Proposed minimum wage hike in Thailand receives backlash

Economists and employer groups are cautioning that an excessive minimum wage raise will be detrimental for both employers and employees alike.
By: | October 4, 2023
Topics: Compensation and Benefits | News | Talent Management | Thailand

With new Prime Minister Srettha Thavisin recently proposing THB400 (USD $10.77) per day as a reasonable level for the minimum wage, there is a chance that the promise made by the ruling Pheu Thai party to raise the minimum daily wage to THB 600 (USD $16.16) by 2027 would come to fruition.

Currently, the minimum daily wage currently varies from different provinces, ranging from THB 328 (USD $8.83) to THB 354 (USD $9.53), with the average daily minimum wage at THB 337 (USD $9.08). The last wage hike, 5.02% on average, took place in October 2022, after experiencing a wage freeze for over two years.

A minimum wage of THB 400 would mean a wage hike of 13-18%, which will not be feasible to implement across the country, said Associate Professor Yongyuth Chalamwong, a labour economics and development scholar at the Thailand Development Research Institute (TDRI).

Speaking with Bangkok Post, Chalamwong said that the proposed minimum wage can only be applied to economic provinces such as Chon Buri, Chachoengsao, and Rayong, as well as popular tourist destinations such as Phuket.

“Politicians may have to swallow their pride when it comes to the wage increase. The wage rise will be a gradual one, not a single step rise across the country,” Chalamwong said, while also encouraging employers to implement wage structures that motivate employees to meet their skills to meet the criteria for a raise.

Echoing Chalamwong’s thoughts was Suchart Chantaranakaracha, Vice-Chairman of the Federation of Thai Industries (FTI), who called for any wage increase to be based on criteria and urged the government to introduce measures to help reduce the cost of living and mitigate impact for employers and their employees.

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Saying that a THB 400 minimum wage will be most keenly felt by labour-intensive businesses, Thaniwan Koonmongkon, President of the Thai Restaurant Association cautioned that an enforced wage hike may compel some employers to cut benefits or working hours to the detriment of employees. Instead, the government should come up with a reasonable rate to ensure businesses can raise salaries to retain employees, she added.