[Thailand] Minimum wage waiver to maintain SMEs suggested

Advisory Council advice suggests Thailand’s government should waive the daily minimum wage requirement for six months to help entrepreneurs maintain employment during the COVID-19 pandemic, Bangkok Post reports.

Thanit Sorat - vice-chairman of the National Labour Development Advisory Council - said the council estimated that Thailand’s unemployment total could reach 9-10 million by the end of April after the government declared a state of emergency and curfew nationwide. The March total was 6.5 million.

Around 2.75 million of the new unemployment total would come from the tourism sector, the remainder from the manufacturing and service sectors. Mr Thanit said the estimates exclude 500,000 new graduates and 400,000 existing unemployed workers.

The cabinet approved a 5-6 baht nationwide increase in the daily minimum wage in December 2019. The highest increment applied to Phuket and Chon Buri, bringing the wage to 336 baht. A five-baht increase in Narathiwat, Pattani and Yala put the wage at 313 baht.

On February 28, the National Economic and Social Development Council reported that 37.5million people were employed in the fourth quarter of 2019 - a decrease of 1.1 per cent year-on-year from the fourth quarter of 2018 - marking the third straight quarter of decreases.

Employment went down by 1.6 per cent in the agricultural sector and 0.9 per cent in non-agricultural sectors.

Mr Thanit said the government’s latest aid measures for small and medium-sized enterprises (SMEs) could prove impractical if commercial banks still require collateral to lend to those enterprises.

On Tuesday the cabinet reportedly passed an executive decree allowing the Bank of Thailand to extend 500 billion baht in soft loans at 2 per cent annual interest for two years with a six-month interest-free period to SMEs for a credit line of no more than 500 million each.

Commercial banks and specialised financial institutions will also offer six-month deferment periods for SMEs with a credit line of up to 100 million baht each.

Mr Thanit said that few SMEs will to be able to access the soft loan scheme as long as commercial banks require collateral for their lending.

“I’ve talked with many bankers and found they remain concerned about their costs and the capability of SMEs, and the higher non-performing loans that could result,” he said.

He proposed the government implement additional measures and set up a special fund to lend to SMEs instead because this would be more practical than lending through commercial banks.

Mr Thanit also suggested state-owned Thai Credit Guarantee Corporation’s credit guarantee coverage be increased from 30 per cent to 40 per cent, saying the higher coverage will help SMEs access credit from banks.

Source: Bangkok Post

Advisory Council advice suggests Thailand’s government should waive the daily minimum wage requirement for six months to help entrepreneurs maintain employment during the COVID-19 pandemic, Bangkok Post reports.

Thanit Sorat - vice-chairman of the National Labour Development Advisory Council - said the council estimated that Thailand’s unemployment total could reach 9-10 million by the end of April after the government declared a state of emergency and curfew nationwide. The March total was 6.5 million.

Around 2.75 million of the new unemployment total would come from the tourism sector, the remainder from the manufacturing and service sectors. Mr Thanit said the estimates exclude 500,000 new graduates and 400,000 existing unemployed workers.

The cabinet approved a 5-6 baht nationwide increase in the daily minimum wage in December 2019. The highest increment applied to Phuket and Chon Buri, bringing the wage to 336 baht. A five-baht increase in Narathiwat, Pattani and Yala put the wage at 313 baht.

On February 28, the National Economic and Social Development Council reported that 37.5million people were employed in the fourth quarter of 2019 - a decrease of 1.1 per cent year-on-year from the fourth quarter of 2018 - marking the third straight quarter of decreases.

Employment went down by 1.6 per cent in the agricultural sector and 0.9 per cent in non-agricultural sectors.

Mr Thanit said the government’s latest aid measures for small and medium-sized enterprises (SMEs) could prove impractical if commercial banks still require collateral to lend to those enterprises.

On Tuesday the cabinet reportedly passed an executive decree allowing the Bank of Thailand to extend 500 billion baht in soft loans at 2 per cent annual interest for two years with a six-month interest-free period to SMEs for a credit line of no more than 500 million each.

Commercial banks and specialised financial institutions will also offer six-month deferment periods for SMEs with a credit line of up to 100 million baht each.

Mr Thanit said that few SMEs will to be able to access the soft loan scheme as long as commercial banks require collateral for their lending.

“I’ve talked with many bankers and found they remain concerned about their costs and the capability of SMEs, and the higher non-performing loans that could result,” he said.

He proposed the government implement additional measures and set up a special fund to lend to SMEs instead because this would be more practical than lending through commercial banks.

Mr Thanit also suggested state-owned Thai Credit Guarantee Corporation’s credit guarantee coverage be increased from 30 per cent to 40 per cent, saying the higher coverage will help SMEs access credit from banks.

Source: Bangkok Post