25 July, 2015
The Permanent Secretary of the Labour Ministry announced in early June that Thailand’s nationally set daily minimum wage, currently set at 300 Baht (approximately US $9) in 2013, will cease at the end of 2015.
The announcement follows a resolution of the Wage Committee in December 2014 to revert to the former system where minimum wages across Thailand were set depending on the cost of living and economy of each province. Consequently, some provinces such as Bangkok had a higher minimum wage than other provinces because their cost of living and economic development were higher compared to other provinces.
When the current uniform national wage was implemented in 2013 it drew substantial criticism from the business community, on the grounds that it reduced Thailand’s competitiveness and amounted to a 100% wage increase for workers in some provinces who previously had low minimum wages.
Under the proposed change, Provincial Wage Committees will consider the economic development and cost of living for each province and will make submissions in respect of the appropriate minimum wage for each province. The Wage Committee will consider the Provincial Wage Committees’ submissions at its October 2015 meeting and set the new 2016 provincial minimum wages, subject to no provincial minimum wage being set lower than 300 Baht. Public information on the proposed changes indicates that a Guideline will be determined and issued by the Wage Committee to standardise the process of making minimum wage determinations in the future.
The rationale for the change is to increase Thailand’s competitiveness while also improving the living conditions of workers in provinces with higher costs of living, such as Bangkok.
Actions for employers
Employers should keep abreast of the proposed change which will come into effect at the beginning of 2016 and ensure that wages set for 2016 comply with the announcement made by the Wage Committee at its October 2015 meeting.
For further information, please contact:
Chinnawat Thongpakdee, Partner, Herbert Smith Freehills
chinnawat.thongpakdee@hsf.com
