CPEA says wage hike could hurt traditional sector

The impending minimum wage hike is expected to have a heavy impact on the traditional manufacturing industry, wholesalers and retailers, a report released by the Chinese Personnel Executive Association (CPEA, 中華人事主管協會) said on Friday.

The Council of Labor Affairs (CLA) said on Friday it would raise the minimum monthly wage by 7.5 percent to 9.5 percent, a motion which will be sent to the Cabinet for approval and is expected to be implemented on July 1 at the earliest.

The wage hike would not impact the majority of laborers, as their salaries are far above the minimum wage level, but it will cause a considerable increase in personnel costs for labor-intensive industries, CPEA chief executive Lin Yu-min (林由敏) said in the report.

Aside from the wage increase, employers will also have to cover the extra costs on labor insurance, health insurance and pension funds, which will rise in accordance with the wage hikes, Lin said.

To save the costs incurred from the hike, Lin said companies employing foreign laborers should take out more board and lodging fees from their salaries.

Ninety-eight percent of employers deduct NT$2,500 (US$75) per month from foreign workers' salaries for board and lodging, Lin said.

Employers could raise the deduction to NT$4,000, the maximum allowed by the CLA, he said.

Wholesalers and retailers -- which hire a large number of part-time employees -- will also feel the repercussions of the hike, as the council also proposed to raise the minimum wage for part-time workers from NT$66 per hour to NT$94 per hour, Lin said.

Taiwan Chain Stores and Franchise Association (台灣連鎖暨加盟協會) expressed its opposition to the 42 percent salary hike on Friday, saying the wages of part-time workers should not be adjusted to the same degree as those of full-time workers, as the former are less skilled and experienced.

"We hope the government will re-evaluate the proposal, or many of our member companies may not be able to afford the surging operational costs," the association said in a statement.

Amy Luan (欒美雲), a public relations official at President Chain Store Corp (統一超商), said the nation's largest convenience store chain was still mulling how it would deal with the new plan.

"The measure will certainly increase our operational costs, given the number of part-time employees we hire," Luan said.

Lin said wholesale and retail operators should limit the number of working hours of part-time employees to less than eight hours, which could help them save on overtime expenses.

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