Thai competitiveness hit by wage hike

THAILAND'S competitiveness has dropped over the past 13 years if unit labour cost is used as the indicator, according to the Thailand Future Foundation (TFF).

The TFF has blamed the problem mainly on the daily minimum wage of Bt300, which is a big jump from the previous wage level, and the relatively low ability to increase labour efficiency.

Indonesia has also significantly raised its wage, but it has managed to boost its labour efficiency by more than 40 per cent over the past decade.

A TFF study reveals that Thai labour efficiency has risen by just two per cent a year. Over the same period, labour efficiency has increased by four per cent in Vietnam and by an impressive 10 per cent in China.

The TFF said Thai labour efficiency has only risen slightly because of several factors - relatively low investment by the government and private sector, local businesses' failure to move up the value chain, and because 40 per cent of Thai workers are in the agricultural sector.

TFF said the agricultural sector had the lowest labour efficiency compared with the service and industrial sectors.

It also pointed out that more than 40 per cent of private sector employees worked in a very small enterprise, with no more than 10 workers. And these employers usually do not provide training for their staff.

Of 39 million working Thais, nearly two thirds work independently, for example, on their farms, or earning income as taxi drivers, or running small stalls. Only six million get salaries.

TTF executive Sethaput Suthiwart-Narueput called on relevant parties to address all the above problems.

He pointed out that co-operation and integration efforts would make it easier deliver efficient and comprehensive solutions.

"These problems are related," he said.

The Foundation has recommended that the government invest more in infrastructure to stimulate investment by the private sector. More investment by the private sector in new machinery or facilities, for example, could help increase labour efficiency.

For the academic sector, the TFF suggested that research be conducted in a way that can deliver business solutions and increase output value.

It also pressed for the improvement of educational quality to ensure that graduates respond well to labour market needs. It also called for reduced reliance on projects that "distort" agricultural-crop prices.

The foundation urged motivational measures to encourage small businesses to provide training for their staff.

Setthaput has also recommended cluster development.

The NATION September 24, 2014.

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