A worker carries a rice sack in Bangkok, Thailand, on Aug 10, 2023. (PHOTO / AP)

BANGKOK - Thailand will set a new daily minimum wage by the year's end, its labour minister said on Friday, but it would not be 400 baht ($11.19) as previously stated.

The raising of the daily minimum wage, a key plank of the ruling Pheu Thai party's election platform, has rattled businesses over concerns it would push up operating costs and make Thailand less competitive for investors at a time when the economy remains sluggish.

Labor Minister Pipat Ratchakitprakarn told reporters the size of the hike would still be higher than inflation. The average daily minimum wage is currently 337 baht.

The new wage is expected to be finalized by the country's tripartite wage committee by November before being announced as a "New Year's gift," said Labor Minister Pipat Ratchakitprakarn 

The annual headline inflation rate in Southeast Asia's second-biggest economy was 0.88 percent in August and 2.01 percent in the first eight months of the year.

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Earlier this week, Prime Minister Srettha Thavisin said he would seek to raise the daily minimum wage as soon as possible to an "appropriate level" of 400 baht, which would be a 19 percent rise from the current average.

Pipat, however, said the 400-baht wage policy would not be set as the daily minimum wage but "pay by skill" for workers.

"If the (minimum) wage rises by more than 10 percent, I believe employers won't be able to handle it and SMEs will disappear from the country," he said referring to small-and-medium enterprises.

The new wage is expected to be finalized by the country's tripartite wage committee by November before being announced as a "New Year's gift," Pipat said after meeting with the Federation of Thai Industries (FTI).

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FTI chair Kriengkrai Theinnukul said the wage committee's decision on the hike would be accepted and that the increase rate should be slightly higher than inflation.

"We have to find a win-win figure," he said, adding there were more than 20 labour-intensive industrial groups in Thailand.

The new government has announced a raft of populist policies seeking to boost the economy and cut living costs, with key campaign promises including a handout via digital wallets worth 560 billion baht.