After a review session on Friday of more than seven hours that was attended by business and union representatives as well as academics and government officials, the Ministry of Labor’s Minimum Wage Review Committee proposed a 4.72 percent increase in the monthly minimum wage to NT$22,000 (US$725.31) from NT$21,009, compared with a 5 percent raise last year. The committee also recommended that the hourly minimum wage be raised by 5.26 percent from NT$133 to NT$140.
The proposals must be approved by the Cabinet before taking effect at the earliest on Jan. 1 next year.
The upward adjustment to the minimum wage is expected to increase corporate costs by NT$30 billion annually, based on an estimate by the Chinese National Federation of Industries, while the planned hikes are likely to affect more than 2 million workers, including 1.25 million domestic workers and 410,000 of their foreign peers, according to the ministry’s tallies.
In many countries, minimum wage refers to the lowest wage permitted by law or reached through a decision by a competent authority, a wage committee or a collective agreement between employers and workers. The purpose of having a minimum wage is to protect workers — especially marginal workers such as part-time workers, apprentices and unskilled workers — against unduly low pay.
In Taiwan, there is currently no law to authorize regular increases in the minimum wage and ensure that these workers can earn enough money to adequately support themselves and their families. Therefore, negotiations at the annual review committee seem to entail tough negotiating among all parties, with labor rights advocates demanding bigger increases and corporate executives favoring milder adjustments, while academics and government officials act as mediators.
It is understandable why corporate executives were not satisfied with the wage outcomes reached on Friday, as labor costs are an important factor affecting firms’ competitiveness. Their cautious stance toward a wage increase also reflects their reluctance to relinquish the cost advantage of cheaper labor.
This type of mindset has actually suppressed wage growth for both white-collar and blue-collar jobs, with the issue of low wages becoming both socially and economically disastrous to the country in recent years.
The committee’s decision to raise the minimum wage for a second consecutive year, with the scope of the hikes exceeding businesses’ expectations, is indicative of policy change under President Tsai Ing-wen’s (蔡英文) government, as her administration shifts gears to achieve a relatively fair and labor-friendly economy after decades of policies that favored businesses while leaving many behind. Based on the current pace of the increases, it is possible to envision the minimum wage reaching NT$28,000 by 2024, when Tsai would complete a second presidential term.
Even so, there is still the need to pass minimum wage legislation as soon as possible. This is crucial if Tsai is to fulfill her campaign promises and if the nation is to establish a solid foundation of review standards with a clear formula for calculating wages, while reducing the political atmosphere of the review committees.
However, raising the minimum wage alone is not enough to tackle Taiwan’s low wage problem.
After all, the minimum wage increase affects only 2 million workers, accomplishing nothing for about 80 percent of the nation’s workers, whose wage levels are higher than the minimum wage, but who might not have seen a raise in years.
This demands a change of mindset in the corporate world, but it also requires the nation to transform its economic structure, upgrade its industrial sector and improve its employment and wage structures.
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