Increase in daily minimum wage and higher salary for new graduates
The government’s new minimum daily wage and starting salary for fresh degree graduates are likely to push up the payroll outsourcing service cost for companies in Thailand by 10-30 per cent, according to a survey conducted by global consultancy Hay Group.
More than 70 per cent of organizations that took part in the survey said they expected to have “moderate” to “most” impacts from the government’s plan to deliver its election promise to increase the daily minimum wage to 300 THB and a starting salary of 15,000 THB for bachelor’s degree holders beginning April 1st 2012..
Hay Group’s bi-annual survey involved 119 organizations, most of them multinational companies and leading organizations in Thailand with revenue of about 1 billion THB to 50 billion THB and 51-300 employees.
About 61 per cent of the respondents disagreed with the government policies, citing higher payroll and operating costs, and suggested the adjustments should be gradual and “step by step” and considered according to industries and their ability to pay, rather than across the board, “For the service sector, in particular, payrolls already account for 50 per cent of their costs,” said Thanwa Chulajata
On the other hand, 39 per cent of the survey participants agreed on the government’s wage and salary increase policies, saying these adjustments would make the pay more relevant to the employees’ current cost of living, and help lift up Thai labor skills and standards.
Leading independent economist Sethaput Suthiwart-Narueput told the Hay Group’s forum that there was a need to raise Thailand’s wages, which over the past many years had been raised by only 2-3 per cent annually, merely to cope with inflation. However, the adjustment to 300 THB daily is considered too high, Sethaput, a former chief economist at Siam Commercial Bank, said the enforcement would be an important issue as a study had found that half of the workers in 76 provinces in the country had actually been paid less than the minimum wages.
On the other hand, if the government can successfully enforce its new daily wage policy, the impact will be large considering the fact that 11 million workers are currently receiving less than Bt300 daily, he said.
The Wages rises are geographically based and will take effect as of April 1 2012.
Meanwhile, the Hay Group survey reveals that Thailand’s average salary increase will remain at around 6 per cent this year and next year, continuing with its decade-old trend despite fluctuating economic growth, inflation, and government policies. It forecasts base salary increase of 6.14 per cent this year, and 6.11 per cent for 2013.
“For the last 10 years, salary adjustments have stayed in the range of 5-6.5 per cent, regardless of inflation,” said Thanwa.
Actual total bonus payment for 2011 averaged 3.02 months, differing marginally from the forecast of 3.03 months.
Among seven countries in Asia included in the Hay Group study, salary increase trends in Thailand for 2012 and 2013 are the lowest except Singapore where salary adjustments are forecast to remain flat at 4.5 per cent for this year and the next. The highest pay raise on the list is Vietnam with 13.7 per cent this year and 13 per cent planned for next; followed by India (11.18 per cent and 12.13 per cent), Indonesia (10.4 per cent for both 2012 and 2013), China (8.7 per cent, 9.5 per cent), and Malaysia (6.2 per cent, 6.1 per cent).
India tops the ranking of regional variable bonus payments with 4.41 per cent months for 2011 and 4.27 months forecast for 2012, followed by China (3.3 and 3.9), Indonesia (3.1 and 2.9), Thailand (2.7 for both 2012 and 2013) Malaysia (2.4 months for both years), Singapore (2.4 and 2.1), and Vietnam (2 months for both years).
All countries included in the survey registered double-digit staff turnover rates in 2011, except Indonesia where the rate was 8.2 per cent. Companies in Malaysia suffered the most with 16.4 per cent of their employees leaving their organizations last year, followed by 15 per cent in Thailand, 14.3 per cent in Singapore, 13.9 per cent in China, 13.5 per cent in India, and 12.6 per cent in Vietnam.
( Nationalmedia & Thai Summit International Law Office)