Yingluck’s 300 Baht Promise Destroyed Businesses and Jobs
One of the most notorious policies drafted under Thailand’s first female PM, Yingluck Shinawatra, was the 300 baht minimum wage which was a key catalyst that won her more than 15 million votes during the election.
This policy is beautiful at face-value, since it dealt directly with the needs of the blue-collar workforce who truly needed a higher wage to improve their quality of life. However, this policy was a well-planned, well-articulated time bomb which was set to destruct the country’s economic growth. Despite warnings from experts and academias regarding the businesses that will greatly be impacted for its sudden spike of workforce’s payment, the policy was given the green light in 7 provinces; Bangkok, Nakorn-Pathom, Nonthaburi, Pathumthani, Phuket, Samut-Prakan, and Samut-Sakorn on 1st of April 2012. The other provinces gradually enforced the 300 baht policy in the following year.
There were two major outcomes after the nationwide enforcement. Firstly, the SMEs and other bigger employers are directly impacted by the sudden spike of the financial burden which translated into the halt in economic growth. Consequently, multiple SMEs were forced to shut down as the 300-baht policy equates to an immediate 26% increase in labor costs. Secondly, with the higher financial burden and the same level of skill, a lot of blue-collars were let go by the business owners as it was no longer affordable to operate at its previous output. To make matters worse, the increase in labor cost also increased the living cost which exacerbated financial constraints for low-income earners.
To put it in simple terms, the immediate 26% hike on the national minimum wage led to businesses having to shut down, a large number of workers being laid off and inflation in commodity prices as the aggregate production cost also increases in all sectors.
This is a prime example of governments that sell policies just to gain political advantages while holding the country’s future as a hostage and victim.
The country is often at risk when the enactment of populist policies such as raising the minimum wage is done in a fashion that does not take the holistic impact on the economy to consideration.
We are often faced with a situation where a select few are willing to sell failing policies in order to win elections, but it is the people who will never win if such histories continue to repeat in this country. We must carefully monitor who is at risk and whether the beneficiaries are only winning temporarily, in order to make the best decision for Thailand.