Minister of Finance Chang Sheng-ford (張盛和) yesterday confirmed state-owned banks may distribute at least 4.6 months of salary to employees as year-end bonuses this year after the banks reached their annual profit targets.
“It should be no problem,” the Chinese-language United Evening News quoted Chang as saying during a question-and-answer session at the legislature.
Chang’s remarks came after the Chinese-language Apple Daily reported earlier yesterday that employees of state-owned banks would on average get about five months salary as a year-end bonus this year on the back of strong annual earnings.
In addition, Mega International Commercial Bank (兆豐國際商業銀行) — which might post the highest earnings for a state-owned bank this year — would distribute 7.7 months of salary as a year-end bonus, according to the report.
The Ministry of Finance sets annual profit goals for state-owned banks every year. Once the banks reach the required targets, their employees can receive at least 4.6 months of salary as a year-end bonus in accordance with regulations.
State-owned banks can even allot greater bonuses if they make excess profits annually.
Chang said that year-end bonuses maintain a steady level in line with profitability.
In contrast to employees at state banks, most wage-earners in Taiwan have stagnant salaries and do not expect big year-end bonuses amid the current economic slowdown.
Moreover, the problem of negative “real” interest rate is weakening consumers’ purchasing power, as the central bank keeps interest rates low to boost exports.
The real interest rate is the current interest rate minus the current inflation rate.
The Chinese-language Commercial Times reported yesterday that the nation’s problem with negative real interest rates this year may be the worst since the global financial crisis in 2008.
Negative real interest rates mean that the interest Taiwanese people receive from their bank deposits may be not enough to cover additional spending caused by rising consumer prices, a negative driver to the nation’s economy, the report added.
The nation’s benchmark one year deposit rate stands at 1.36 percent, while the government has forecast headline inflation is to rise 1.93 percent this year.
In response to the report, the central bank said the problem of negative real interest rates is common in many countries because of the sluggish global economic situation.
The central bank emphasized that it would continue to keep an eye on global economic developments and adopt appropriate monetary policy, an indication the bank may need to raise policy rates if the real interest rate stays negative for a prolonged period of time.