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tlansford, on 2012-04-02 15:55:47, said:
nietzche, on 2012-04-02 15:45:55, said:
tlansford, on 2012-04-02 15:26:36, said:
nietzche, on 2012-04-02 15:09:02, said:
We all know where artificial price floors regarding labour lead! A few factors that may be considered:
- An increase in the minimum wage by 50% causes an increase in prices of non discretionary items (food, gas, etc.)
- Real purchasing power of minimum wage workers increases, while purchasing power of the lower middle class decreases.
- Inflation will make the already expensive imported goods even more out of reach
- Will make Thailand less competitive on the global market leading to a decrease in Foreign Direct Investment
- Substantially higher rate of unemployed
- Decreased in government revenue:
- Those making less that 150,000 baht/year tax exempt. After the minimum wage increase these people will still be tax exempt (no additional tax revenue from this demographic)
- Reduced net profits of private organizations and High earning individuals (shareholders, etc.) will lead to lower government tax revenues.
- How much more productive can an Asian factory worker be????
I mean seriously! This is like Greece on Steroids!
Apparently also, the starting salary for government workers with bachelor degrees will rise from 8,000 baht/month to 15,000 baht/month
Where is the money coming from???
- An increase in the minimum wage by 50% causes an increase in prices of non discretionary items (food, gas, etc.)
- Real purchasing power of minimum wage workers increases, while purchasing power of the lower middle class decreases.
- Inflation will make the already expensive imported goods even more out of reach
- Will make Thailand less competitive on the global market leading to a decrease in Foreign Direct Investment
- Substantially higher rate of unemployed
- Decreased in government revenue:
- Those making less that 150,000 baht/year tax exempt. After the minimum wage increase these people will still be tax exempt (no additional tax revenue from this demographic)
- Reduced net profits of private organizations and High earning individuals (shareholders, etc.) will lead to lower government tax revenues.
- How much more productive can an Asian factory worker be????
I mean seriously! This is like Greece on Steroids!
Apparently also, the starting salary for government workers with bachelor degrees will rise from 8,000 baht/month to 15,000 baht/month
Where is the money coming from???
You make many claims about the detrimental effects of raising the minimum wage without a shred of evidence. Just a couple of examples :
- higher gas prices - not minimum wage
- higher food prices ? non-processed food won't change due to min wage
- less competitive for FDI - a myth - most foreign companies don't pay min wage.
- higher unemployment ? Not due to minimum wage (note previous post - if a company can't pay 60 B more per day...)
- decreased gov( revenue ? How? Not due to the min wage
Minimum wage is exactly that - a minimum. It is a floor so that when a person works all day, that they have a chance to be able to feed and shelter themselves based on that pay.
Nothing more, nothing less.
On the other hand, one can see already from the news reports since the announcement, that companies will be exploiting this to raise prices (not due to the min wage) and blame it on the minimum wage hike. I have no doubt that this will happen in certain sectors.
Higher gas prices: An unsubstantiated increase in the Thai money supply will lead to a relative devaluation in the currency (inflation). The amount of goods in the economy will remain stable meaning in simple terms that "we have more baht chasing the same resources" causing a relative increase in the price of the said resources. Commodity prices will increase when a domestic economy sees increased levels of inflation. Gas, food, grain, etc. are commodities. The prices are determined on the basis of global supply and demand. Therefore, with a devaluation of the Baht relative to other currencies, it will require more Thai Baht to purchase commodities.
Higher food prices: (Please see above explanation)
Less competitive for FDI: Increased labour costs lead to an increase in production costs. There is a proven statistical correlation between increases in production costs within a domestic economy and exports (Economics 101)
Higher unemployment: Companies will account for an increase in labour costs by reducing employees and (attempting) to increase worker productivity. Profit margins in manufacturing are already slim.
I am not saying that those on minimum wage in Thailand are not entitled to a higher quality of life (I believe they are), but this policy is contrary to generally accepted economic theory.
I am not trying to start an argument, however, the issues I raised regarding increases in commodity prices, inflation, increased unemployment, were also quoted in the original article.
I also am not interested in an argument. But I also understand economics 101, and, for example, an increase in the price of gasoline is definitely not related to the Thai minimum wage. And for FDI, sure the minimum wage is higher and which FDI will that really impact? Electronics? Automotive? Any other serious manufacturing operation? Very few pay the minimum wage, and for those which do, the increase of 60B/day will amount to (literally) a fraction of a bhat / piece increase in costs. Even the textile industry will be nominally affected because much of their work is piece-work and not covered by the minimum wage.
But it is clear that the business lobby will make hay out of this - they already received an across-the-board corp tax cut...
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