1. COMMENTARY NUMBER 1 COVERSHEET
Economics commentary number: HL Number 1
Title of extract: Wage hikes to begin only in 7 Thai
provinces
Source of extract: asiaone
Date of extract: 01 September 2011
Word count: 705
Date the commentary was written: 12 September 2011
Sections of the syllabus to which the commentary relates: Section 2
Candidate name: Siriben Somboon
Candidate Personal Code and Session Code: dfy510 (000307-179)

2. Siriben Somboon
dfy510 (000307-179)
Commentary Number 1 Extract
Wage hikes to begin only in 7 Thai provinces
THAILAND - The Pheu Thai-led government risks raising the ire of blue-collar workers by
lifting the minimum wage to Bt300 (S$12) next year in just seven provinces, not at once across
the whole country.
"The immediate hike in the minimum daily wage across the country was a highlight of the Pheu
Thai Party's election campaign," Wilaiwan sae Tia, vice president of the Thai Labour Solidarity
Committee (TLSC), said yesterday.
"If the Pheu Thai Party fails to keep its word, its empty promise may be considered public
deception. We will consult with legal experts and academics about the issue," he said.
Labour Minister Padermchai Sasomsap said the party's hallmark policy would be implemented
first in Bangkok, Samut Prakan, Samut Sakhon, Pathum Thani, Nakhon Pathom, Nonthaburi and
Phuket.
More than three million workers are expected to benefit.
Somkiat Chayasriwong, permanent secretary of the ministry, said the plan was possible because
the current wage rate in those provinces is now quite close to Bt300, so employers should not be
too bothered.
In Phuket it is Bt221 and in the other provinces Bt215.
All parties must discuss the issue with the Central Wage Committee in the middle of the month
before coming to any conclusion, he said.
"I think things should become clear by October. We hope to see the new wage take effect on
January 1," he said.
The minimum wage in other provinces may rise by 40 per cent first and to Bt300 later, he added.
_________________
“Wage hikes to begin only in 7 Thai provinces.” asiaone. N.p. 1 September 2011. Web. 12
September 2011. <http://www.asiaone.com/News/Latest%2BNews/Asia/Story/
A1Story20110901-297182.html >

3. Siriben Somboon
dfy510 (000307-179)
TLSC is not happy about this, though.
TLSC president Chalee Loysoong said all workers around the country were suffering from the
rising cost of living and deserved a similar wage.
In Phayao, the rate is just Bt159.
On Monday, Chalee would present information on inflation, workers' income and household
expenses at a press conference to make clear why the Bt300 wage should be applied to all
workers.
On September 14, the Central Wage Committee will meet to discuss the wage-hike plans.
Pannapong It-atthanon, who sits on the committee as a representative of employers, said small
businesses would incur severe problems dealing with the government's move.
"If the government takes sides with workers, it will be hard for us to do anything. The
representatives of employers may walk out the first time the Central Wage Committee considers
this issue but our boycott won't mean anything when the committee picks up the issue again.
"Our walkout for the second time won't affect the quorum," he said.
Now, employers could only pin their hopes on the representatives from the Finance Ministry,
National Economic and Social Development Board and Commerce Ministry, who should
recognize the ramifications of the big jump in minimum wages, he added.
Somkiat said the government would consider remedial assistance for those employers
experiencing the greatest difficulties.
"The labour minister will hold discussions on the measures with Deputy Prime Minister Kittiratt
na Ranong and Commerce Minister Thirachai Phuvanatnaranubala late this week," he said.
Yongyuth Chalamwong, director of labour research at the Thailand Development Research
Institute, said the government might use tax relief to cushion the blow to employers.
___________________
“Wage hikes to begin only in 7 Thai provinces.” asiaone. N.p. 1 September 2011. Web. 12
September 2011. <http://www.asiaone.com/News/Latest%2BNews/Asia/Story/
A1Story20110901-297182.html >

4. Siriben Somboon
dfy510 (000307-179)
Commentary Number 1*
The Pheu Thai-led government is going to lift the minimum wage (a law that makes trading labor
below a specified wage illegal) from 215 baht per day (in other provinces) to 300 baht per day
next year in seven provinces in Thailand. In other provinces, the minimum wage will rise 40%
first and it will rise to 300 baht per day later. The lift in Thailand’s price floor (a regulation
making it illegal to charge a price lower than a specified level, set above equilibrium to be
effective) would benefit more than 3 million people in Thailand. The increase in minimum wage
can be represented by a shift upward of the minimum wage line.
Diagram 1 Minimum Wage in Thailand
/ S
day
Wage: 300
Wage: 215
/day)
We
Wage (
D
0
Qd2 Qd1 Qe Qs1 Qs2 days
Labor in Thailand (days/month)
As shown in Diagram 1 (above), assuming that the supply (amount of labor that household are
willing to offer at various possible wages during a given time period) is constant at S and the
demand (amount of labor that firm is willing and able to hire at various possible wages during a
given time period) is constant at D. The rise in minimum wage from line “Wage: 215 ” to line
“Wage: 300 ” causes the quantity demanded (amount of labor that firm is willing and able to
hire at each particular wage during a given time period) decrease from Qd1 to Qd2.
_________________
* All definitions have been adapted from:
Sloman, John. Economics. 6th edition, Essex: Pearson Education, Ltd. 2006

5. Siriben Somboon
dfy510 (000307-179)
The quantity supplied (amount of labor that households are willing to offer at each particular
wage during a given time period) increases from Qs1 to Qs2. There is a surplus (excess quantity
supplied at a particular wage) of labor [unemployment] from Qd1 to Qs1 when the minimum wage
is 215 baht per day and when the minimum wage is 300 baht per day, the surplus of labor would
be from Qd2 to Qs2. The workforce that lost their job at minimum wage of 215 baht per day is
from Qd1 to Qe. The workforce that lost their job at the minimum wage of 300 baht per day is
from Qd2 to Qe. The workforce that join the labor market at minimum wage of 215 baht per day
is from Qe to Qs1 and the workforce that join the labor market at minimum wage of 300 baht per
day is from Qe to Qs2. Some of the labors join the labor market because there is an increase in
minimum wage because they can earn more money.
Due to increase in minimum wage, black market (illegal trading arrangement in which buyers
and sellers do business at a price that is lower [in the case of floors] than the legally imposed
price) might exist. The firms would want to minimize the cost of production (total cost of
materials, labor, and other inputs required in the manufacture of a product including any goods
and services used to make a product), so they might invest in black market activity. Some
workers might take the jobs under the black market because they are unemployed and they want
to get a job. Although there might be punishment for disobeying the law (invest in black market
activity), this only apply to some functions. If the government policies regulations are not tight;
chances of being caught violating the regulations are low and the scale of penalties involved for
the violations is not high, black market activity would increase. If one of the factors that affect
the black market increase, for example the chances of being caught violating the regulations
increases, black market activity would decrease.
With a rise in minimum wage, it increases the cost of production for firms to produce goods or
services. Some firms would move their factories to other places (countries) where the cost of
production is lower than the cost of production when the minimum wage rises. If the firms do not
move to other places where the cost of production is lower, they would increase the price of
goods or services to balance the increase in cost of production.