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New twists in minimum wage debate

New twists in minimum wage debate

BUSINESS: The debate over the Pheu Thai Party’s minimum wage has been taking some interesting turns in the past week, with some surprising supporters lining up behind the policy.

Saturday 6 August 2011, 06:56AM

Support is by no means unanimous, of course. One staunch opponent of the proposed policy is the Thai Hotel Association (THA) which has expressed “concern” for three-star hotels, which it believes could be badly hurt by the stated policy to raise the minimum day rate to B300 across the country.

THA Honorary Advisor Samphan Paenpat was quoted by the Thai government news service, NNT, as predicting that some owners of three-star hotels or lower might not be able to handle the rise in operating costs, and would be forced to sell their businesses.

He said he was particularly worried about hotels in Chiang Mai, Pattaya and Bangkok where rooms on offer currently outstrip demand. The current minimum day wages in those three places are B180, B191 and B215 respectively.

Mr Samphan pointed out that labour cost would increase but hotels in competitive areas could not increase their room rates. He also noted that big-budget foreign investors, particularly from the Middle East and Singapore are just waiting to pounce on hotel businesses in Thailand that hit hard times.

THA President Prakit Chin-amourphong added that even if they wanted to, the hotels could not increase their rates for most rooms this year because they have already made agreements with tour companies and individual guests who book well in advance.

Firmly on the other side of the fence is Charoen Pokphand Foods (CP), which has expressed its agreement with the Pheu Thai Party plans, not just for the B300 minimum wage, but also the minimum B15,000 a month for fresh graduates and the proposed rice pledging scheme that has been criticised by most in the rice industry, including the farmers it is supposed to benefit.

CP President and CEO Adirek Sripratak had one caveat: that the government should prepare to give financial support to small and medium-sized enterprises that are likely to be affected by the rise in minimum wage. This is already in hand in the relevant ministries.

CP’s support is not particularly surprising – it was a major contributor to the Pheu Thai Party’s precursor, Thaksin Shinawatra’s Thai Rak Party and CP is said still to maintain a close relationship with exiled former Prime Minister Thaksin.

QSI International School Phuket

Rather more surprising, perhaps, is the support coming from the Siam Cement Group (SCG), which is controlled by the Crown Property Bureau.

President and CEO Karn Trakulhoon said that SCG supports the minimum wage plan, and is ready to implement it as soon as details of the plan are announced.

He noted that the majority of SCG workers already receive more than B300 per day, so the company will be able to adjust easily.

SCG may also be interested in presenting a friendly face to Pheu Thai because of the infrastructure mega-projects the party has announced. Mega-projects mean mega-sales of cement. Although SCG’s main business now is petrochemicals, cement and construction materials still play a significant role in determining its bottom line.

At less rarified levels of industry, smaller entrepreneurs in rural areas of Thailand are voting for the policy with action – some are already beginning to increase wages for their workers to B300 a day, the Thai Chamber of Commerce (TCC) has reported.

But TCC Chairman Dusit Nontanakorn reiterated the Chamber’s recommendation that the new government should carefully consider a wage hike for each business sector case by case, as the policy could result in both short-and long-term effects.

Over in the Finance Ministry, where officials are waiting nervously to meet their new boss, Fiscal Policy Office Director-General Naris Chaiyasoot warned gently that the new government’s policies “could have an effect on next year’s budget”.

But he added that the policies should not affect inflation rates or private investment, because the new government also has mitigating policies such as the corporate tax reduction plan. – The Phuket News/TAN/NNT

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