cooking gas. Without the revenue from the fuel levies, the government must either divert tax revenue to help offset fund losses or reduce existing subsidies offered on cooking gas and other fuels.

 

Dr Praipol said the Oil Fund's original purpose was two-fold _ to offer price support for fuels such as gasohol and liquefied petroleum gas (LPG) while helping to stabilise domestic fuel prices amid volatility in the global oil market.

 

But politicians have generally been reluctant to collect levies on fuel sales when oil prices drop while quick to use the fund to subsidise local fuel sales when oil prices are high.

 

Dr Praipol said that in principle, domestic retail prices should match global prices, with taxes used to help encourage diversity in fuel use.

 

Assuming taxes are set at 15-20% of retail prices, gasohol in principle should be at least three baht cheaper than petrol to help encourage its use, he said.LPG, compressed natural gas, diesel and petrol should also not have an excessively high gap in prices.

 

"The government should consider subsidising LPG, which is used as a cooking gas, for low-income households such as by offering coupons allowing the purchase of 10 kilogrammes a month at a subsidised price of maybe 10 baht/kg," said Dr Praipol.

 

"Assuming 10 million low-income households nationwide, a subsidy scheme structured in this manner would significantly help to reduce expenses for the government overall. LPG subsidies are now running at about 3.5 billion baht a month."

 

 

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[cavanami]

What a load of horse hockey!

 

How many of the Thai businesses really pay the min. wage?

 

Small bar on Soi 22...ladies working 10 ~ 16 hours/day!

@ 25 Baht/hour, say...250 ~ 400 baht/day.

 

The ladies get a base salary of 5000 Baht/month, with two days off a month, so working say 28 days/month.

5000 / 28 = approx. 180 Baht/day...with no extra pay for the extra hours worked!!!

 

They would welcome to be paid 25 Baht/hour!!! and this is just the bar industry...and if they come to work late, they get docked. 30 min. late, docked 60 Baht (1/3 a days pay...WTF)...over 30 min. late, docked 200 Baht (now this is really WTF...more then they make in one day!) and if they don't show for work, they have to pay the bar fine themselves!!!

 

So the "lady drinks" mean a whole lot to the ladies as they get a % of the cost (40 ~ 60%).

 

Such is the life of a lady working in a bar so bring on the min. wage but try to get it implemented in the bars...55555555555555, good luck!