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It's the hourly wage that should be revised

Employment helps people live a dignified and meaningful life. Anyone willing to work hard and play by the rules should have a chance to improve his/her income.

The fundamental reasoning behind the minimum wage laws adopted by many countries is to make sure that the minimum wage is sufficient to sustain a basic standard of living. In many countries, the real wage earned by unskilled workers has shown a downward trend.

Regardless of how the economy performs, most unskilled workers remain at the low-income level.

There are many reasons why these people live in poverty. Some analysts attribute it to the increasing internationalization of businesses, while others say that technological changes and an outflow of businesses lead to declining demand for unskilled workers. Others still blame it on falling union membership and many economic studies say the reason is that minimum wages have not been able to keep up with inflation.

The question of whether Taiwan should adjust its minimum wage has been the topic of a heated debate of late. The focal point of most of the discussion has been the question of how much the government should adjust the minimum monthly wage.

I believe, however, that while the government is reviewing the basic wage rate it would be more worthwhile to establish a system to govern the hourly minimum wage.

Beginning in August 1992, the Council of Labor Affairs formulated a policy for the minimum hourly wage in addition to the minimum monthly and daily wages. The hourly wage was determined by dividing the minimum monthly wage by 240 hours which in its turn is based on an eight-hour workday, 30 days per month. This in effect assumes that apart from the working hours, the job market for long-term official labor contracts and that for short-term unofficial contracts are the same.

But in fact, these are two very different kinds of labor markets. The workers in the long-term market hold a regular full-time job with a monthly salary, whereas those in the short-term market hold non-regular jobs, work part time and are paid hourly. The latter have less work protection, employee benefits with education and training, promotion opportunities, pensions and yearly bonuses, and might not even have them at all despite performing more physically demanding labor. The Labor Standards Law (勞基法) states that Taiwanese full-time workers have paid holidays included in their salaries, whereas part-part time hourly employees are paid only for the time they are actually working.

All of this demonstrates that there is a clear difference in the working conditions between the two groups.

Theoretically, this disparity should be offset by higher wages for the part-time workers, but this is not the case with the nation's current hourly base wage. This is unfair and should be addressed.

For any form of minimum wage to be meaningful, it must guarantee workers a basic standard of living. Otherwise it fails in its original purpose. Under the current hourly minimum wage system, part-time workers must work 240 hours per month in order to qualify for the monthly minimum wage. Recent survey figures from the Directorate-General of Budget, Accounting and Statistics showing that last year the average monthly income of 181,000 part-time hourly workers was just NT$14,717 (US$443) testify to how unreasonable this law is. We must therefore consider establishing a more logical system so that these workers can have more security in their lives.

Taiwanese have traditionally calculated labor by the day. But with industrial development and changes in the social structure and individual values, use of part-time workers is becoming ever more common and an increasing number of employers are paying workers by the hour. Taiwan has already expanded the scope of the Labor Standards Law to apply to commercial and service industries in which the divisibility of labor is greater than in other industries. In order to help commercial employment efforts, improve personnel efficiency, adapt to changes in the economic structure and make the best use of labor, the government should push to create a flexible system for part-time workers and develop the staffing industry.

The success of these efforts will depend on a logical hourly minimum wage. Therefore, in order to interest people of all ages and genders to work part time and join staffing agencies as well as guarantee the quality of life of disadvantaged labor groups, appropriately raising the hourly minimum wage should be a logical way to employ labor and improve the overall economy.

Huang Jen-te is a professor in the department of economics at National Chengchi University.

Translated by Daniel Cheng and Marc Langer
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