Thai minimum wage increases will not destroy the economy


In my July 30, 2011 editorial to the Bangkok Post , I point out the logical fallacies with an argument in an article asserting that the pro...

In my July 30, 2011 editorial to the Bangkok Post, I point out the logical fallacies with an argument in an article asserting that the proposed minimum wage increase to 300 baht a day will destroy the Thai economy.

By Karn G. Bulsuk

In the editorial “Wage Increase will Crash Thai Economy”, I find Terry Weir’s assertions that a minimum wage increase to 300 baht will lead to economic collapse and even hyperinflation are based on fiction rather than grounded in fact.

Firstly, we need to bring the whole wage issue into perspective. In China, average minimum wages range from 850 to 1350 Yuan a month (3,900-6,230 baht). Assuming a 20 day work month, one person under the new 300 baht minimum wage would be earning a monthly income of 6,000 baht. In other words, Thailand is still very competitive even when compared on the international arena.

The idea that raised wages will lead us back to a repeat of the 1997 Thailand economic crisis demonstrates a lack of understanding of the root causes of the meltdown, which includes lack of financial oversight and controls, as well as reckless overseas borrowing and uncontrolled loans. Similarly, hyperinflation in Zimbabwe is a result of systematic collapse of their economy caused by poor governance and insufficient fiscal discipline. It should be noted here that increasing minimum wages has never been identified as a root nor associated cause in both cases.

What would mostly likely result from the wage increase is a corresponding increase in spending. As people earn more, they will spend more, helping to prime the pump and stimulate the local economy. It will help Thailand to defend itself from the effects of the wavering European and American economies as we decrease our reliance on export-led trade in favour of local consumption.

Companies too would benefit, as they would be encouraged to increase production efficiency, whether through improved work processes or automation.

In the long run, this may be the turning point in helping Thailand to shake off low-cost manufacturing, and move into more specialised, higher valued manufacturing. Rather than crashing the economy, it is more likely the increased minimum wage is the paved path to success.

Disclaimer: This article is designed only to describe the logical issues with the article in question. It does not express any political opinions. Any opinions are my own and do not reflect the views of any companies I am or may have been associated with.



5-why advertising analysis anime apple aria articles asian business culture Australia bangkok blackberry business case study china coaching commentary communication consulting corruption cost cutting creative commons crisis CSR culture customer service deming disruptive download editorial education environment ethics expatriate fishbone diagram food genchi genbutsu generation y hansei harvard business review hong kong Horenso information interesting clips internet iphone IT Audit japan kaizen KPS Video Express laos leadership lean live in bangkok like a local management marketing Melbourne mieruka movie new year obituary opinion opportunity PDCA personal reflections photo essay photography poster project management proposal published quality control quotes research review sales saving money segmentation self reflection shared singapore social media software piracy standard chartered status teaching technology telecoms thai floods thailand the hong kong I remember The Toyota Way thought leadership threat toyota toyota production system travel venice Virtual Tour Visuals wallchart wikicommons Wikipedia working
Karn G. Bulsuk: Full Speed Ahead: Thai minimum wage increases will not destroy the economy
Thai minimum wage increases will not destroy the economy
Karn G. Bulsuk: Full Speed Ahead
No posts found VIEW ALL Read more Reply Cancel reply Delete By Home PAGES POSTS View All RECOMMENDED FOR YOU LABEL ARCHIVE SEARCH ALL POSTS No matching posts found Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS IS PREMIUM CONTENT Please share to unlock Copy All Code Select All Code All codes were copied to your clipboard Unable to copy code / text, please press [CTRL]+[C] (or CMD+C with Mac) to copy