Price Monitoring to Cope with Impacts of the Nationwide 300-Baht Minimum Wage Hike

(16/01/2013)

The Ministry of Commerce is closely monitoring prices of consumer goods to ensure that consumers will not face higher prices related to the 300-baht minimum wage hike nationwide. The Cabinet, during its meeting on 15 January 2013 acknowledged the operations of the Ministry of Commerce to prevent exorbitant increases of consumer goods, following the implementation of the 300-baht daily minimum wage in the remaining 70 provinces on 1 January 2013. The Ministry of Commerce reported that it upholds the policy of fair prices that reflect the actual production costs. For instance, prices of fresh food usually depend on seasonal availability. Traders are required to place price tags on their products. Officials will also ensure that there are enough supplies and that the hoarding of goods does not take place. According to the Ministry of Commerce, the wage hike will boost the people’s purchasing power and lead to the sale of more products. As a result, the production cost per unit is expected to drop. Moreover, the Government has also introduced various measures to help businesses, such as a reduction in corporate income tax rates. In addition, entrepreneurs were urged to manage to reduce their production costs by increasing the efficiency of workers, which would lead to greater production efficiency and contribute to the country’s economic growth in the long run. As for the price situation in 2013, the Ministry reported that most prices were at the same level as in 2012, since prices of raw materials were likely to remain unchanged. The crude oil price is expected to stand at 100-120 US dollars per barrel, compared to 88.98-124.09 dollars per barrel in 2012. The exchange rate is expected to be 28.50-32.50 baht per US dollar, compared to between 30.38 and 32.05 baht per dollar in 2012. Meanwhile, Permanent Secretary for Labor Somkiat Chayasriwong urged both employers and workers to adjust themselves to the wage hike. With higher payment, workers need to enhance their potential to meet the expectations of their workplaces. Employers should offer opportunities for workers to equip themselves with more skills. Greater efficiency would lead to lower production costs, thus enabling businesses to continue. More modern technology might also have to be brought in to help in production. The Government has introduced the 300-baht wage policy since 1 April 2012 in seven pilot provinces, namely Bangkok, Nonthaburi, Pathum Thani, Samut Prakan, Samut Sakhon, Nakhon Pathom, and Phuket. Mr. Somkiat said that statistics compiled by the Ministry of Labor showed that, after the wage hike, labor productivity had increased by 12 percent, compared to only 2-3 percent in the previous year. This would enhance the country’s competitiveness, as Thailand would have more labor skills. When the ASEAN Community is in place in 2015, he said, Thai labor would be able to compete effectively in the international labor market.