29 November, 2016
Thailand’s nationally set daily minimum wage of 300 Baht (approximately US $9) is likely to change at the end of 2016. The Central Wage Committee has recently announced increases in the minimum daily wage for 69 of the 77 provinces effective 1 January 2017. The increases vary between 5 and 10 Baht per day (approximately 15 – 30 US cents per day). Previous increase? Previously in 2014 the Central Wage Committee resolved to abandon the national daily minimum wage of 300 Baht and to move back to a previous structure whereby the minimum daily wage varied between each province, depending on the cost of living and other factors.
The rationale for the proposed change was to increase Thailand’s competitiveness while also improving the living conditions of workers in provinces with a higher cost of living, such as Bangkok. However, the proposed change which was to set the new 2016 provincial minimum wages was never implemented, and now appears to be superceded by the new changes. Central Wage Committee Following a meeting in October 2016 to consider the minimum daily wages for 2017, the Central Wage Committee has announced its decision to raise the minimum daily wages in 69 of the 77 provinces of Thailand.
The eight provinces in which the minimum daily wages will not be increased are almost all in the southern part of Thailand. For the other 69 provinces of Thailand, the minimum daily wage will increase by between 5 and 10 Baht per day (approx. 15 – 30 US cents per day).
Most of the provinces in Thailand will see the daily minimum wages rise by 5 Baht a day. In 7 of the provinces, the minimum daily wage will rise by 10 Baht per day. It is no surprise that these provinces include Bangkok, Phuket and some of the surrounding provinces where the cost of living is generally higher than the rest of the country. In 13 other provinces, including Khon Kaen, Nakhon Ratchasima, Chon Buri, Rayong, Chiang Mai, Songkhla and Ayutthaya, the minimum daily wage will rise by 8 Baht per day. In determining the new minimum daily wages for each province, the Central Wage Committee considered factors such as the cost of living, inflation, GDP, production costs and capacity, living standards, competitiveness, and economic and social conditions.
The Central Wage Committee has announced that the new minimum daily wages are intended to be introduced as of 1 January 2017. Not yet law, the Central Wage Committee's decision is not yet law. Before taking effect the Central Wage Committee will have to submit its decision on the new minimum daily wages to the Labour Minister, who will in turn submit the decision to the Cabinet for approval and endorsement.
There is no indication as to how long the process will take to get Cabinet approval or whether there will be further changes to the Central Wage Committee's decision. Actions for employers Employers should be mindful of the proposed changes to the minimum daily wages and ensure that the daily wages they provide to employees comply with the minimum daily wages if and when the changes take place.
For further information, please contact:
Chinnawat Thongpakdee, Partner, Herbert Smith Freehills
chinnawat.thongpakdee@hsf.com
