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Thailand: Academics urge labour-friendly changes to wage committee
Bangkok Post

July 13, 2011
View the Original Article


It is difficult to imagine how a minimum wage earner in Bangkok can raise a family comfortably, given the high cost of food, housing and transport in the capital. So it was no surprise that Pheu Thai's campaign pledge of a 300-baht minimum wage proved popular with workers.

However, the promise is meeting with heavy resistance from businesses, which warn higher operating costs could lead to a new wave of layoffs.

Others doubt whether the plan can be carried out under the existing system, in which a tripartite committee of civil servants, businesspeople and labour representatives reviews and recommends wages each year.

Lae Dilokvidhayarat, director of Chulalongkorn University's Labour and Management Development Centre, said the tripartite committee needed tweaking to ensure workers are treated more fairly in terms of compensation.

"The government needs a more socially oriented approach rather than relying on market mechanisms when it comes to setting wages, as the current system is biased toward employers," he said.

The Thailand Development Research Institute said the minimum wage has increased by an average of 2.4% annually over the past 13 years, peaking at 9% from 2007-08, followed by 7% this year.

Pheu Thai's promise represents a 40-90% hike in current minimum wages, which now range from 159 baht a day in Phayao to 215 baht in Bangkok and 221 baht in Phuket.

Assoc Prof Lae said the criteria used by the tripartite committee were contradictory and unfavourable to employees' bargaining power.

For example, the Labour Protection Act stipulates the panel consider hard data on existing wages, the cost of living, living standards and economic growth while also taking into account production costs, the cost of goods and services, business capability, productivity and economic and social conditions.

"The criteria for setting the minimum wage cancel each other out. And employee representatives have inferior bargaining power, as they are not well represented, plus the discussions are technical," he said.

"The government must intervene more forcefully in market mechanisms, overhaul the tripartite committee or shift to another system."

He said previous increases in the minimum wage did not let the workforce reap the benefits of development.

Some 2.4 million people make the minimum wage.However, some firms adjust their employees' salaries relative to minimum wage increases.

"A fairer rate of adjustment would see the increase catch up with gross domestic product plus inflation, plus adding margins to close the wealth gap. For example, it might track GDP growth of 4%, inflation 4%, and a certain margin set by the government," he said.

Bundit Thanachaisethavut, a labour rights researcher, said political parties campaigning for a minimum wage increase represented a first.

"While this is a positive development, I doubt the practicality of a big increase under the tripartite system," he said.

Mr Bundit said workers' demands for improved compensation were respected more in the wake of the October 1973 political uprising, but minimum wage increases have been very slow in coming.

The minimum wage system and the tripartite committee were both introduced a year earlier.

"From 1973-74, the country paid the lowest wage among Asean countries, and this was promoted as a strong point for the country's industrial development," said Mr Bundit.

However, the International Labour Organisation has endorsed the tripartite system as an international criterion for setting minimum wages, he added.