Government approves minimum wage hike ( + 5 %)

The national wage committee held a meeting this morning to approve the minimum wage increase by two to 11 baht, with a nine baht increase in Bangkok. The wage increase will come into effect in June.

At a meeting of the national wage committee today, Labour Minister Uraiwan Thienthong said the minimum daily wage has been increased by two to 11 baht nationwide, with the highest hike of 11 baht in Chiang Rai. Bangkok sees the minimum wage go up by nine baht. The hike comes into effect on June 1. The wage hike is in line with the workers’ request of a five per cent or nearly 10 baht increase, from the current rate of 194 baht. (TO)

It’s not a surprise. And the bad inflation figures released for april did make the case. And the government, with its populist agenda, couldn’t refuse. Next step : wages of civil servants…

However, the lunacy is still very vivid :

Federation of Thai Industries President, Santi Vilassakdanont, admitted that a rise in minimum wage could have a slight effect on the operation costs for businesses. He said the average labour cost accounts for three to four per cent of total operation costs, which is lower than raw material costs at 40 to 50 per cent of total costs.

Santi expects the daily wage increase will not affect the inflation rate too much, and that manufacturers will not raise the selling prices of their products following the revision, because labour payments are not a key expenditure for firms.

Increases of wages always fuel inflation. Always.

And anyway, a hike of 5 % is peanuts… The official inflation rate is already higher (6,2 % in april, year on year). And prices of many products and services are about to increase…

It’s the inflation tsunami on the move.

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