A recent story published by Agence France-Presse about the flip side of Germany’s economic miracle may provide some insight into Taiwan’s labor policymaking as workers in both countries face the same problem of low wages, despite fairly good GDP figures and unemployment rates.
In Europe’s biggest economy, about 3 million workers earn less than 6 euros an hour, making Germany the country with the biggest portion of low-wage workers in Europe. That figure stands in contrast to the country’s impressing 6.8 percent unemployment rate.
Unlike many other countries such as France, the US and Taiwan, Germany has not set a minimum wage, making it difficult to find a solution to the problem.
Employers in France are obliged to pay a minimum wage of 9.50 euros (NT$376) per hour, while US employers must pay US$7.25 (NT$215) per hour to allow workers to have a decent standard of living amid rising costs.
Taiwan’s situation is somewhat different from that in Germany, given the differences in their respective economic structures. However, the problem of low wages in Taiwan is even more acute than in Germany.
Taiwanese employees have staged a series of protests recently requesting higher salaries as they found their wages have not just stagnated, but are decreasing, meaning many are struggling to make ends meet.
In the first four months of the year the nation’s real average monthly income fell to a level last seen 16 years ago at NT$55,062, according to the statistics released by the Directorate-General of Budget, Accounting and Statistics (DGBAS).
The main purpose of a minimum wage is to ensure that workers can enjoy a basic standard of living. Currently, Taiwan’s system is failing to do this. Workers are finding that they are losing ground in their fight for a raise as the government takes sides with their employers with an eye on keeping the nation’s economy in check.
Taiwanese enterprises rely on foreign low-wage workers to make products and to provide services. Any increase in the minimum wage will mean cost increases. Any increase in cost will harm the businesses that count on selling low-profit-margin products and services to win orders.
Last month, the Council of Labor Affairs conditionally approved a 1.19 percent increase in the monthly minimum wage to NT$19,273 and a 5.5 percent rise in the hourly minimum wage to NT$115, following intensive discussions with representatives from labor unions and employers.
The council also decided to scrap the rule of holding an annual review on minimum wages. Instead, the meeting will only be held when the consumer price index (CPI) increases by 3 percent or more annually.
It is unlikely a meeting will be convened to review the minimum wage in the short term, as the nation’s CPI has been falling. The index shrank 0.79 percent annually last month, bringing inflation up slightly by 0.89 percent in the first eight months of this year, according to the DGBAS.
Relating the minimum wage to CPI may seem reasonable because of higher consumer prices. However, the index is an average figure, indicating the median changes of all major elements. People in the lower-income bracket are more vulnerable to rising prices of food and other daily necessities. What is more, the price hikes of those items usually outpace rises in average consumer prices. That is why people felt the pinch of price hikes in a wide range of basic goods such as electricity, even though the CPI fell.
The government should rethink its wage polices to effectively safeguard the basic standard of living for low-income workers and link minimum wages to the nation’s GDP. It should think more about helping companies expand out of low-margin businesses. Taiwan’s economic growth should not come at the expense of workers’ wages.