Thailand's Prime Minister Srettha Thavisin on Wednesday defended a cornerstone policy pledge of his populist government, saying increases to the daily minimum wage would "not be a disaster" for business owners.

His comments came after a wage committee of government officials, labour representatives and businesses agreed to a 2.37% hike in the minimum wage to between 330 baht and 370 baht ($9.23 to $10.35) per day, which the prime minister deemed too low.

"This government does not agree with (that hike)," Srettha told a business forum, adding the government has already reduced electricity and energy prices to support businesses.

"Thais need to have work with dignity."

Srettha's ruling Pheu Thai party had campaigned on a key populist plank of raising the minimum wage to 400 baht a day.

A previous government had raised the minimum wage by 5.02% in October 2022.

A larger minimum wage hike will be proposed this month, the labour minister said earlier, without giving further details.

Businesses have expressed concern over rising costs and wages as a factor in holding back competitiveness amid sluggish economic growth. "Businesses will find that wage hike will not be a disaster, but will have a positive effect if done properly," Srettha said.

The Federation of Thai Industries has warned businesses would have to shoulder the costs of a higher minimum wage alongside higher borrowing costs, which could make Thai companies less competitive.

Southeast Asia's second-largest economy grew much lower-than expected at 1.5% in the July-September quarter from a year earlier, the slowest pace this year, on weak exports and government spending.

($1 = 35.7400 baht) (Reporting by Chayut Setboonsarng; Editing by Jamie Freed)