Mon, Jan 07, 2008 - Page 8 News List

Don't blame the state for corporate slothfulness

By Huang Chin-yin 黃欽印

Scenes of members of the public cornering politicians, often with complaints about their jobs and the economy, have been televised recently. This is a worrying development as it is likely that most viewers would unthinkingly side with the protesters, regardless of the validity of their complaints.

In any economy, employees must outnumber employers. Stability therefore depends on employers being able to pay reasonable wages to the employed. When wages are not reasonable, wage earners will choose to look for other employers that offer better salaries. When workers cannot find employers that offer better conditions, they complain.

Some people always blame the government for such problems and choose to protest. But should the government carry the can?

Simple research reveals that as many as 300 listed companies had profit margins under 10 percent last year. Of these, as many as 200 companies invested less than 1 percent of their profits in research and development -- and many of these companies are well-known. Based on these observations, the outlook for these companies is not rosy: As little or no research and development is taking place, orders can only be gained through high volume sales at low margins. A company of this sort has little option but to move to China and take advantage of the cheap labor. This results in a lack of job opportunities in Taiwan.

Employers who deny Taiwanese employment or pay rises typically pass the buck to the government -- and the government foolishly believes that its own policies have caused the problem. This is utterly confounding.

Workers need to understand that no government can save businesses that do not strive to improve. A business that does not invest in research and development is a sitting duck. Low profit margins result from a lack of pricing power, with businesses forced to passively accept the humble profits that large foreign companies are willing to pay. This plight befalls companies that fail to innovate and create quality brands.

Considered in this light, it should be obvious that the government cannot be held responsible for all economic problems. Wage earners have the right to monitor government and ensure sound economic policies are in place so that quality companies thrive in Taiwan. As for businesses that rely on low margin, high-volume strategies and refuse to invest in research and development -- their political influence must be watched closely. When these businesses have the ear of government, wage earners suffer.

Huang Chin-yin is an associate professor at the Department of Industrial Engineering and Enterprise Information at Tunghai University.

Translated by Ted Yang and Angela Hong

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