Thai shippers forecast modest growth amid wage increase concern

The Thai National Shippers’ Council (TNSC) projects a 1% to 2% growth in exports for the current year and urges a thoughtful approach to the proposed increase in the daily minimum wage, supplemented by government support via the wage committee mechanism.

TNSC chairman Chaichan Chareonsuk anticipates a 1 to 2% increase in the nation’s exports by March this year. Chaichan advises close monitoring of the Israel-Hamas conflict due to its potential to intensify and include other regional countries.

The chairman warns that an expanded conflict causing the closure of the Strait of Hormuz, the most significant global oil route, could disrupt worldwide trade. Alongside this, production costs, including a proposed hike in the daily minimum wage to 400 baht (US$11), the costs of oil and electricity, the Bank of Thailand‘s interest rates, increased freight costs, and drought impacting agricultural production, are other areas of concern.

The council recommends government assistance to shippers for risk insurance, which includes exchange rate risk in response to financial market fluctuations and the potential payment defaults by the country’s trading partners due to an economic downturn.

Chaichan highlights how a sudden increase in the daily minimum wage could negatively impact labour-intensive industries and small to medium-sized enterprises (SMEs) that cannot rapidly transition to capital-intensive industries.

The chairman calls for government intervention to manage production costs to maintain Thai entrepreneurs’ competitiveness amidst a global economic slowdown. He also suggests the government implement supportive measures for entrepreneurs through the wage committee, keeping in mind the potential effects on the overall economy and employment.

Chaichan advises that the proposed daily minimum wage increase should consider the varying cost of living across provinces and the productivity of the labour force. He recommends any wage increase be gradual, aligned with workers’ skills, and calls for government support in enhancing Thai workers’ productivity and innovative abilities.

The chairman also proposes the establishment of joint investment funds by the government for companies needing to boost their liquidity to hire skilled workers, improve their production processes, and increase competitiveness, reported Bangkok Post.

In the first quarter of the current year, export values amounted to US$71 billion, marking a 0.2% decrease year-on-year. Import values reached US$75 billion, a 3.8% increase, resulting in a trade deficit of US$4 billion, as reported by the council.