Analysts see new challenges for Thailand’s manufacturing sector as the country prepares to raise its daily minimum wage for the first time in more than two years in response to mounting inflationary pressures.
Last week, the Labour Ministry agreed to raise wages by an average of 5.02% beginning October 1. The minimum wage was last increased by 1.6%-1.8% in January 2020.
The exact rates vary slightly among provinces, with the three most industrialised provinces – Chonburi, Rayong, and Phuket – and the capital Bangkok at the upper end of a 328 and 354 baht range.
With this increase, Thailand’s monthly minimum salary jumps from 9,840 to 10,620 baht, making it one of the highest in Southeast Asia.
According to the Kasikorn Research Centre, a 5% increase in the minimum wage would have an impact on costs in 4Q22 and the following year, with an average cost increase of about 0.5% and a potential drag on operating profit of about 4.6% across the agriculture, retail, hotel, and restaurant, and construction sectors, respectively.
Despite businesses facing increased costs in a wide range of areas, there is room for limited price hikes across the board.