Whenever the Minimum Wage Review Committee holds a meeting, it triggers a debate between its supporters and opponents. Opponents believe that raising the minimum wage would inevitably force businesses to stop investing in Taiwan and relocate overseas. Some even believe the government will have to follow Singapore’s example and abolish the minimum wage altogether to help commerce survive in the competitive global market. Moreover, some say raising the minimum wage would reduce job opportunities and create unemployment among marginal workers and that the government may cause widespread harm despite its good intentions.
However, such views are erroneous. The government sets a minimum wage requirement to protect economically disadvantaged workers and to guarantee their right to a share in the fruits of economic growth. With the exception of the Middle East, minimum wages are a universally implemented policy with almost 90 percent of all nations making it law.
The drive to reinforce the minimum wage has not ceased despite the global economic downturn. Over the past decade, developed countries such as the UK, Ireland and Australia turned the concept into law. However, it is developing countries that have been the key driving force behind this trend. South Africa implemented a minimum wage in 2002 and China did so in 2004.
Given that the minimum wage has the power to stabilize real aggregate demand, many countries have continued to raise the minimum wage level despite the recent difficulties. For example, in Brazil — although its GDP dropped slightly in 2009 — the government still raised the minimum wage by 6 percent to maintain living standards and the purchasing power of low-income laborers. The UK, Japan, Russia, South Korea and the US also chose to raise their minimum wage during the global financial crisis and more recently, South Korea passed a resolution to raise the minimum wage by 6.1 percent in 2013, despite the European debt crisis.
The question of whether the minimum wage will have any unexpected effects on employment has long been debated. According to economics textbooks, the minimum wage could distort the job market and lower the demand for labor, causing higher unemployment. According to this line of reasoning, raising the minimum wage would harm the very groups that it is designed to protect.
However, this point is not backed up by empirical research and evaluation reports provide evidence to both support and oppose the argument. In recent years, the view that the minimum wage acts as a positive influence on employment has gradually become dominant.
In 2006, more than 650 economists — including five Nobel Prize winners and six former presidents of the American Economic Association — jointly called on the US to raise its minimum wage, saying that it would improve the living conditions of low-income laborers and that it would not have the negative effects that critics suggest it would. The British Low Pay Commission also said that there is no evidence to show that the implementation of a minimum wage is significantly harmful to either the economy or employment.
The implementation of a minimum wage is not just a prevailing trend, it is also a recognized policy tool to effectively protect low-income workers and narrow the wealth gap. For the sake of economic growth and fairness, the government should take action to maintain a healthy consumption level among low-income workers and boost real aggregate demand.
Liou You-syue is a doctoral student in the Institute of Social Welfare at National Chung Cheng University.
Translated by Eddy Chang
Singaporean Prime Minister Lee Hsien Loong’s (李顯龍) decision to step down after 19 years and hand power to his deputy, Lawrence Wong (黃循財), on May 15 was expected — though, perhaps, not so soon. Most political analysts had been eyeing an end-of-year handover, to ensure more time for Wong to study and shadow the role, ahead of general elections that must be called by November next year. Wong — who is currently both deputy prime minister and minister of finance — would need a combination of fresh ideas, wisdom and experience as he writes the nation’s next chapter. The world that
The past few months have seen tremendous strides in India’s journey to develop a vibrant semiconductor and electronics ecosystem. The nation’s established prowess in information technology (IT) has earned it much-needed revenue and prestige across the globe. Now, through the convergence of engineering talent, supportive government policies, an expanding market and technologically adaptive entrepreneurship, India is striving to become part of global electronics and semiconductor supply chains. Indian Prime Minister Narendra Modi’s Vision of “Make in India” and “Design in India” has been the guiding force behind the government’s incentive schemes that span skilling, design, fabrication, assembly, testing and packaging, and
Recently, China launched another diplomatic offensive against Taiwan, improperly linking its “one China principle” with UN General Assembly Resolution 2758 to constrain Taiwan’s diplomatic space. After Taiwan’s presidential election on Jan. 13, China persuaded Nauru to sever diplomatic ties with Taiwan. Nauru cited Resolution 2758 in its declaration of the diplomatic break. Subsequently, during the WHO Executive Board meeting that month, Beijing rallied countries including Venezuela, Zimbabwe, Belarus, Egypt, Nicaragua, Sri Lanka, Laos, Russia, Syria and Pakistan to reiterate the “one China principle” in their statements, and assert that “Resolution 2758 has settled the status of Taiwan” to hinder Taiwan’s
As former president Ma Ying-jeou (馬英九) wrapped up his visit to the People’s Republic of China, he received his share of attention. Certainly, the trip must be seen within the full context of Ma’s life, that is, his eight-year presidency, the Sunflower movement and his failed Economic Cooperation Framework Agreement, as well as his eight years as Taipei mayor with its posturing, accusations of money laundering, and ups and downs. Through all that, basic questions stand out: “What drives Ma? What is his end game?” Having observed and commented on Ma for decades, it is all ironically reminiscent of former US president Harry