As Taiwanese companies grapple with intensifying global competition, corporate executives need to adopt new business strategies and take a more proactive stance on raising salaries to improve their firms’ competitiveness and profitability.
One of the most important things that local companies have to do is change their long-standing mindset that sees employees only as a cost. This has left firms reluctant to pay higher salaries even to skilled professionals as they try to control costs and generate as much profit as possible.
Statistics from the Directorate-General of Budget, Accounting and Statistics show that after factoring in inflation, wages in Taiwan have contracted 0.49 percent over the past decade, while the nation’s GDP expanded at an annual average rate of 2.75 percent, indicating that the benefits of economic growth have not trickled down to the average worker.
Corporate stinginess has reduced earning power to a 16 year low and long-term wage stagnation has left salaries far behind those offered in Hong Kong, South Korea and Singapore and even some big cities in China. This has created an endless drain of talented people seeking to work abroad.
With rise of China and emerging markets, Taiwan can no longer compete by manufacturing low-cost products and offering slim-margin services, even though labor costs have been cut significantly over the past decade. Companies can no longer succeed by holding on to such low-margin businesses and old-fashion labor strategies. Things need to change.
Taiwan needs to invest more in employees and in research and development to see more profit. Local executives should catch up with the global trend of seeing employees as corporate assets who can help boost profits, since skilled employees can create value-added products and services.
Companies’ growth will hinge on how many talented employees they can attract and retain. Good compensation and profit sharing will help companies keep skilled workers.
Many firms have enough capital to afford to boost wages. Based on the Taiwan Stock Exchange’s latest statistics, the nation’s 778 companies on the main bourse posted nearly 60 percent annual growth in pre-tax profit to NT$1.16 trillion (US$36.61 billion) in the first three quarters of last year.
More than 55 percent of those firms see their pre-tax profits grow on an annual basis, the stock exchange said.
Yet most corporations remain circumspect about pay hikes, or boosting research funds, because they are wary of the uncertain world economy and fast-changing industrial environment. A survey by online recruitment agency 104 Job Bank released last month said that less than 40 percent of companies planned to raise salaries this year.
Employers plan to raise salaries by 4.01 percent this year, compared with a 3.2 percent increase in 2013, the survey said.
The government has been urging firms to raise salaries to retain skilled workers and attract experts.
“Investment in talent will be ultimately translated into corporate performances,” Minister of Economic Affairs John Deng (鄧振中) said.
In its latest effort to encourage firms to raise wages, the ministry is pushing a draft bill in the legislature that would offer incentives for small and medium-sized enterprises to hike entry-level salaries by offering a corresponding reduction in their business tax. The ministry expects one-third of such firms will boost their pay scales if the draft is passed.
However, the government’s efforts to stimulate pay hikes will only play a minor role in helping break the cycle of wage stagnation and brain drain. The main propellant will be corporate leaders recognizing that they have to adjust their labor policies and salary structures to ensure their firms’ growth and survival.
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
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
Can US dialogue and cooperation with the communist dictatorship in Beijing help avert a Taiwan Strait crisis? Or is US President Joe Biden playing into Chinese President Xi Jinping’s (習近平) hands? With America preoccupied with the wars in Europe and the Middle East, Biden is seeking better relations with Xi’s regime. The goal is to responsibly manage US-China competition and prevent unintended conflict, thereby hoping to create greater space for the two countries to work together in areas where their interests align. The existing wars have already stretched US military resources thin, and the last thing Biden wants is yet another war.
Since the Russian invasion of Ukraine in February 2022, people have been asking if Taiwan is the next Ukraine. At a G7 meeting of national leaders in January, Japanese Prime Minister Fumio Kishida warned that Taiwan “could be the next Ukraine” if Chinese aggression is not checked. NATO Secretary-General Jens Stoltenberg has said that if Russia is not defeated, then “today, it’s Ukraine, tomorrow it can be Taiwan.” China does not like this rhetoric. Its diplomats ask people to stop saying “Ukraine today, Taiwan tomorrow.” However, the rhetoric and stated ambition of Chinese President Xi Jinping (習近平) on Taiwan shows strong parallels with