Thailand wage driven recession starting

Perhaps the title of this entry is a reality check that is simply based on competitive pricing of basic goods. Or perhaps it is the Thai government forgetting why foreign companies came to Thailand to begin with. But no matter what the reason, the reality of wages that are not supported by the market value of good produced at any given company can only spell one thing, and that thing will likely consume any government in Thailand for ignoring the basic principles of economics.

It was fairly easy to predict economic headlines that would be seen at the start of 2013 in Thailand. When the Thai government was insistent on implementing a minimum wage increase that by all accounts was too much too fast, reality quickly blows away any positive spin presented by the government. It was so blatantly obvious, even a person with the most rudimentary understanding that money coming in must exceed money going out is needed to prosper could see problems ahead.

Without going deep into the basic of how people shop for goods, there is a simple understanding that there are simply two types of people when it comes to shopping. There are the brand loyal shoppers who will simply buy the Apple product not paying too much attention to the price, and there are the shoppers who ignore brand and look for value in any product. So if you consider the percentage of brand name products produced in Thailand, and compare that to the generic products, you can get a fairly good idea of what way the Thai economy will go.

As Thailand itself is not a country known for being a manufacturing country like Japan or China, and the goods produced are generally geared towards tourism, esthetics and agriculture, you can start to quickly see just where things will go. So without that critical type of high end product being produced that can support higher wages, failure almost seems imminent. The failing rice pledging scheme is just another example  of the same faulted logic being applied, so similar results can be expected.

What the second half of this story is about is just a place Thai politicians would rather not want to be. All things being Thai and going backwards is simply not done, the fallout of not thinking things through to conclusion is now here to not only haunt them, it is here to properly chew them up and spit them out. The reality that is about to unfold in Thailand will be both tragic and entertaining at the same time.

The thought of taking back wage increases that have been promised for months will likely result in a political power shift. However unfortunately, it seems all politicians in Thailand were more or less for this wage increase. Underlying reasons like poor education, corruption and greed have more or less sabotaged the wage increase concept from the word go. Without that high education, top end companies can’t find qualified people to work in key positions, and so selecting another country based on educational attainment is a factor that is given serious consideration.

Perhaps this unfortunate reality check for all Thais will be a bit of a wake up call. If you want to reap the benefits of western culture, you need to give up corruption, greed and other poisons that simply tell companies not to plant their seeds in Thailand.

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