Labor Day, 2011: Factors Affecting Workers and Businesses (Business Brief No.3099)

May 1 is observed as International Labor Day every year in most countries across the globe, including Thailand. National Labor Day here marks the importance of workers, an integral part of the nation's economy. Statistics for January 2011 from the National Statistical Office show that Thailand's unemployment rate is still low, with unemployment standing at 1.0 percent, totaling 373,930 persons.

The government's policy which envisages a 25-percent increase in minimum wage levels over the next two years has attracted much attention. The increase would be in addition to the THB8-17 hike in localized minimum wage levels nationwide (averaging 5.0 percent), effective January 1, 2011. Minimum wage increases, set provincially, are aimed at enhancing workers' spending power amid rising costs of living. To lessen the impact of wage hikes on the business sector, the government plans to offer tax incentives to reduce operating costs. KASIKORN RESEARCH CENTER (KResearch) believes that these increases will not only improve the quality of life of workers saddled with soaring expenses, but also attract more farm-based workers into other industries and services in need of workers.

Businesses should brace for rising labor costs that may come with these changes. Those most likely to be affected will be labor-intensive industries, e.g., agriculture, fisheries and transport, as well as contract manufacturers relying on international orders, e.g., textiles and garments, which face stiff competition. Since they are susceptible to change in costs, emphasis should be placed on adjustments to lower operating costs through upgraded processes that minimize losses, plus the use of machinery for greater efficiency, etc.