Thai Wage Rate Offers Financial Food for Thought

China isn’t the only Southeast Asia nation struggling to come to grips with rapidly increasing wages.

Thailand’s government is considering a 21% hike in the minimum wage, leading several executives to warn that the move could push labor-intensive jobs elsewhere.

Thailand is home to several of the world’s largest EMS firms, including Cal-Comp (no. 8 on the CIRCUITS ASSEMBLY Top 50), Team Precision (n0. 19), Delta Electronics, Hana Microelectronics ( no. 29) and SVI Public Co., not to mention Fabrinet, which is based in San Francisco but whose factories are in Thailand.

We will hear more and more of this as Asia faces the same, inevitable swell of worker pushback. Thailand suffers through massive worker strikes each year, and its government may finally be capitulating. With higher wages come increased overhead, although it would take far more study and space than allowed here to examine whether the expenses related to training, turnover and (lower) end-product quality exceed those of a higher minimum wage.

What we do know, however, is that much of the world’s economic model balances on the import economies of the US and Europe. Over time, this will have to change, lest we continue to endure sharp boom-bust cycles every few years.