While the world gave a sigh of short term relief after Washington’s fiscal cliff deal January 1st, Thailand introduced a controversial nationwide minimum wage.  The policy is popular amongst Thailand’s workers, yet corporations and some government level departments have expressed concern about the policy’s potential impact on employment and Thailand’s economy in general.

Minimum wages are unpopular among “free market” thinkers because they are thought to interfere with the efficient allocation of labor. They argue that businesses will suffer as their wage costs are made unnaturally high (“unnatural” meaning anything not set by market forces), and businesses will pass on these higher input costs to consumers through higher prices, resulting in inflation.  Some also argue that minimum wages hamper businesses by forcing them to pay more to their least skilled workers at the expense of those who are more valuable, productive or capable.  As with several of Thai Prime Minister Yingluck’s policies, critics have labeled the minimum wage increase as a “populist” measure.