Post-300 baht Thailand

What will changes to the minimum wage mean for the Thai working class?

Kriangsak Teerakowitkajorn

Economics and finance, Trade and industry, Social policy | Asia, Southeast Asia

14 December 2016

The decision by the Thai government on increases to minimum wage rates are an assault on the working class, and labour groups need to unify around restoring them, Kriangsak Teerakowitkajorn writes.

Good news and bad news for the working class in Thailand – which would you like first? Given the general gloomy climate, perhaps the good news? Here it is: after three years in the waiting, the Thai government has finally announced a new set of minimum wage rates, and they are an increase on previous rates.

The bad news: the new minimum wage increase is abominable. It is an insult to the Thai working class. The Thai government, under the supervision of the military junta, has decided that the lowest income workforce deserves a national wage increase of 0-3.3 per cent, with the largest increase to be concentrated in the seven most developed cities, while eight provinces mostly in the deep South are to be punished with no increase whatsoever.

Instead of a universal minimum wage raise, as a 2017 New Year present, the government promises to give a B1500-3000 lump sum (approximately US$44-$88), depending on individual annual incomes, to those on the lowest incomes, along with other social programs such as free train services during the New Year holidays.

From these measures, it is clear where the government stands in terms of economic development and its preferred means of remedying social inequality. By choosing to pay low-income households out of the public pocket in the form of extended social programs, rather than raise wages and make private business pick up the bill, the junta is making a clear statement about the importance of business interests and its preference for a labour-intensive growth economy.

In January 2017, the new rates will take effect, exactly four years after the universal minimum wage of 300 baht was enforced in most of the country, in January 2013. Shortly after Yingluck Shinawatra’s administration took office, the national minimum wage committee was tasked with increasing wage rates from where they were at the time by 35-39.5 per cent. In hindsight, the minimum wage increase was probably one of the major campaign points that earned Yingluck her landslide victory.

To ensure a smooth transition for business, the Yingluck administration also stipulated that the minimum rate would remain the same for the two subsequent years. Those two years ended in 2015. Now in the face of economic stagnation, the Thai junta is keen to put an end to this legacy.

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In 2014, the military government commissioned the Thai National Assembly to set up a subcommittee to study ‘alternatives’ to existing minimum wage determination. It was intended as a way to reclaim the minimum wage system back into the hands of bureaucrats – a political project to undo the interference of opportunist politicians from the supposedly neutral tripartite wage determination system, with equal representatives from government, business and labour groups.

Thai civil society has long called for reform of this system. Due to the underrepresentation of employees, the government’s tripartite committee has always favoured business interests at the expense of labour. Organised labour represents only 5 per cent of approximately 10 million waged workers entitled to the right to association. Meanwhile the majority of the workforce, amounting to roughly 39 million people from the so-called informal sector, has no formal representation in the determination of the minimum wage.

The subcommittee tasked by the national assembly recommends, unsurprisingly, against a universal minimum wage scheme, instead calling for wages organised around area-based development in line with the promotion of Special Economic Zones.

In response to these recent developments, labour groups are calling for an appropriate increase to the minimum wage, as well as the continuation of the universal minimum wage. Although labour groups disagree on the precise figure they feel would make an appropriate minimum wage, the fact that the current wage is far below the cost of living is indisputable.

Given the lack of political space in Thailand, it is hard to imagine any dialogue on the minimum wage taking place between labour movements and the state. But more importantly, the 300-baht period has revealed fundamental challenges faced by the labour movement in forming strong minimum wage alliances.

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To begin with, elements of the organised labour movement, especially the major labour confederations, have shown very little interest in participating in public campaigns on the minimum wage. These are generally those workers who can negotiate directly with their employees through yearly collective bargaining agreements (CBAs). Some activists in union leadership even view minimum wage politics as a ‘distraction’ from activism organised around industrial unionism. By contrast, small labour groups and independent area-based unions rely mainly on the adjustment of minimum wages.

The main challenge thus lies in the fact that the industrial unions are better represented in the tripartite minimum wage determination process, even though the smaller labour groups have much more at stake.

Moreover, within the past four years, the positive impacts of the universal minimum wage on informal workers cannot be overstated. In terms of a nominal wage rate, the minimum wage has increased by 33 per cent for agricultural workers, 30 per cent for small factory workers, 25 per cent for restaurant workers, and 24 per cent for security guards.

Thai law does not recognise the right to freedom of association for such workers, and consequently, they do not have formal representation in the minimum wage decision-making process. By the same token, after the wage increased in 2013, their already existing benefits were taken away by employers in exchange for the higher wages.

In the face of recent changes, Thai labour groups leading the campaign would be well advised to form alliances of working class people around the minimum wage issue. But to do so, the labour movement is obliged to advocate for the rights of the excluded – including their right to freedom of association in the workplace as well as to representation in the larger economy. Without broader participation of all, the social betterment of the working poor is put on hold, as the military junta shut down not just Thai democracy, but also the politics of inequality in the country.

This article is published in collaboration with New Mandala, the premier website for analysis on Southeast Asia’s politics and society. 

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Teerakowitkajorn, Kriangsak. 2017. "Post-300 Baht Thailand - Policy Forum". Policy Forum. http://www.policyforum.net/15001-2/.

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