The Thai Hotels Association (THA) has raised concerns about potential large-scale layoffs in the hotel sector during the low season, should the government proceed with plans to increase the daily minimum wage to 400 baht next week. The THA has submitted a petition to the prime minister, urging the cancellation of this policy.
La-iad Bungsrithong, an advisor to the THA board, highlighted the impact on five-star hotels in Chiang Mai, which have already experienced a 14% rise in wage costs since last year after the implementation of the 400 baht daily minimum wage.
This wage increase initially affected five-star hotels in key tourism provinces such as Chiang Mai and Phuket, where daily rates have been adjusted twice since the start of the year.
From July 1, the Labour Ministry plans to propose that two-star hotels or those with more than 50 rooms must also comply with the 400 baht daily rate.
Hotels in Chiang Mai faced a minimum wage of 350 baht in 2024, and the new rate would result in a more than 12% increase. Other destinations, including Chiang Rai, Hua Hin, and Phang Nga, could see a 13.6% rise, the THA reports.
La-iad noted that upper-scale hotels struggle to manage operational costs, as the wage hike could account for 35-45% of expenses, including employee benefits. The policy’s timing during the low season is deemed unsuitable, with energy costs rising due to Israel’s unprovoked attack on Iran. Many hotels may reduce staff due to insufficient revenue to cover increased expenses.
THA Southern Chapter President Suksit Suvunditkul warned of the critical impact on provinces with low current wage rates, such as those in the Deep South, facing an 18.7% increase. The low season could be particularly challenging, given the reduced visitor numbers from China and the Middle East.
Phuket hoteliers, having previously implemented this measure, increased wages for 30% of employees, with another 30% receiving adjustments due to experienced staff, resulting in a 60% wage increase.
Suksit explained that payrolls typically account for 25-30% of total operational costs during the high season, but could surge to 50% in the low season, leading to potential layoffs due to high turnover, reported Bangkok Post.
The pandemic has reduced employee numbers, with hotels preferring multi-skilled workers over hiring more staff. Suksit added that using casual staff offers flexibility but does not reduce costs, as training is still necessary to meet hotel standards.
Last week, the THA appealed to the prime minister to reconsider the policy for two-star hotels or those with more than 50 rooms. THA President Thienprasit Chaiyapatranun stated the wage hike could increase operational costs by 10-15% and is deemed unacceptable amid the sluggish economy.
The story Thai hotels warn of layoffs amid 400 baht wage hike proposal as seen on Thaiger News.
