Homebuilders safe on minimum wage

New home designs are on display at a fair held by the Home Builder Association, whose members have expressed concern about a shortage of skilled labour.  APICHART JINAKUL

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An increase in the minimum daily wage would have no direct impact on the homebuilding business but would strongly affect the industrial sector as wages for construction jobs are higher than the standard rates, according to the Home Builder Association.

Current wages paid by the homebuilding sector is much higher than the rate paid by factories in the industrial sector.

Association president Pichit Arunepunlop said most homebuilders paid wages higher than the minimum rate to retain skilled labourers, who are in short supply across the country.

"The proposed increase in the minimum wage of 20% to 360 baht a day would have an impact on the industrial sector as wages are sensitive to the sector's costs and the sector depends largely on the labour force," he said.

Labour networks used Labour Day on Sunday to lobby the government for a 60-baht increase in the minimum wage that they say would help millions of struggling workers across the country to cover their monthly expenses.

The groups proposed the appropriate daily wage to enable these workers to stay afloat is 360 baht, a 20% increase from the current 300 baht.

Mr Pichit said that although an increase in the minimum daily wage might not have a direct impact on the homebuilding sector, it would have an effect on construction material costs, which would increase prices of homebuilding units eventually.

In the homebuilding sector, the minimum daily wage starts from 340 baht for general technicians and increases to 400-500 baht for labourers with specific skills that are in short supply.

"As homebuilders may not want to raise unit prices amid unfavourable sentiment and a competitive market, they may lower discounts or campaigns instead," Mr Pichit said, adding that wages were 30% of total homebuilding costs.

Mr Pichit said the homebuilding market in the second half will probably improve from the first half as consumer confidence will pick up following better sentiment on overall economic prospects.

Despite strong demand, higher construction costs will be a negative issue having an impact on sentiment in the second half, he said.

According to Mr Pichit, demand in the self-built home market remains strong. The segment has no defaults on mortgage loans because buyers need to have their own land plot before building a unit.

To boost demand, the association will discuss with several banks the possibility of providing loans for decorations and furniture.

Only Kasikornbank and Siam Commercial Bank currently offer loans for furniture and decorative items of up to 20% in addition to mortgages.

The association predicted earlier this year that Thailand's homebuilder market was expected to recover this year thanks to pent-up demand delayed last year by the economic slowdown.

The association forecasts the market will grow by 15% to 12 billion baht this year.

The association plans to have a sales event in August when Mr Pichit expects a recovery in economic sentiment and purchasing power.

At a homebuilding fair held in March, the association's members posted sales of 950 million baht, close to the target of 1 billion baht.

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