TCT: Higher pay will hurt tourism competitiveness

Aug 4, 2011
Bangkok Post

Thailand may lose its competitiveness along with its role in helping to lift tourism in Southeast Asia if operators are burdened with paying sharply higher wages, say industry executives.

The Pheu Thai-led government has vowed to lift the minimum wage for unskilled workers to 300 baht a day and starting salaries for university graduates to 15,000 baht a month from Jan 1.

Kongkrit Hiranyakit, president for policy and planning at the Tourism Council of Thailand (TCT), said Thailand was an anchor for tourist arrivals in Southeast Asia.

''Over 20 years, Thai tourism has rebounded after each crisis. For example, the sector rebounded with double-digit growth after the Sars epidemic and the southern tsunami,'' he said.

Normally, international tourist arrivals in Thailand grow by 7% a year and tourism revenue by 10-12%, but the domestic political turmoil of 2008-10 dragged down both those figures.

''In fact, Thai tourism has a lot of potential in the short term, but the long term is very fragile. Increasing the daily minimum wage and monthly starting salaries will make operators shoulder higher costs,'' said Mr Kongkrit.

International arrivals to Thailand jumped by 66% year-on-year in May, as the same month last year saw Bangkok in the grip of anti-government protests, the Pacific Asia Travel Association (Pata) said yesterday.

Thailand's gain in May was the biggest in Southeast Asia.

Asean recorded a 16% increase in outside arrivals during that month, boosted by Thailand's figures as well as a 37% rise in Vietnam, 33% in Burma, 12% in Cambodia and 11% in Singapore, said Pata.

''A lot of that increase came from Thailand because of the very poor performance it suffered last May

[2010],'' said John Koldowski, Pata's managing director for strategic intelligence.

Tourist arrivals to Southeast Asia during the first five months of this year totalled 28.3 million, up from 23.2 million in the same period last year, a 22% jump, according to Pata data.

Operators will have to reduce other expenses to offset the pay increases, as prices are difficult to increase. Products and services may decline in quality.

The TCT hopes the new government will pay more attention to the tourism industry, as it employs 2.5 million workers and would certainly be affected by any increase in the daily minimum wage.

''We want to see measures that will help to enhance Thai workers' efficiency, which still lags behind Hong Kong and Singapore,'' said Mr Kongkrit.

Full-year arrivals are projected at 18.3 million with revenue of 700 billion baht, up from 15.9 million visitors and 590 billion baht in revenue last year.