The University of the Thai Chamber of Commerce (UTCC) has cautioned that a potential nationwide increase in the minimum daily wage to 400 baht could have significant economic repercussions, potentially hampering GDP growth to below 2.6% and elevating inflation to 3%. Thanavath Phonvichai, UTCC president, highlighted findings from a survey conducted among 403 business operators from April 22-26, representing various sectors such as manufacturing, trade, and services. The survey indicated that an appropriate minimum daily wage would be 370 baht, according to respondents.
An upsurge to 400 baht per day would trigger considerable concern among 70% of business operators, particularly small and medium-sized enterprises. They fear escalated production costs, diminished profits, and a potential shift in the burden of wage hikes onto consumers through increased product prices, thus exacerbating inflation.
Reflecting on past wage adjustments, the UTCC underscored the lack of empirical evidence demonstrating substantial positive impacts from the government sector post the significant 40% minimum wage hike in 2010. Moreover, the proposed wage hike to 400 baht per day could impact at least 7.5 million workers and impose an additional 9 billion baht monthly cost on the private sector.
Though workers may earn higher wages, the subsequent rise in product prices could mitigate their increased purchasing power. With an anticipated GDP growth of only 2.5%, falling below the targeted 2.6%, the wage hike’s introduction across all provinces is feared to drive inflation from 1% to 3% this year.
However, limiting the wage hike to 10 pilot provinces may mitigate the inflationary impact. A uniform increase from 350 baht to 400 baht per day would position Thailand’s minimum wage as the highest in ASEAN, excluding Singapore and Brunei. Presently, Malaysia’s minimum daily wage stands at 392 baht, followed by Vietnam (230 baht), the Philippines (360 baht), and Indonesia (350 baht).
In anticipation of economic shifts, the UTCC survey forecasts a circulation of 2.12 billion baht as of May 1, 2024.
