2,500 jobs axed as daily wage hike bites
Cabinet okays package to help 300,000 SMEs
- Published: 9/01/2013 at 12:00 AM
- Online news:
Almost 2,500 workers were laid off in the first five days after the 300-baht daily minimum wage was enforced nationwide on Jan 1, Labour Minister Padermchai Sasomsap says.
The minister's remark came on the same day that the cabinet approved a package it claimed would ease the strain on the almost 300,000 small- and medium-sized enterprises (SMEs) and create about 320,000 new jobs.
Mr Padermchai quoted the Social Security Office (SSO) as reporting that 2,479 workers were laid off from Jan 2 to 6 after the wage increase took effect.
The 300-baht minimum daily wage had already been in effect since last April in seven pilot provinces, including Bangkok. There were 243,141 workers laid off from April to December last year, the minister said.
The cabinet Tuesday approved a package to ease the wage strains.
Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong said the package involves:
- Corporate tax exemption for the first 300,000 baht of profit, up from 150,000 baht for SMEs with revenues of less than 30 million baht a year.
About 210,000 SMEs will benefit from this measure while the government is expected to lose 2.8 billion baht a year.
- A reduction in the tax paid by small-and medium-sized hotels from 80 baht per room to 40 baht per room for three years. This measure will cost the government some 14.16 million baht a year.
- An increase in the budget for civil servant training to match the current economic situation. Job training and seminars held by state agencies are typically organised in provincial hotels.
- The extension of measures already in place in the seven pilot provinces.
These measures will be extended until Dec 31 this year across all provinces.
Among those measures is the Social Security Fund (SSF), which is providing 10 billion baht in soft loans to boost the liquidity of SMEs.
Other measures include: reducing employers' contributions to the SSF from 5 per cent to 4 per cent; tax deductions of 1.5 times that of wage hike payments; soft loans from the SME Bank; and guaranteed loans from Thai Credit Guarantee Corporation.
Mr Kittiratt said the cabinet also authorised the Finance Ministry to study the feasibility of cutting the withholding tax for SMEs from 3 per cent to 0.01 per cent as requested by the private sector.
"The rate request is quite high," he said. "The government has offered a slight cut from 3 per cent to 2 per cent."
He said the measures will alleviate the wage hike strain for 210,000 SMEs and allow an additional 80,000 SMEs to access loans. The measures should create about 320,000 new jobs, he added.
Prime Minister Yingluck Shinawatra said Tuesday there could be other causes of the job losses and she has ordered the Commerce Ministry to look into it.
She said her government would figure out how to assist strained businesses.
Ms Yingluck, however, stood firm that the minimum daily wage hike was needed. Workers could not afford the rising cost of living, she said, and a boost to overall purchasing power will be healthy over the long run.
Adjustments need to be made to cope with the transitional period, she added.
Mr Padermchai said some larger enterprises were turning to outsourcing to avoid taking care of employees' welfare.
He stressed that workers of subcontractors are also eligible for the minimum daily wage. Violators could face a jail term of up to six months and/or a fine of up to 100,000 baht, he warned.
He also pointed out that employers could not change their employment terms without the consent of their employees.
However, Mr Padermchai said that in general he had heard from large-scale employers that they had no plans to cut their employees' welfare or outsource their workforces.
He said most operators were more concerned with declining overseas orders and the rising cost of raw materials.
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Writer: Penchan Charoensuthipan, Chatrudee Theparat & Patsara Jikkham