Effects of the Recent Minimum Wage Hike in Thailand

March 25th, 2013
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Beginning in April 2012, Thailand’s much discussed minimum wage hike went into effect. Since then, there has been opinionated chatter in HR circles about the consequences to business, investment, labour and industry as the nation-wide policy was implemented.

Effects of the Recent Minimum Wage Hike in Thailand

Effects of the Recent Minimum Wage Hike in Thailand

At the risk of oversimplifying, opinions generally fall into one of two categories – those that are ‘for’ the hike and those that are ‘against’ it.

Those who are support the rise note that it is a good economic move for the country, arguing that as the purchasing power of minimum wage-earners rises, there will be an accompanying increase in consumer demand, which will offset any negative impacts to industry or the economy. They also cite moral implications, recognizing that by not adjusting the minimum wage in accordance with inflation, it is very difficult for the lowest-wage earners to have an adequate quality of life. Conversely, there are widely heralded fears that the move will weaken Thailand’s manufacturing industry’s competitiveness, as the cost of doing business increases. They cite consequences like an influx of illegal workers, bankruptcies and mass layoffs.

However……

The effect of minimum wage on overall employment figures remains unsettled,” concludes Warangkana Imudom of the Macroeconomy Analysis and Policy Team at the Domestic Economic and Policy Department. Yongyuth Chalamwong, a senior researcher, said the 300-baht daily minimum wage that took effect nationwide on Jan 1, 2013 represents the biggest increase since a minimum wage was first introduced in Thailand – about 40%. “The timing of the increase in the wage is probably appropriate, as the labour market for low-income workers is tight,” he said.

At PeopleServe, we genuinely understand the position of both sides and all of the nuances in-between.  Change always has intended and unintended consequences and the challenges being faced by HRM professionals now are to adapt to the new reality.

Minimum Wage adjustments offer companies great opportunities…

The sky isn’t falling…At CloudForce HR, we’re working with clients every day who have been proactively addressing these changes within their own organizations. There is no ‘single solution,’ for thriving in the new business climate, but it offers a remarkable opportunity to reassess training and development initiatives, stream-line HR processes, look outward to the larger Asean Community and generally take inventory of where to invest in terms of human resources or technology.

We’ve been inspired by organizations that have embraced these changes, taken an honest look at what impact the hike will have on their operations and are working to adapt in ways that benefit shareholders, employees, and the community. They have demonstrated that as a nationwide-economic policy, these changes may prove beneficial or perhaps detrimental, but at an organizational level, they are able to remain flexible amidst changing regulations and we expect they’ll emerge as the winners.

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