Cost Of Living
Allowances (COLA)
to Thai company employees
and possibility of inflationary wage-price spiral
By Jon Fernquest
If everyone gets a pay increase, then does
anyone really get a pay increase?
During the 1970s in the US, labour unions forced the wages of pretty much all workers up and the result was a wage-price spiral. Increasing wages meant that companies had increased costs. To cover these increased costs, companies had to raise the price of the goods they sold. When every company does this, the benefit of increased wages is eliminated.
Just as the minimum wage for the lowest wage earners was adjusted upwards recently, the most highly paid workers in the Thai economy, those who work for companies are also getting their salaries adjusted upwards to keep up with inflation. (See article by Professor Pasuk of Chulalongkorn on a breakdown of different kinds of participants in the Thai workforce)
COLA sounds like a drink but it is actually an acronym that stands for "Cost Of Living Allowance."
A COLA is an extra amount of money paid to an employee of a company to help them cope with increased cost of living during times of increased inflation.
COLAs are especially important for low wage earners and the poor who pay a larger fraction of their income on basic necessities such as food and transportation.
The average COLA that companies are planning to pay this year is 800 baht per month with the range of payments running from 250 baht to 2,000 baht. (See bar chart on right for a breakdown by industry).
Only 23% of companies have already paid COLA to their staff, with the average amount being 1,000 baht per employee and the highest amount being 2,400 baht per employee in the banking sector. Another 42% are planning to pay COLA, 16% are considering paying COLA, leaving the remaining 19% who say they aren't going to pay COLA because they already pay similar benefits to their employees.
Fuel allowances are already paid by 151 companies in Thailand. Fuel allowances are paid in one of three ways: 1. a fixed amount per month, 2. a fixed rate per kilometre, and 3. a fixed amount of litres, or 4. reimbursement for amount actually used. The most popular fuel allowance is a fixed amount of litres (#3). The amount paid per kilometre for fuel actually used is being adjusted upwards from six baht to eight baht per kilometre.
The consulting firm Watson Wyatt that carried out this survey recommends that "companies conduct employee engagement surveys in order to understand what employees want."
(Source: Bangkok Post, business, 23-06-08, front page, temp-link)
Vocabulary:
inflation
- (See The
Economist glossary)
cost of living
- the amount of money spent daily by people for essentials such as
food, transportation, housing, clothing, the cost of maintaining a
certain standard
of living (See Wikipedia)
a cost of living
allowance - an addition to an employee's salary to help meet
increased cost of living
wage price spiral - one cause of inflation, a cycle (or feedback loop or vicious circle) in which wage hikes due to inflation cause companies to raise prices, and those rising prices lead to demand by employees for further wage increases, which keeps the cycle going, or alternatively:
When there is inflation, employees will want to be compensated for the higher prices, as they want to buy the same things as they have always bought, so they push for higher wages, when they get the higher wages, this pushes up costs again for the firms, and so the firms increase prices again, if prices go up again, then people will demand higher wages, and so on indefintely. Higher wages push up prices, which in turn push up wages, which in turn push up prices, and so on.
This wage-price spiral
can be very difficult to get rid of, as people quickly build the
increased level of inflation into their expectations. That is why it is
called a spiral as inflation spirals up and up fuelled by increased
wages. (Source)
(See Wikipedia,
Paul
Krugman New York Times editorial, and IMF
paper)
labour unions,
trade unions, unions - an organisation of workers who have
joined together to negotiate with employers for improved wages, hours,
and working conditions (See Wikipedia)
สหภาพแรงงาน
an acronym - a word made from the first letters of
words in a name or phrase (for example, BOT for Bank Of Thailand) ตัวย่อ
X stands for Y - X is a shorter way of saying Y
เมื่อ ก แทนค่า หรือ ย่อมาจาก ข
cope with - deal with a problem sucessfully (See glossary)
รับมือกับปัญหา
minimum wage
- the lowest amount of money that can legally be paid to someone
everyday or per hour for their work ค่าแรงขั้นต่ำ
salaries - the amount of money that an employee receives
per month for their labour เงินเดือน
wages - the amount of money that an employee
receives per hour for their labour ค่าจ้าง
(รายชั่วโมง) สำหรับแรงงานหรือลูกจ้างชั่วคราว
salaries adjusted upwards - salaries increased
การปรับขึ้นเงินเดือน
a breakdown of X - showing the details of X
รายละเอียด
the Thai workforce - all the people who work and
earn money in Thailand แรงงาน หรือคนทำงาน ในประเทศไทย
a bar chart - a chart with bars to show and compare values, bars can either be horizontal or vertical (See Wikipedia) แผนภูมิแท่ง
breakdown by industry - showing the details in each industry, splitting total amounts into the amounts for each industry แสดงรายละเอียดค่าตอบแทน หรือ ค่าจ้างของอุตสาหกรรมแต่ละแขนง
considering X - thinking about doing and debating doing, but have not made the final decision พิจารณา
fuel allowances - money paid to employees of a company that can be used for transportation or gasoline for their car ค่าน้ำมัน ที่บริษัทออกให้ลูกจ้าง
reimbursement - getting money back for money spent on something (for example, I bought the training books expecting that the company would reimburse me) ได้เงินคืนจากการนำสินค้าไปคืนร้านค้า
a survey, a statistical survey - try to find out detailed information about people and their opinions by asking people a series of questions (See Wikipedia on statistical survey) การวิจัย
carried out a survey, conduct a survey - ask the series of questions (and, of course, also communicate the results afterwards) ทำการสำรวจ / วิจัย