No one could doubt Council of Labor Affairs (CLA) Minister Jennifer Wang’s (王如玄) determination to increase the minimum monthly and hourly wages next year, especially after she tendered a second letter of resignation in protest against the premier’s decision not to raise the minimum monthly wage. The question is not who is in charge of the wage matter, but how the wage committee will move ahead.
The wage committee passed a proposal on Aug. 9, which called for increasing the minimum monthly wage by NT$267, or 1.42 percent, to NT$19,047 next year and raising the minimum hourly wage from NT$103 to NT$109 next year, followed by a further increase to NT$115 in 2014. However, the Cabinet on Wednesday decided to implement the proposed increase in the hourly wage, but turned down the plan to increase the monthly wage on the grounds of the need to maintain competitiveness amid the economic slowdown.
Wang’s move made her the second minister — after former minister of finance Christina Liu (劉憶如) — to bow out of President Ma Ying-jeou’s (馬英九) administration since Ma began his second term in office in May. Disagreements within the government over the wage issue have raised further doubts about Ma’s leadership as well as the capability of Premier Sean Chen (陳冲) and the entire Cabinet. However, the real issue that few people have noticed is that the Cabinet’s decision to reject the wage committee’s suggestions puts the committee’s credibility to the test and casts doubt on its legitimacy.
The wage committee is an advisory body set up under the council to review salary standards on an annual basis by accounting for consumer price changes, unemployment levels and other things. The 21-member committee is composed of representatives from the government and academia as well as members of labor unions and businesses. For the most part, government representatives dominate the review process because committee members tend to disagree.
The committee’s wage discussions have never brought cheer to either employees or employers over the past decades. It has always invited heated debate between labor rights groups and business associations over the feasibility of wage hikes before and even after the committee members meet to discuss the issue. This is because an increase to the minimum wage, although a move designed to lift the lowest-paid workers out of poverty, means a higher health insurance, labor insurance and pension fund burden for employers. Therefore, it causes considerable increases in personnel costs for labor-intensive industries. There is also criticism that the committee’s wage proposals fail to keep pace with inflation and about the formula used to determine such wage hikes.
Under Article 21 of the Labor Standards Act (勞動基準法), the committee must present the proposal to the Executive Yuan for approval. Over the years, the Cabinet had always paid respect to whatever decisions the committee made and accepted its proposals entirely until this week. The events of the past week serve as a watershed and send out a warning about the nation’s minimum-wage-setting mechanism.
Minimum wage hikes are not an issue of right or wrong, but rather of when and how. One should realize that there will not be any gain without pain. The people who helped establish the wage review committee would like to see the mechanism make steady progress and address the issues facing both employees and employers. However, the Cabinet’s move has raised speculation of a policy that tilts toward business interests at the expense of the public’s trust in the wage committee.