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If Burmese labor disappears, will Phuket find an alternative source

Phuket's Wage Rise Likely to Deliver Labor Shortage, Prices Pressure

Tuesday, March 27, 2012
Phuket News Analysis

PHUKET: Phuket's continuing labor shortage is likely to become a full-blown crisis when the minimum daily pay rate rises to 300 baht on April 1, many Phuket employers fear.

The Labor Office says 3000 to 5000 positions are already waiting to be filled on Phuket - and that number is likely to continue to grow larger.

Burmese workers have already begun drifting back to Burma from Phuket because of another event that occurs on April 1 - a by-election that is expected to see democracy icon Aung San Suu Kyi emerge as a victor.

Indeed, Sunday could become a turning point for Burma - and for the economics of Phuket's tourism industry. Calls for the tourism industry and Phuket especially to be treated as exceptional cases have so far been ignored.

Rising prices continue to preoccupy employers and employees on Phuket. In an increasingly competitive region, tourism has to stay reasonably priced - and that means resisting inflationary pressures.

Rising daily living costs had already driven Phuket to an unwanted position as the most expensive province in Thailand, long before the new government of Yingluck Shinawatra decided on a nationwide minimum wage last year.

Even with the boost from the old minimum of 221 baht - the highest in the country - to 300 baht, Phuket's exceptionally high cost of living is likely to mean that workers find living and working on Phuket unappealing.

Only Bangkok, Phuket and five other provinces will initially boost their minimum daily wage to 300 baht. But once all the provinces are united in a national minimum, workers are likely to prefer provinces where living costs are low to provinces where living costs are high - and that includes on Phuket.

The corollary is that price rise pressures are likely to be greatest in those provinces where the minimum wage rise is greatest, and employers may struggle to control inflation.

For the time being, as so often in the past, Phuket's biggest labor problem is finding enough of it. Many times over the years, Phuket employers have attempted to attract workers from Isarn to Phuket.

Every attempt has failed - largely because living costs on Phuket are known to be exceptionally high. Workers from Isarn also prefer Bangkok, where they are still within relatively easy travelling distance of home. Phuket is too far away, geographically.

Phuket is also, in many senses, becoming more distanced from any obvious natural labor source. With Burma evolving rapidly as a more pleasant place to live and work, fewer Burmese are expected to target Phuket as a place to make quick money, either legally or illegally.

Rumbles also continue on Phuket about whether tips and service charges should be absorbed into workers' wages. Hotels at the lower end of the scale - two-star and three-star venues - are expected to feel the wage rise more than the four-stars and five-stars.

Human Resources Phuket, which represents organisations overseeing 70,000 employees, including 142 resorts, would like to have the tourist industry treated as a special case, without the need for a minimum.

It's claimed that to make the resorts pay not just the minimum but also tips and service charges places an unfair burden on those employers.

Not so, says the Phuket unions, who still have inflfuence at several prominent resorts where workers are mostly members. The unions reject the notion of service charges and tips being included in the minimum wage, saying that the clear intention is that the extra cash should go straight from customers to workers.

There will be no sudden realisation of crisis on Monday. But by the end of April, workers will know whether they pay has been adjusted, or whether employers have bitten a rather large bullet.

And over time, as the minimum pay levels rise in other provinces to match those on Phuket, Phuket's labor crisis is likely to grow more and more acute.

This will itself provide an inflationary spur - Phuket employers will have to pay above-minimum wages to attract even non-skilled staff to basic jobs.

With the Asean economic community set to become reality in 2015, Phuket needs to respond to key issues about prices, on-the-job training and quality services quickly.

Comments

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If Burma does move towards Democracy, as it looks like it is, then the black market for Burmese labor (illegals) will also shrink. There are still a lot of places here in Phuket, small Thai run restaurants, etc that still don't pay the minimum wage. Will this be ignored or do the authorities have a plan to tackle that issue.

Come 2015 the wage issue will be the least of their problems and most Thais I've spoken to don't have a clue what the AEC is about or the effects it's going to have upon the labor market.

There are going to be tough times ahead and while the Government continues to talk about improving education it is becoming apparent that the changes that are so desperately needed are too little and far too late.

Thailand is going to be left behind the other member countries and then the Thai people are really going to feel the consequences.

Posted by Graham on March 28, 2012 22:20

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Well said Graham. I've noticed the same - none of the Thais I've spoken to have a clue of what the AEC is or will mean for them or Thailand.

Everyone on Phuket will feel it's effects. Can you imagine the sentiment of Thais when they see a Burmese legally running and owning a successful business, let alone being their boss ?

With the abysmal English skills of Thais they will be outclassed from a lot of jobs, mainly by the Filipinos.

It's not only the unskilled job market that will change dramatically. Thais may quickly find that the only jobs they can compete for are those only the Burmese are currently willing to do.

This will inevitably lead to social tensions with rather predictable consequences. Anti-foreigner sentiment is sure to grow.

It's a tough call for every nation to have to compete for jobs in their own country but of all the ASEAN countries Thailand is by far the most ill prepared.

Posted by Steve C. on March 29, 2012 06:35


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