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Populist policies will drive inflation

With the Thai election looming in 3 weeks time the candidates are in full force and what a circus it is. One theme is common to all candidates are the populist policy promises that each candidate is preaching, also common is the undeniable fact that none of these promises are actually going to be kept, not because they don't care to implement them, but because they are just unrealistic. It seems none of the candidates are able to say anything intelligent about how they are going to steer Thailand towards economic growth. In fact the policies that the candidates are boasting will in fact deepen Thailand's economic woes.

Let's look at what the red side are preaching. They say they want to raise the minimum wage to 300 baht per day and that anyone with a bachelors degree must get a minimum of 15,000 baht per month. Sure everyone loves the idea but is it realistic, a plain NO. For starters college graduates have little to no experience at all, more than 90% of them have never had a real job before and their field of study at Thai universities is no where near enough to equip them to make any money for the company they wish to work at, and what does this say about someone with a college degree and 5 years experience, should they be getting 30,000 a month then? I think not. Most people with a uni degree and 5 years experience don't even make 15,000 per month now so how will it work exactly.

If it is a requirement to pay Thai employees literally 50% more than what they get now it will cripple the economy, put many companies out of work and drive inflation through the roof. This year alone inflation must have increased prices for food over 15% and the effects on the economy are being felt. Hundreds of thousands of Burmese workers have moved back to Myanmar because their economy is improving and the price of living is cheap in comparison. Bangkok is now the second most expensive city to live in South East Asia only just behind Singapore and you can no longer get a decent meal for under 30 baht all of a result of inflation. If the minimum wage is increased by 25-50% over the next few years Thailand will be the most expensive place to live in all of South East Asia.

The knock on effects will curb tourism as it's no longer a cheap place to visit. Businesses will be forced to close because they can't afford to pay ridiculous wages and investment in Thailand will literally dry up. The populist policies may sound great but will evidently weaken Thailand's economy. Employees and rent are the biggest factors in a Thai Business and if you raise either of them prices will have to rise to cover the increased costs. A 25% increase in wages will almost certainly equate to a 40-50% increase in prices.

If the minimum wage is increased so does any product or service that uses people to produce the product or service.

No One is hearing how the candidates will increase growth, create sustainable economies and reform taxes and keep the baht lower. They are just promising hand outs that can't be delivered like a 2% reduction in the VAT tax that would see the governments revenues drop by up to 30%. How will the government pay for essential services then.

Thai people need to see someone come out and just speak the truth, tell the Thai people that handouts are not going to drive growth and are just going to make the people more dependent on the state. Reform in the labour market is needed especially the recruitment of foreign workers to fill low paying jobs that Thai people are just too lazy to do this will expand the economy and allow businesses to flourish so that educated Thais can get employed in High paying jobs.

Many college graduates in Chiang Mai earn about 7500 baht per month, doubling their salary will only put them out of a job.


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About Chris

Chris founded LivingThai.org in 2011 and has received over 3 million visitors. He has lived here for over 10 years and speaks reads and writes very good Thai.
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