Thai SMEs threatened by proposed minimum wage hike and high loan rates

The Federation of Thai Industries (FTI) warned that small and medium-sized enterprises (SMEs) could be significantly affected by the proposed daily minimum wage hike and high loan interest rates. This comes as the government persists in its efforts to increase wages.

Towards the end of 2023, a resolution was reached by the tripartite wage committee, composed of representatives from the government, employers, and employees, to increase the wage by an average of 2.37%. This equates to a daily increase of 2-16 baht. This adjustment came into effect on the first day of this year.

However, Prime Minister Srettha Thavisin voiced concerns that this increase may not suffice for workers in the southernmost provinces. He pledged to implement a more balanced wage increment and argued that it’s unnecessary to confine minimum daily wage increases to once a year.

Apichit Prasoprat, vice-chairman of the FTI, expressed fears that more than one annual wage increase would shock the business sector.

“Many SMEs certainly cannot afford to pay for a higher wage amid more financial costs caused by loan interest rates that increased to 7.3%.”

Post the 2.37% wage increase, workers in Phuket receive the highest daily rate in the country – 370 baht. However, Yala, Pattani, and Narathiwat workers in the far South receive the lowest revised daily wage of 330 baht.

The Pheu Thai Party, which heads the coalition government, has previously proposed a daily wage hike to 600 baht by 2027, starting with an increase to 400 baht next year.

Apichit raised concerns that higher operating costs, fuelled by increased daily wages, will inflate prices, especially within the food and beverage sectors. According to the FTI, nearly half of the 46 industries are labour-intensive, with the farm produce and food processing industries being the most impacted.

Moreover, around 50% of these industries already pay a daily wage of 600-700 baht, as their payment structures are based on worker skills, reported Bangkok Post.