Asian governments gamble on making cheap labour less cheap
BANGKOK, (Reuters) – After years of profiting from cheap labour, Southeast Asian businesses paying wages low enough to undercut China are being forced to accept it is time they paid people a bit more.
In Thailand, minimum wages will jump by 35 percent in some regions from January, on top of a nationwide increase of 40 percent last April. Big percentages that add up to just a few dollars more in pay packets each month. The country’s finance minister says it will be good for workers and industry. “People getting higher wages will not want to lose their jobs and employers will not want to increase wages for nothing.
They will have to work together to boost efficiency and productivity,” Kittirat Na Ranong told Reuters this week.Economists also point out that if you pay people more they’ll buy more. But the nagging worry is that everyone could eventually lose out if wages rise too fast, resulting in higher inflation and job losses as firms lose competitive edge.
While the political benefits are easy to see in a region where a vast majority of people are clamouring for a better life, the economic calculation is a harder sell to a business community whose margins depend on cheap labour.
The chairman of the Federation of Thai Industries was ousted last month for failing to lobby hard enough to convince the government to go back on a promise to voters, and the surrender to higher wages left the federation riven with factions.
Similar social and economic tensions are evident elsewhere in Southeast Asia, a region that has otherwise come through the global slowdown better than most.
The emerging market boom that characterised the first decade of the millennium saw growth rates surge and profits multiply, but now countries such as Thailand, Indonesia and Malaysia face pressure from workers for a bigger share of the wealth.
The World Bank designated Thailand an upper-middle-income country in 2011 after national income per capita almost doubled in a decade but it has fretted about wealth inequality.
As a former stock exchange president, the Thai finance minister seems an unlikely class warrior. But that is how he sounds.
“We have a duty to improve the distribution of wealth,” said Kittirat. “For over 30 years that economic records have been kept, it seems income distribution has not improved. The proportion of low-income earners is still the same.” After years of political turmoil, broadly pitting the lower classes against Bangkok’s middle class and “old money” elite, Prime Minister Yingluck Shinawatra’s government was elected in July 2011 with a promise to bring in a nationwide minimum wage of 300 baht a day.
Follow @timesonlinelk
Related Posts:
EFC raises concerns with Minister of Labour on minimum wage revision processThe Employers’ Federation of Ceylon (EFC) has raised concerns with Labour Minister Gamini Lokuge on the manner in which the ...
Budget serves capitalist business interests : CFLThe 2013 Budget is in line with his earlier budgets -- promoting the business interests of the capitalist class, hiding ...
NIKE CEO’s 2010 annual salary equivalent to ‘14,000 years of wages’ for a Sri Lankan apparel workerAdidas, the global sportswear firm is sourcing its apparel for this week’s Olympic Games in London from many low wage ...
People left behind: How inclusive is inclusive growth?Poverty amidst growth is a much debated issue these days. The poverty paradigm has shifted from poverty reduction to inclusive ...
Global clothes firms say Bangladesh must ensure fireDHAKA, Dec 1 (Reuters) - International garment firms have demanded fast action to ensure the safety of Bangladeshi textile workers, ...