Wage hike 'won't cripple businesses'

Wage hike 'won't cripple businesses'

Kittiratt vows steps to ease firms' burden

Workers locked out: A sign at Veena Garments' factory in Saraburi province prohibits employees from entering the premises after the company decided to shut down without notice on Tuesday, the day the nationwide minimum wage increase took effect. (Photo by Thiti Wannamontha)
Workers locked out: A sign at Veena Garments' factory in Saraburi province prohibits employees from entering the premises after the company decided to shut down without notice on Tuesday, the day the nationwide minimum wage increase took effect. (Photo by Thiti Wannamontha)

The government's blanket enforcement of the 300-baht daily minimum wage will bolster businesses rather than cripple them, Finance Minister Kittiratt Na-Ranong says.

He said, however, measures to ease impacts from the policy will be tabled before the cabinet next week.

Mr Kittiratt, who is also deputy prime minister, made the remarks after meeting representatives from nine economic ministries and agencies to assess the world and local economic situation at Government House Thursday.

He conceded the government was concerned by the possible impacts of the minimum wage policy, which has been in force across the nation since Tuesday and would closely monitor its consequences.

The government is confident the wage hike will not cause private firms to shut down since it has received the support of both the Federation of Thai Industries and the Chamber of Commerce, he said.

Kittiratt Na-Ranong (Photo by Kosol Nakachol)

The 300-baht minimum wage was introduced in seven pilot provinces including Bangkok in April last year. Mr Kittiratt said it had not caused any significant impact in terms of business operations or employment.

Instead, several companies have enjoyed more benefits from the policy because it has helped boost the public's purchasing power, Mr Kittiratt said.

Labour Minister Padermchai Sasomsap said only five major business operators have closed since the wage hike went into effect in the pilot provinces, causing about 1,700 workers to lose their jobs.

He said he will meet Mr Kittiratt tomorrow to discuss additional measures to help businesses, particularly small- and medium-sized ones (SMEs), which have been affected by the minimum wage hike before seeking cabinet approval next week.

Mr Kittiratt said the Finance Ministry will seek the cabinet's approval on measures to ease the impact of the wage hike on Tuesday.

Initially, the ministry agreed on at least 15 measures. Of them, 11 are those which were previously approved for businesses in the seven pilot provinces. These measures will be extended for another year and will be offered to business operators in the 70 other provinces.

The measures include a reduction in employers' contribution to the Social Security Fund from 5% to 4%, as well as tax deductions equal to one and a half times the added labour expenses resulting from the wage hike plus two times the cost of skills training expenses.

The government will also allow companies access to low-interest loans from a 20-billion-baht fund.

The four other measures include reductions in various official fees collected from businesses; provision of intensive workers' skill training; reductions in rent on state land and properties for business activities; and stabilisation of goods prices.

Other proposed measures which have yet to be finalised include financial assistance to firms with more than 200 workers.

The wage hike has drawn mixed reactions. Major businesses have welcomed the policy since they have enjoyed corporate tax cuts from 30% to 23% last year and a further cut to 20% this year while SMEs which have been affected by the extra wage burden have opposed the policy.

On Wednesday, more than 200 workers of an underwear-making company in Saraburi held a protest against the company's abrupt closure of its factory. The workers say the company is trying to avoid paying the new wage rate.

Kittipong Laoniphon, Saraburi Labour Office chief, said the executives cited a big drop in orders from foreign customers, not the 300 baht minimum wage, as being behind the decision to close the factory.

Nattaya Saengsakul, a senior official at Buri Ram Provincial Labour Office, said yesterday that two garment factories in the province have also laid off 120 workers since the wage hike.

The Democrat Party yesterday urged the government to devise a plan to cushion impacts caused by the wage increase.

The party's deputy spokesman Malika Boonmeetrakul said the wage hike will hurt workers, and accused Prime Minister Yingluck Shinawatra and Labour Minister Padermchai Sasomsap of doing little to ease their hardship. She said the wage increase policy is likely to cause 100,000 people to lose their jobs.

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