After reading this article, I realized that Thailand is facing a hard time trying to balance its labor laws to achieve a good healthy economy. As a developing country, Thailand should focus more on increasing productivity of the workforce instead of focusing on labor protection as the article says. I'll now list important points on how can minimum wage and labor laws be bolsters to Thailand's economy and how, at the same time, suffering it.
Advantages:
1. Protect the rights of employees and employers - This is what Thailand is focusing on, which it shouldn't as much, but still it is a good thing to help poor families and improve working conditions for workers.
2. To regulate the restrictive practices of powerful employers - To control and limit the power of employers and to regulate maximum and minimum pay for different jobs. This is a good thing, because if the government doesn't interfere, a firm might pay a worker average of 100 baht per month and that is too low....So, to protect workers from getting too low wages, minimum wage is the right thing to do.
3. Raise wages of very low-paid workers - Yes, obviously the government's main goal is to raise wages of low-pad worker, which is good for the workers, but firms? not so much.
4. Reduce discrimination - According to the article, Thailand labor rules enforce firms to hire 1 disabled person every 100 normal workers they hire. Or else, they can pay an entire one year salary of that worker to the ministry's fund for handicapped. Most firms don't do the latter, so handicapped people are hired.
Disadvantages:
1. Workers get paid more than they are worth - the minimum wage might be unsuitable for some workers. If you have a worker that always come late and forget all the meetings versus a worker who is very hardworking and determined, you would likely want to pay a better wage to the second worker and pay very little to the first. However, the minimum wage tells you to pay for example, 100 baht per day to the first worker, but his dedications should worth only 50 baht.
2. Raise production cost -> price increases -> reduce demand - This is the result from increasing wages of low-paid workers. Producers need to pay more for labor in order to produce a certain amount of product, but since the cost of production increases, producers will not produce as much and the price will likely to increase. Thus, causing demand to decrease.
3. Increase unemployment - Firms might not be able to pay the new minimum wage to every worker, so they will tend to decrease their labor force(Most firms will turn to technology and machine-power instead), which increases unemployment.
Minimum wage sounds like a wonderful idea to keep workers well-paid without being oppressed by devilish firms. However, it may not seem as wonderful as you think, since everything has 2 sides, so does minimum wage. Although it is essential to control the rights of labor force, but if it's not implemented correctly, it can suffer the economy as a whole. :(
Link to the article: http://www.bangkokpost.com/business/economics/323831/wage-hike-compounded-by-tougher-labour-rules
Picture:http://www.imglols.com/wp-content/main/2012_03/the-truth-about-working-for-minimum-wage.jpg
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