With this year rapidly drawing to a close, the time has come for a moment of reflection: We are slightly better off than a year ago, but that is not saying much.
Last week, the Directorate-General of Budget, Accounting and Statistics (DGBAS) released the latest wage data, showing that real wages after adjustment for inflation for the first 11 months of the year rose 1.79 percent year-on-year to average NT$37,330 (US$1,131) per month, the highest level in the same period since the 2008 global financial crisis. After adding in year-end, overtime and other bonuses, nominal wages rose 3.33 percent from a year earlier to NT$47,567 per month, also the highest in eight years, the DGBAS statistics showed.
Meanwhile, Taiwan-listed companies, excluding financial holdings firms, reported an overall 6.52 percent average increase in pre-tax profits for the first three quarters of the year thanks to good results in the electronics, plastics and petrochemicals sectors, according to Financial Supervisory Commission data. The latest statistics indicated that listed companies managed to post their highest pre-tax profits in recent years during the first nine months, at NT$1.51 trillion, despite uncertain macroeconomic conditions around the world.
Consequently, about 78.6 percent of local businesses have offered pay raises to their employees this year, with an estimated average annual growth of 4.3 percent, or an increase of NT$1,661 per month, based on a recent survey conducted by online job bank yes123. That is good news for wage earners whose salaries in real terms have not returned to their level of 16 years ago. However, the raise is not across the board and the monthly increase means an extra reward of NT$55 per day, or roughly the price of a lunchbox sold at convenience stores.
Clearly, the link between real wage growth and GDP growth in Taiwan in recent years has disappeared, as government data showed that real wages contracted by 2.6 percent from 2001 to last year, while real GDP increased by 71 percent over the same period.
The problem of low wages shows that the fruits of corporations’ earnings are yet to fully trickle down to their employees. It also reflects the long-term results of the nation’s economic development, where the high-paying manufacturing base is shrinking, while the number of low-paying retail and food service jobs is significantly increasing.
It is no secret that low-wage workers and their families tend to have the most to lose as the economy sags and companies cut back. This year, lawmakers moved to pass amendments to address this issue, with an amendment to the Company Act (公司法) compelling companies to allocate a certain amount of their profits to employees in the form of bonuses or dividends, and another amendment to the Small and Medium Enterprises Development Act (中小企業發展條例) allowing companies to claim pay raises as tax- deductible expenses.
These actions might not have an extensive impact on the job market, but they represent the government’s first step toward pushing wages higher. The government can no longer rely on corporations to do their part to boost wages voluntarily, because the government has lost the power of moral suasion in its quest for higher pay rates. Meanwhile, policymakers must resort to a carrot-and-stick approach to entice businesses to offer better paychecks.
Thus far, the three presidential candidates have all proposed measures to improve jobseekers’ employment skills and other policies to tackle the issue of low pay in the run-up to the Jan. 16 presidential election. Voters must use the election to send a message to the next government that it has to do something. It is hard enough for low-wage workers to survive in this economy.
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