Higher minimum wage drives Hana to Vietnam
Hana Microelectronics Plc may move to Vietnam or China when the minimum daily wage rises to 300 baht next year, as the new Pheu Thai-led government plans to do.
The company has Thailand 10.000 workers and in Jiaxing in China 2000, almost all of whom are paid the minimum wage. Although personnel costs represent only 6 to 8 percent of operating costs, the increase still has major consequences because profit margins are small.
Next week, chief executive Richard Han will be in Vietnam looking for suitable locations to assemble the printed circuit boards. The minimum wage in Vietnam is less than half of Thailand's minimum wage. Hana is also looking for expansion opportunities in other parts of China. The Chinese government, like Thailand, is increasing the minimum wage, but gradually over a period of 5 years.
The Federation of Thai Industries proposes to gradually increase the minimum wage over a period of 3 years. Chairman Payungsak Chartsuthipol believes small businesses need additional help, such as a three-year exemption from contributions to the Social Security Fund and possibly a direct government subsidy of 40 to 50 baht per worker/day.
Hana CEO Han expects higher wages in Thailand, the hard baht, economic uncertainty in the US and Eurozone and China's attempts to control inflation will put pressure on Hana's earnings in the second half of the year.
A number of companies such as HMP will always look for locations with the
lowest production costs (read lowest wages)
In the end, the consumer should not even be willing to pay more for products with a good quality ratio.
The supply companies could be charged for this.
A qualification certificate should show that the funds finally reach the
target audience.
(A long way)
This is already going on with certain brands of football and (sports) clothing, so that child labor is possible
reduces.
Sincerely,
Lodewijk
Just a boycott of their products
Not really a good move by the new Thai government… those 10.000 workers could really use that minimum wage… further departures from (big) foreign companies will result in this. They should have waited until the crisis was over.
Groet
Ronny
That's not entirely true what you're saying there. As Lodewijk indicates in the first response, there are always companies in Thailand that move at the slightest thing. We have seen this happen several times in recent years and it always will. They are the companies where people work 12 hours a day in shifts for an absurdly low salary. Should you be sad about that?
More salary ultimately also means a liberation and a better situation, although it will also fuel the inflation spiral, but doing nothing will not solve it either. And which crisis? In Asia they suffer from this because the Western countries buy less, but China absorbs everything there. So it fits with that.
It's the same as it used to be here when the minimum wage was introduced. That's a good thing there too. It hasn't turned out all that bad here, after all.
the people who now work for absurdly low wages (below the minimum wage?) will really not get any more after the minimum wage is raised.
you get more prosperity by better education and not by rewarding unskilled work with a (by thai standards) generous salary.
someone who sews patches on jeans will soon get paid as much as a police officer.
or will all wages go up 65%?
The reason that many companies move to China also has to do with a very good supply chain, many suppliers and suppliers are very close to each other, which provides logistical and many financial benefits. A higher minimum wage should not be an end in itself and especially not in a country that is developing with many competing countries in itself. You can do this if the country can focus on something else, for example higher qualified work. I admit I don't know the exact numbers, but a common complaint is what I read here and there, that the level of education and its quality. A lot of low-tech assembly work, where the margins are indeed small, I'm afraid will be relocated to neighboring countries. And what does Thailand want to do with the large group of people who are particularly eligible for this type of work. Back to the agricultural work, where they are already losing the battle against a country like Vietnam. Don't throw away your old shoes before you have new ones and work towards a higher qualified workforce. Incidentally, I don't think you can achieve that by providing free tablets.
Raising the minimum wage was just a nice stunt to win the election.
As for Vietnam, Vietnam is booming! And quite rightly so!
A very interesting country for trade, the low wage costs and the enormous economic growth and opportunities.
I understand that people would like to earn more,,, and rightly so, but Thailand will price itself out of the market, Laos and Vietnam are also there.
Cambodia, too, but is riskier, too corrupt, too little structure, and before you know it there will be another pol Pot figure on it.