Despite being in office for only two months, the Pheu Thai-led government has made progress on several campaign pledges including plans to raise salaries for civil servants and the daily minimum wages for unskilled workers, although the timeframe set for these changes is within four years.
On the proposal to increase the pay of low-salaried state officials, the government said a study is being conducted on whether to increase salaries for civil servants and those working for the government.
The Labour Ministry is working on the daily wage hike. According to Labour Minister Phiphat Ratchakitprakarn, the minimum daily wage will be raised by the end of next month, but to a rate below 400 baht, while the promised 400-baht rate will come later, around the end of next year in certain provinces.
Given that the Pheu Thai Party plans to implement these policies over a four-year period, the government’s push after two months in office has spurred chatter about whether the economy is truly prepared for such changes.
Some argue that bumping up people’s pay is a necessary step to improving their well-being, while others contend it is a political strategy to strengthen and expand the party’s support base.
The Bangkok Post took a closer look at the salary increase and wage hike plans, exploring arguments by economists, political scientists and the government, with some experts cautioning that the hikes should be gradual rather than sweeping.
Addressing needs
Assoc Prof Yutthaporn Issarachai, a political science lecturer at Sukhothai Thammathirat Open University, backed pay raises for low-salaried civil servants and workers but said challenges await in putting these policies into practice.
The pay hikes for state officials will place a big burden on the state budget as a larger portion of the national spending plan will be allocated for this item which could affect other areas of expenditure. Some 100 billion baht could be needed to cover pay hikes for state officials.
He said while giving unskilled workers better pay is a way to ensure fairness, it can affect the economy. So the government must step up measures to control the prices of goods.
“Still, these policies are short-term. Unless the government addresses structural problems, this issue will recur. The plan to guarantee a monthly salary of 25,000 baht for new graduates is harder to do. It’s hard because it must not have repercussions,” he said.
Assoc Prof Yutthaporn said the ruling party is under pressure to implement these policies including the 10,000-baht digital wallet scheme. If the government fails to launch any of these, it will affect the public confidence and the party’s support base.
“When Pheu Thai switched political alliances, many people shifted their support away from the party. These policies will be make-or-break for Pheu Thai as to whether it can keep its political base,” he said.
The academic did not perceive these policies as currying favour or a calculated move to win support at the next election as some critics suggested. Since 1997, every party has adopted such approaches to engage with the public, he said.
If the government can implement key policies with real results, the ruling party can expect a boost in popularity, he said. However, the role of the main opposition Move Forward Party (MFP), which is being rocked by scandals, remains an influential factor.
“If the MFP can’t get its house in order and the government policies prove to be a flop, the ruling party may not experience an increase in popularity. If the policies prove successful, Pheu Thai has a chance,” he said.
Delivering promises
Sorawong Thienthong, Pheu Thai’s secretary-general, said the government is actively working to boost GDP, and laying the foundations for implementation of pay rise policies for unskilled workers, civil servants and new graduates.
“We must rejuvenate the economy because the wage increase is a double-edged sword. We look at it from the perspective of employers and workers. When the economy is better, pay rises will be made gradual as we promised,” he said.
Mr Sorawong said the salary increase plan for civil servants is unlikely to be carried out in the 2024 fiscal year because the period for submitting requests for budget allocations is closed. Asked if the policy is a political strategy to win over voters, the party’s secretary-general said it is indeed perceived as such from a political perspective but the government is committed to delivering its campaign promises.
“Of course, the party’s support base will be affected if we can’t pull it off. But we’re confident we can put them into practice despite pressure and resistance,” he said.
Deputy Pheu Thai leader Jiraporn Sindhuprai said the party is obliged to do as it promised.
Citing the global situation, she said inflation will rise and push up the cost of living regardless of whether the minimum wage increases. Such economic hardship makes it difficult for people to survive, said the MP for Roi Et.
“Several countries are considering raising wages even though they face inflation. But we don’t plan to increase wages all at once and we want to make the economy grow by 5% on average, too. When businesses make profits, they can offer a bigger wage,” she said.
Ms Jiraporn said the party conducted research on the pay raises before formulating them into policy.
Gradual increases urged
Assoc Prof Yongyuth Chalamwong, researcher from the Thailand Development Research Institute, agreed with the minimum wage hike in principle and believed the tripartite committee would find a reasonable rate.
He said some industries are still adjusting to the impacts of the Covid-19 pandemic, relying on technology to maintain productivity. Moreover, poor economic growth figures raise concerns about businesses’ ability to increase wages for their workers.
He doubted the proposed 400-baht minimum wage, which is nearly 20%, will be approved considering that previous wage hikes typically ranged from 5% to 8%. Additionally, in some provinces the provincial wage committees did not seek wage adjustments, so as to prevent layoffs.
According to Assoc Prof Yongyuth, a key factor in determining wage rates is the majority of industries operate as Original Equipment Manufacturers (OEM), producing based on orders, and so are unable to set higher prices in the competitive market. The high cost of living makes the situation worse for low-income workers.
He said that if the government starts at a 10% wage increase and implements the hikes gradually over following years, together with structural reforms to boost productivity, the wage level in 2027 is likely to be close to the 600-baht benchmark without causing severe impacts.
Nauvarat Songswaddichai, deputy secretary-general of the Federation of Thai Industries, called on the government not to intervene in wage rises, which are reviewed by the wage committee.
She echoed Assoc Prof Yongyuth’s concerns about the potential impact of a sharp wage rise on competitiveness. During economic slowdowns and uncertainty, consumers tend to spend less, so businesses’ priority is to stay afloat and retain workers as long as possible.
Ms Nauvarat said the government also needs to regulate the price of essential consumer goods and cut expenses including travel costs for various groups.
Wirote Chuachanwong, an office worker, welcomed the government’s pay rise plan, but said that if the government fails to control the price of goods, the wage increases will not be effective.
“Who doesn’t want a better pay? People were struggling during the Covid-19 pandemic, and now we have the Ukraine-Russia conflict. A pay rise is necessary, but without comprehensive measures it will make no difference,” he said.
Mr Wirote said the Covid-19 pandemic made many realise that working in the public sector is more secure.
During the past 10 years, many private employees were laid off without compensation, and those who were fortunate to keep their jobs are uncertain about their future. Hopes of getting a salary increase or a bonus are but a pipe dream, he said.