Mon, Mar 17, 2014 - Page 8 News List

Tackle the minimum wage with legislation

By Lai Hsiang-ling 賴香伶

The Ministry of Labor has said it prefers the idea of using policy instruments to encourage companies to improve salaries and it has called on people not to focus too much on the minimum wage. Workers may think differently.

Consider real salary levels. According to the Directorate-General of Budget, Accounting and Statistics, the monthly average regular earnings figure stood at NT$36,710, while the average monthly income was NT$45,965 last year for the more than 7 million workers employed in the industrial and service sectors.

The first thing to note is that salaries, in real terms — after inflation has been taken into account — have fallen to levels of 15 years ago, because any increase in salaries since that time actually falls short of the increase in the price of goods.

The second point is that the difference between the two figures — just shy of NT$10,000 — shows that employers are supplementing their workers’ salaries with non-regular earnings, thereby decreasing their costs in labor insurance and pension contributions that they are required to pay.

Now look at salaries for the close to 3.5 million workers who earn less than NT$30,000 a month. Their “non-regular” earnings — their salary minus the minimum wage — account for as much as one-third of their total monthly take-home pay. That is, the reason the monthly salary of these workers falls between NT$22,000 and NT$25,000 is because employers have purposefully calculated it at the minimum wage level and then added non-regular earnings, such as perfect attendance bonuses or overtime pay.

The ministry defines the minimum wage as the guaranteed minimum workers are paid, to protect marginal workers, but this does not reflect the truth of the matter because these 3.5 million workers are not marginal workers; they are the majority of the low-income service sector workers.

Premier Jiang Yi-huah (江宜樺) believes the solution to the decline in salaries lies in the government’s push to participate in regional economic integrations such as the proposed Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP), and to encourage industrial innovation and R&D.

However, the reality of the situation is that the impressive GDP figures of the past few years — driven by companies’ overall profits — show that it is within these firms’ power to distribute some of the surplus and increase salary levels, but over that same time period workers salaries have continued to fall. This has also meant that the debate over the minimum wage rages. Frankly, the ministry’s promise to prioritize for government contracts companies that say they will improve salaries is insufficient.

The Taipei City Government is leading by raising its minimum pay to NT$22,639, an hourly wage of NT$133. This is something that workers’ groups have long been urging. Given this, is the minimum wage review committee still going to insist that the wage is adjusted only when the consumer price index hits 3 percent?

The ministry does not have very many policy instruments to play with. The minimum wage review system is unlikely to constitute a viable policy instrument by itself. That the committee plays an advisory role and has no legal status notwithstanding, its existence is in doubt, thanks to the Chinese National Federation of Industries and the General Chamber of Commerce of the Republic of China.

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