Thai Union Frozen Products, one of the world’s largest seafood companies, is bracing for a government initiative that would raise the minimum daily wage nearly 30 percent to THB 300.
Implementing the policy could drive up production costs and increase prices to consumers, in addition to the possibility that employers could relocate to countries where labor is cheaper.
Thirachai Phuvanatnaranubaia, Thailand’s finance minister, said, however, that the government has no authority to force the private sector to increase wages, but the government will enforce it for government officials and workers and ask state enterprises to follow suit., the Bangkok Post reported on Monday.
On Tuesday, Thai Union called the wage increase a “manageable challenge.” The company said about half of its consolidated sales are prone to the new government initiative. Out of the company’s local operations, which are mainly manufacturing facilities, less of 10 percent of total operational costs are related to the daily wages paid to workers.
“Therefore, the potential impact from the daily wage hike should not exert any significant negative impact on our bottom line as well as competitiveness despite any worst-case scenario,” said Thiraphong Chansiri, president of Thai Union Frozen Products. “As a matter of fact, Thai Union and its Thai subsidiaries have generally been paying our daily workers well above the current minimum daily wage, if including overtime pay and other benefits.”
In addition, the company said its plans to tighten its labor pool by using machine-driven automation to replace daily workers and moving workers into direct production sections such as cleaning and cutting will allow for increased production capacity and productivity.
“The combination of automation and converting support workers into direct production workers should lead to cost savings, allowing us to stay competitive regardless of any potential minimum daily wage hike pursued by the new Thai government,” said Chansiri.
