Comment: Wage Hikes

We’ve touched on this topic here before, now despite what I hear from a lot of of the public saying that increasing minimum wage is a bad thing, I completely digress. Yes I understand some business margins will drop, yes I understand some companies will make less money, yes i understand that there will be a knock on effect to the other employees within a company (i.e. everyone’s salary has to increase), but oye salaries in Thailand haven’t changed for the past 10 years, while basic food prices and gas prices have gone up, this increase in minimum wage will finally force Thai companies to become more productive, it’ll finally force Thai companies to upgrade themselves, it’ll finally force Thai companies to think “ohhh perhaps yes I should invest in machinery that can replace the work of 20 people.” Is unemployment going to hit the roof? No! Officially the unemployment rate is what .. 1%? And there are still plenty of new businesses popping up here, there are still plenty of foreign investment looking to come into Thailand, stop complaining and just move with the times.

Impact on equities? Quite moot..a lot of the manufacturers have already been paying their employees above minimum wage for the past few years, but in the non-publicly listed equity space, yes perhaps a few low-valued added manufacturers will suffer.

The government’s policy to raise the daily minimum wage to 300 baht in the remaining 70 provinces will definitely take effect on Jan 1, 2013, Labour Minister Phadermchai Sasomsap confirmed on Wednesday afternoon.

Source: Bangkok Post

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