Unabated inflation continued to erode incomes in the first five months of this year, with the decline in real wages widening to 2.01 percent, the nation’s statistics agency reported yesterday.
The report by Directorate General of Budget, Accounting and Statistics (DGBAS) said nominal wages, averaging NT$37,066 a month between January and May, posted the biggest drop since 1980.
“The nominal wage climbed 1.58 percent in first five months of this year,” Huang Jiann-jong (黃建中), deputy director of DGBAS’ census bureau, told a news conference. “But the gain failed to match the rise of 3.66 percent in commodity prices during the same period, resulting in real wages declining 2.01 percent after falling 1.92 percent a month ago.”
Huang pinned the blame primarily on imported inflation, which has pushed up fuel and raw material costs and dented corporate profit margins.
The statistics official dismissed concerns about stagflation, noting that while the consumer price index kept rising, the domestic labor participation rate remained stable.
Unemployment stood at 3.95 percent, or 428,000 people, last month, up 0.11 percent, or 12,000 people, from May, the DGBAS report said.
Huang attributed the rise to the entry of new college graduates, who accounted for 4.42 percent of the jobless population, topping other groups by education.
“Seasonally adjusted unemployment stood at 3.88 percent in June, down 0.01 points from a month earlier, indicating labor participation is steadily growing,” Huang said.
The official declined to speculate on the real wage decline except to say the trend would reverse when inflation is contained, the economy recovers and corporate margins expand.
Economists said they saw no signs of an economic recovery in the near term.
Daw Jaw-yang (戴肇洋), a researcher at the Taiwan Research Institute (台綜院), said real wages would continue to decline in the second half of the year unless oil prices could drop sizably, under US$100 a barrel, for example.
“The government cannot stabilize commodity prices or boost the economy if fuel and raw material costs continue the upward trend,” Daw said by telephone.
The researcher also cast doubts on the official unemployment figures, saying they failed to take part-time workers into consideration.
Daw said he doubted this group could adequately support their family given their limited pay.
Chu Hau-min (朱浩民), professor of Money and Banking Department at National Chengchi University, agreed.
Chu said he was not surprised at the wider drop in real wages and predicted no across-the-board wage hike would take place in the next two years.
“It is unlikely the private sector would raise wages even if the government manages to expand domestic demand and raise GDP growth,” Chu said by telephone. “Manufacturers by and large have kept profit margins low to compete in the international stage.”