Employers worry that introducing the 300 baht
minimum wage will hurt Thailand’s competitiveness. Yet cheaper wages are not
the only way to achieve comparative advantage, and this argument should not be
used as a justification for keeping the minimum wage as low as possible.
APICHART JINAKUL
"We are entering the Asean Economic
Community in the very near future, so how can we compete with our
neighbours?"... "Foreign investors will move away from Thailand, to
places where labour is cheaper, such as China, Cambodia, and Vietnam"...
These
are the opinions of the business sector and many economists, apparently
prioritising the competitiveness of the Thai economy even if it comes at the
expense of workers' living standards.
However,
the fact is that in a capitalist free-market economy, undercutting the international
price of labour is not the only way to achieve comparative advantage. Such
arguments should not be used as a justification for keeping the minimum wage as
low as possible.
Indeed,
in the transition towards becoming a developed nation, countries must accept
that this strategy is unsustainable in the long term, as no developed economy
has ever been able to maintain this comparative advantage over developing
nations.
What
about the future of unskilled workers? Are they expected to resign themselves
to a lifetime of low wages to support the supposed "national
interest" of Thailand's economy?
When
speaking to red shirt supporters in Laos at his public appearance during the
Songkran festival, former prime minister Thaksin Shinawatra said:
"Brothers, life will be better now. Prime Minister Yingluck has already
implemented the '300 baht' policy. Your children will earn more from
work."
As we
know by now, any such statements coming from Thaksin will be jumped on
immediately by opponents who will level accusations of irresponsible political
populism at him.
The
income gap in Thailand today is glaringly obvious to anyone who can face up to
this fact. To categorically dismiss as irresponsible populism attempts to
correct this injustice, however imperfect they may be, implies a serious lack
of concern for the plight of millions of decent yet underprivileged Thais.
Pasuk
Phongpaichit and Chris Baker have argued: "Thaksin's populism was more
complex than his policy offerings, in that it developed over time in response
to social demands. Thaksin may indeed have been opportunistic, but there would
have been no opportunity if there had not been a social demand."
As
Warren Buffet once argued: "A market system has not worked in terms of
poor people."
The
intrinsic injustice of this system is interpreted within the anti-capitalist
discourse of Thailand as tunniyom samarn, or "evil capitalism".
Moreover,
what is often referred to as the "free market" is far from being free
of market manipulation.
Notably,
when we look at the examples of the most advanced capitalist countries, such as
the United States and the United Kingdom, we find many forms of government
intervention.
Indeed,
as far as we can recall, there has always been evidence of market failure. And
it has been quite common for there to be some degree of government intervention
within the market which distort both prices and costs, including labour costs.
Every
Friday, a truck takes mothers and fathers from the village of Ban Tadop in Si
Sa Ket province to visit their children, by now mostly in their 20s, who are
working in factories in Samut Sakhon.
The
main reason for the families to undertake this journey is to collect remittance
money from their children, and at the same time, to bring them staple foods
such as the rice they have grown in the village.
Such
efforts are undertaken in order to minimise their child's cost of living, which
is higher in Samut Sakhon than in the villages.
Labour
migration from the Northeast has been both permanent and seasonal. Both have
made an important contribution to improving the quality of life for rural
villagers.
To a
significant extent, these remittances can help make life more comfortable in
the rural provinces, and is an example of how market mechanisms can contribute
towards raising living standards when the state does not.
Hoi
Kambongsa, a 53-year-old worker from Ban Don Chot, Ubon Ratchathani, said:
"The 300 baht [minimum wage] is good for our family, living in a rural
village. I don't have a full-time job.
"I
receive money from my six children who work in Bangkok, although not very
often. But this really helps to make my life a lot easier."
A high
percentage of the rural population in the northeastern region today depend on
these remittances to at least some degree.
Older
generations living in rural areas of provinces such as Ubon Ratchathani
typically receive approximately 5,000 baht a year in remittances. Although this
figure might not appear to be particularly significant for the urban
middle-class, this extra money is needed for their subsistence.
This is
also the main contribution of remittances in relation to the economy, boosting
grassroots incomes and spending which have the positive benefit of stimulating
Thailand's macroeconomy.
The
supply of both permanent and seasonal labour from the region stems from what
economists call the "opportunity cost" of workers not having a job in
their village or district. Moving to work in a factory for even a very low wage
becomes the "rational choice".
Some
economists make the argument that if there is enough supply of labour for jobs
available, there is no need to increase the minimum wage.
It
follows from this statement that if workers remain in their current employment,
they must be happy with the status quo. However, can this argument be
justifiably made if workers have no other options available to them?
Of
course not.
Ultimately,
there is a moral for us in all of this. We are speaking here of the demographic
which has so often come under attack during the political blame game that has
accompanied the conflicts afflicting Thailand in recent years.
This
demographic is the rural population of the Northeast provinces, who
realistically have few choices in life.
To live
viably at all, they must work in the fields and subsist by producing rice and
selling their surplus. They seize the opportunity of employment as seasonal
migrant workers in factories in distant provinces. Very often, they are not
even paid the 300-baht figure which is now being introduced as the minimum wage
for Thailand.
These
are the people from the poorest region of our country who are routinely
patronised by other Thais and made to feel as though they are second-class
citizens because of their "shortcomings" and their lack of education.
We may
only become more genuinely concerned for their well-being and future if we take
the time to realise that these very people are the ones producing Thailand's
staple rice crops which keep food prices low and help to fuel the lives of all
Thais.
Then,
perhaps, we would think about the fact that they so often take these low-paying
jobs in factories that most other Thais would certainly not undertake. To argue
their case then becomes the least we can do.
Titipol
Phakdeewanich
Business & Investment Opportunities
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