Thai Government OKs Minimum Wage Increase, Key Industries Raise Concerns

After more than two years, the Thai government approved the Labor Ministry’s request to increase the minimum wage by 5% to 8%, according to a press briefing reported by Nikkei Asia on Sept. 13.

Effective on Oct. 1, the new rate for the minimum daily wage will range from THB328-THB354. It will be divided into nine regional zones based on the kingdom’s current economic status. Workers in major cities such as Bangkok, Phuket, and Chiang Mai can expect an increase of 8% (THB354). On the other hand, those working from provinces such as Yala, Pattani, Narathiwat, Nan, and Udon Thani will receive an average increase of 5% (THB328).

Despite the good news for working consumers, companies from key industries involving agriculture, construction, and hotels raised concerns about the rising prices of commodities and other major necessities. They worry about their profits as the economy has just started to recover from the COVID-19 hiatus after nearly three years.

Moreover, Thailand’s economy is perceived as “fragile” due to higher prices on food and fuel caused by the Russia-Ukraine war. The Kasikorn Research Center, a think tank affiliated with Kasikorn Bank, stated that an increase in wages will significantly affect labor-intensive agriculture, retail, restaurant, construction, garment, and hotel industries, garnering 5% to 15% smaller profits.

Last year, Thailand’s economy expanded by 1.5%, but its headline inflation rate hit a nearly 13-year high in August at 7.86%. This year, the Ministry of Commerce forecasted that inflation for the kingdom would reach 5.5% to 6.5%.