Thailand Minimum Wages Increase

Thailand Minimum Wage

The 300 THB flat rates on minimum wage in Thailand have raised various concerns. Corporations and business leaders have expressed alarm over what they perceived as a contributor to increasing corporate expenses that will or may already have caused problems on their respective firms’ fiscal capacities and status.

While some argue for the big firms, some do not dismiss the widely accepted fact that it is the small and medium enterprises that are being hit the most with this government policy on the minimum wage. This is high because of the fact that SMEs are heavily relying on their employees, skilled or unskilled, on getting their businesses going. SMEs are labor-intensive therefore a 40% to 70% increases in wages, depending on which provinces the SMEs are operating, can exact a huge toll on these companies as labor costs will increase several percents higher too.

Yet, the Thai government has introduced several measures to counter the multi-level increase in labor costs by decreasing the corporate tax, withholding tax and the social security fund among others. How these measures can help these firms, particularly the SMEs, remain to be seen.

Corporate adjustments will not be simple for firms already operating in Thailand. They have to make the necessary responses to comply with the policy without sacrificing a majority of their workforce or circumventing the mandates of the laws or policies.

For incoming companies, however, it may be easier for them as adjustments are done even before they will start their operations in the Kingdom.

One of the measures that these companies may undertake is to restructure their business and operations plan.

They can still plan ahead on how to maintain or increase their targeted corporate output without being overly labor-intensive firms. They also have the liberty to identify which corporate expenses that they can afford to forego or minimize and the savings of which will be utilized to buffer the effects of the wage increase.

These firms can also have more freedom to study on how they can utilize the decrease in corporate tax, withholding tax and social security fund to its full extent. Existing companies in Thailand, especially the SMEs, do not have the same room to have a favorable maneuver in such a limited time frame.

Also, foreign corporations can utilize the services of top-notch lawyers in Thailand with extensive backgrounds in corporate law even before starting their business operations in the Kingdom. This is to ensure whether their corporate restructuring as an advance response to the increase in wage still complies with the existing laws and government policies.

It may seem that enlisting the services of a lawyer with an exceptional background in Thai corporate laws is non-relating to the current issue of the wage increase. But in reality, it does relate well.

Corporations, foreign and locals alike have to operate within the bounds of the law in Thailand otherwise they may face hefty fines and even imprisonment for some corporate people. It must be remembered that circumventing or non-compliance with the law is not an option in the Kingdom.

And in closing, it is without question that companies who have yet to operate in Thailand do have the upper hand when it comes to dealing with the increase in the minimum wage as adjustments are being done even before the start of their operations.

These adjustments will not be very drastic in nature as to compare with the existing companies and SMEs which may have to let go of several key personnel just to remain in business and abide with the new policy.


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