Minimum wage laws have long been a contentious topic among academics, businessmen, and lawmakers. They increase the cost of hiring low-paid workers, which in some situations may increase unemployment even while they guarantee workers a minimum pay. The results of empirical studies on the effects of minimum wages are contradictory. There have been detrimental effects on employment in industrialised nations including the United States, the United Kingdom, and Australia.
Because of the magnitude of their informal sectors and significant non-compliance with minimum wage legislation, analyses of emerging nations are more difficult. Studies on the effects of minimum salaries in emerging nations like Indonesia and Brazil abound, but there is little information available for Thailand. According to one study, Thailand's 2013 increase in the minimum wage had no effect on overall employment.
The 300 baht (US$8.64) minimum daily wage programme was introduced in 2011 by the newly-elected government headed by Yingluck Shinawatra. Since the first minimum wage law was implemented in Thailand in 1973, this was the country's greatest minimum wage increase. In addition, this was the first time since 1972 that the minimum wage was the same across all provinces, regardless of cost of living or other socioeconomic factors. Many professions and economic activities, such as those involving government officers, employees of state-owned enterprises, domestic workers, maritime workers, and agricultural workers, are not covered by the minimum wage law, in contrast to other regulations like the universal health care system and pension.
Age, education, country, colour, and sex are not factors in minimum wage laws, which vary by location. The protection of freshly employed workers is one of the law's main requirements. Because they develop skills and are more productive, employers are required to compensate employees with more experience than the minimum wage.
The 2013 minimum wage change raised average daily earnings, per capita income, consumption expenditures, and the number of paid days of employment. However, because of the widespread non-compliance with minimum wage rules in Thailand's economy, disadvantaged households are less likely to benefit from this reform.
About 2.6 million migrants live in Thailand, mainly from Laos, Cambodia, and Myanmar. Manufacturing, fishing, construction, and household work are where most migrant workers are employed. These jobs fall within the categories of being filthy, risky, and challenging. The majority of migrant workers in Thailand make salaries that are equivalent to the minimum wages set by the government, but given the slow economic recovery from the current pandemic, a big flood of migrants may not arise from the raised minimum pay.
International commerce and export growth have fueled Thailand's economy during the past three decades, which has been fueled by global value chains. Thailand's increased engagement in global value chains is mostly due to its relative cost advantage, which is driven by reduced labour costs.
Wages are not the only significant criterion for drawing additional investment into Thailand, despite the possibility that a raise in the minimum age could put pressure on corporate costs. Relocation requires time and money since there are significant sunk costs associated with investing abroad and because parts and components must be acquired elsewhere. Due to rising labour costs in China, the COVID-19 epidemic may hasten the process of production shifting elsewhere.
In terms of alterations to the daily salary, the 2022 increase in the minimum wage is less significant than the 2013 revision. Because the economic conditions are fundamentally different, it also does not ensure beneficial outcomes for employees, particularly low-paid, low-income earners. Thailand's economy grew by between 2.7 to 7% annually in the early 2010s, while the jobless rate was just over 0.5 percent. Thailand's economy, which has been negatively impacted by the COVID-19 pandemic, is anticipated to increase by 2.9% in 2022 and 4.2% in 2023. In comparison to other nations in the region, such as Vietnam, the Philippines, and Indonesia, which are projected to grow by 5-7% in 2023, this is relatively low. The highest in twenty years, Thailand's unemployment rate in 2021 was 1.4%. The problems brought on by the ageing of its population, the scale of its informal sector, and its severe income disparity have been made worse by this.
Conclusion
The pandemic has had a severe impact on the Thai economy. Low-wage, unorganised employees are suffering greatly. It is still unclear whether Thailand should raise the minimum wage at this time considering the burden it could place on small and medium-sized businesses in this tumultuous environment. On the path to Thailand's economy recovering from the pandemic, the argument over the country's minimum wage rages on. Based on past experience, the National Wage Committee's announcement is anticipated to state that a "day" refers to an employee's normal working day, regardless of whether it is shorter than the "normal working hours" set by the employer under the Labor Protection Act. This is in reference to the question of whether employers can reduce the working hours in order to pay less than minimum wages (e.g., a prorated amount).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
