Sector fears impact of 50% wage bump

Tourism operators say they will suffer and their expenses will rise by as much as 50% if they have to raise minimum wages to 300 baht a day in January.

The industry is concerned about the wage promises made by the Pheu Thai Party in its successful election campaign, said Kongkrit Hiranyakit, president of the Tourism Council of Thailand (TCT).

The current minimum wage is 159-221 baht, and Pheu Thai also proposed raising the starting salary for bachelor’s degree holders to 15,000 baht per month, effective at the start of next year.

Around 2.5 million people work in the tourism industry, including those on daily wages and monthly salaries.

On average, Mr Kongkrit said daily-wage personnel in the tourism business earned around 200 baht per day.

Entry-level salaries in service industries vary widely but many positions pay less than 10,000 baht a month.

Normally, labour costs in the tourism business are about 15-20% of total operating costs, higher than in manufacturing industries. In the electronics sector, the figure is around 10%.

Pichai Naripthaphant, a member of the Pheu Thai economic team, said the impact from higher minimum wages would be offset by a reduction in the corporate tax rate from 30% to 23% by next year and 20% by 2013.

”Small and medium tourism operators need more time to adjust to the wage policy. And the tax reduction will benefit only big operators,” Mr Kongkrit said.

The TCT believes tourism operators would have to pass on higher costs to customers. Once product and service prices rise, then inflation would increase, and Thai tourism would lose its competitiveness, he said.

Susdivachr Cheewarattanaporn, president of the Association of Thai Travel Agents (ATTA), said hotels and airlines would have to increase room rates and airfares to afford higher wages. Some 70% of operating costs of tour companies go to staff salaries.

Mr Kongkrit said he was worried that wage and salary adjustments would draw an influx of workers from abroad, especially from the Philippines.

Singha Tangcharoenchaichana, the Federation of Thai Industries’ chairman for the central region, suggested industrialists use more machinery to replace workers if their wages rise.

Long-term, he is concerned about firms being more cautious about adding workers. Some may relocate to other countries where wages are still low.