Thailand's Proposed Minimum Wage Hike to 400THB Concerns SMEs

Thailand's proposal to raise the minimum wage to 400 THB (11.7 USD) a day has created questions about how it might affect SMEs, who employ more than 90% of the nation's workers.

Whereas a rise in wages is thought to be essential for improving worker well-being and growing living expenses, experts caution that SMEs may find it difficult to adapt to increased labor expenditures.

According to Xavier Estupiñan, Wage Specialist at the ILO Regional Office for Asia and the Pacific, the impact varies by region and might be anywhere between 8% and 21%, depending on the province.

"An impact assessment on SMEs is always necessary," Estupiñan emphasized, adding that although larger enterprises can find ways to offset the wage hike, SMEs might find it difficult to bear the first load of labor costs.

Estupiñan said, “In the longer run, these businesses can also use this as an opportunity to become more efficient and invest in higher-value activities”

The Thailand Development Research Institute's Visiting Research Advisor, Nuttanan Wichitaksorn, expressed similar worries but pointed out that many SMEs use informal employment methods and that the wage increase might encourage these businesses to formalize their labor structure.

The restricted capacity of SMEs to implement new business practices or technologies to reduce labor expenses is one of their main obstacles.Nuttanan Wichitaksorn, Visiting Research Advisor at the Thailand Development Research Institute said, "SMEs will have to consider ways to adapt, such as using technology to supplement labour, not replace it, but make it more efficient"