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Higher living costs eat up hike in daily wage

Publication Date : 01-05-2012


The Labour Ministry of Thailand will monitor the cost of living over the next three months to determine if any additional adjustment is needed to the minimum daily wage.

From April 1, workers in seven provinces of Thailand have already earned at least 300 baht (US$9.7) a day thanks to a significant hike pushed by the Pheu Thai-led government and approved by the Central Wage Committee.

And the daily minimum wage will soar to 300 baht in 70 other provinces from next January.

However, a recent survey suggests workers have not really benefited from the significant wage hike because product prices have also jumped.

"I have already signed an order instructing provincial labour chiefs to survey the cost of living in their respective provinces within three months," permanent secretary at the Labour Ministry Somkiat Chayasriwong said. This should |be done within three months.

"In July, we should obtain information to determine how to tackle problems relating to the cost of living."

The Bank of Thailand said yesterday inflation was expected to be 3.7 per cent over the next 12 months, up from 3.5 per cent in February.

Energy Price the Problem?

However, Somkiat yesterday sought to downplay growing criticism that the government policy to raise the daily minimum wage had pushed up the cost of living.

"The main factor behind the soaring cost of living is the increasing energy price," he said.

Somkiat said when the energy price rises, the electricity price, bus fares and transport costs climb too.

"But on the bright side, the increased wage has eased the expense burden on workers," he said.

Somkiat said workers would be suffering more if the daily minimum wage had not increased significantly.

He said the move to push for a 300 baht a day minimum wage took into account the fact workers have struggled with soaring costs in the past. "Their debt problems have accumulated over years."

While the Central Wage Committee planned to not raise the daily minimum wage for two years after the rate reached 300 baht, the committee would review the plan if needed. "If the cost of living has drastically changed, a review is possible," he said.

Thailand Development Research Institute (TDRI) labour-development research director, Dr Yongyuth Chalamwong, said the current wage-hike policy could endanger many businesses and make workers uncomfortable.

The policy, after all, also involved two years of no wage hikes afterward.

"It won't be really fair to workers because the cost of living will keep rising," Yongyuth said.

He believed it would be better if the government gradually increased the wage as that would mean employers had more time to adjust.

Yongyuth recommended three options for authorities to consider. One was in line with a suggestion by the Federation of Thai Industries (FTI), which suggested the daily minimum wage of 300 baht should take effect across the country in January 2015. For provinces where the daily minimum wage was already above 300 baht by then, it should be adjusted up - in line with the consumer price index (CPI), which the Commerce Ministry compiles every year.

Wage Adjustment Called For

Two other options recommended by Yongyuth also call for adjustment to the daily minimum wage based on the CPI. Without such adjustment, no matter how much the wage rate soared, it was possible remaining workers would become poorer.

Although there's much debate about true benefits of the government policy to provide the 300 baht daily minimum wage, Prime Minister Yingluck Shinawatra plans to highlight it today - Labour Day. "We have already raised the daily minimum wage to 300 baht in seven provinces. We are going to ensure the same rate for other provinces by 2013," she said.

The National Congress of Thai Labour and the Thai Labour Solidarity Committee are set to hold separate rallies and seminars to mark Labour Day. They are preparing to call attention to workers' grievances, especially soaring product prices.

More than 40 per cent of the labour force say they are facing greater hardship than last year after being affected by the great flood and the rising cost of living, according to the latest survey by a Suan Dusit Poll. The poll was conducted between April 25-30 and involved 1,440 workers in major provinces around the country.

Asked how their living conditions compared to 2011, 44 per cent said they faced more hardship as a result of last year's flood and the higher cost of living; 32 per cent said living conditions were about the same; and 24 per cent said things had improved following a wage rise and promotion.


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