Minimum wage increase pledge sparks hotel industry crisis

Photo courtesy of The Nation

Prime Minister Srettha Thavisin’s promise to increase the minimum wage to 400 baht by October 1 has set off alarms in the private sectorparticularly among hoteliers.

Concerns abound as businesses foresee a hefty 15 to 20% surge in costs across goods and services, presenting a formidable hurdle for the hospitality sector.

The impending wage revision marks the third adjustment this year alone. The initial increase, rolled out on January 1, nudged the minimum wage to an average range of 330 to 370 baht per day, contingent on provincial variations.

Subsequently, a second increment, implemented on April 13, elevated daily wages to 400 baht exclusively in 4-star and above hotels across ten tourist provinces. This increment applied to hotels boasting a workforce of at least 50 individuals.

However, the proposal has encountered fierce opposition, with 76 chambers of commerce and 54 trade associations voicing dissent, citing apprehensions regarding potential detrimental effects on commercial enterprises.

Presently, Thailand’s hotel industry employs approximately 461,000 individuals, already bracing for the upcoming wage surge. Establishments in renowned tourist hotspots such as Phuket and Hua Hin have pre-emptively embraced the wage hike since April.

Perajit Binsomprasong, aka Peter, a seasoned hospitality industry veteran, sheds light on the current salary landscape within hotels, asserting that wages typically range from moderate to high. He elucidated that the basic wage for hotel personnel typically commences at 12,000 baht monthly, coupled with a yearly increment.

When factoring in service charge shares, averaging around 12,000 baht monthly, overall salaries soar to nearly 25,000 baht per month, substantially exceeding Thailand’s average monthly income of 14,315.37 baht.

Nonetheless, Perajit cautioned that the proposed wage hike to 400 baht would engender a 15% upswing in hotel expenses, potentially triggering a ripple effect on consumer goods prices. This, he noted, could force smaller hotels into resorting to cost-cutting measures, potentially burdening existing staff with additional responsibilities.

While the government envisions businesses aiding in reskilling and upskilling initiatives, craftsmen underscored the logistical challenges posed by the existing 48-hour workweek, advocating for labor law revisions to trim working hours to 40 per week.

Furthermore, Thienprasit Chaiyapatranun, president of the Thai Hotels Association (THA), echoed concerns about the broader economic ramifications, particularly in provinces with scant incomes and diminished tourism demand, reported The Nation.

The THA president appreciatively envisioned scenarios of staff layoffs and resignations amid increased duties, warning of a bleak outlook for third-tier provinces.

ORIGINAL STORY: Thai govt’s minimum wage hike to 400 baht faces opposition

The government’s recent announcement of an impending nationwide minimum wage hike to 400 baht per day in October has provoked strong opposition from a member of the tripartite wage committee. The committee member in question, Atthayuth Leeyavanich, who represents employers, criticized the premature disclosure of the wage increase, asserting that it had not yet been discussed or approved by the committee.

Atthayuth expressed confusion over the origins of the wage hike proposal, stating that the committee had only agreed to conduct a study on profession-based adjustment at its April 14 meeting. Atthayuth further suggested that Labor Minister Pipat Ratchakitprakarn, who publicized the increase on International Labor Day (May 1), may have been misinformed.

“At the April 14 meeting, the committee agreed to conduct a study on a profession-based adjustment.”

The last wage increase, which only impacted tourism-related businesses and four-star hotels in 10 select provinces, underwent rigorous study before receiving approval, Atthayuth added.

“As for the profession-based adjustment, we need a study first and the committee will meet on May 14 to discuss the scope of the study and how long it will take.”

Atthayuth also highlighted that any changes to the daily minimum wage must abide by Section 87 of the Labor Protection Act. If the proposed rate complies with this law, the committee is prepared to support it.

Wage increase

Another wage committee member representing employees, Weerasuk Kaewboonpun, corroborated Atthayuth’s account, stating that the April 17 meeting did not entertain any proposal to increase the daily minimum wage to 400 baht (US$11).

“The PM criticized the two-baht increase as unacceptable because it couldn’t buy half an egg. But I asked him why the government didn’t try to lower egg prices. The goods’ prices are tied to the wage.”

Weerasuk further implied that the wage increase was simply an election promise and that the labor minister’s announcement could not exert pressure on the tripartite wage committee. He revealed that provincial committees were tasked with gathering information for the next wage hike and submitting it for review before October.

A Labor Ministry insider disclosed that businesses and trade associations are arranging a meeting with the labor minister to voice their opposition to the new wage hike, not to discuss it. They are even considering taking the matter to the Administrative Court if the government persists with the wage increase.

Meanwhile, Prime Minister Srettha Thavisin stands firm on the government’s policy to raise the daily minimum wage and commends the labor minister for his endeavours. The business community, however, remains against the plan, reported Bangkok Post.

They argue that wage adjustments should be based on worker’s skills and only be implemented in businesses and provinces that are ready to pay higher wages. They also harbor concerns about potential job losses if the wage increase imposes excessive stress on employers.

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