The Chinese Nationalist Party (KMT) legislative caucus called for a pay raise for workers when enterprises profit and proposed amending related laws, but former Democratic Progressive Party (DPP) legislator Shen Fu-hsiung (沈富雄), while applauding the good intention, said he doubted its efficacy.
KMT caucus whip Lai Shyh-bao (賴士葆) and Legislator Lo Shu-lei (羅淑蕾) held a public policy hearing yesterday, in which they proposed amending the Company Act (公司法) and the Labor Standards Act (勞動基準法) to require corporations to share their profits with employees at a rate that could benefit the nation’s workforce, whose share of the country’s GDP has been declining over the past decade.
“While our GDP has been increasing, our workers’ wages have been stagnant for the past 16 years,” Lai said. “According to the Directorate General of Budget, Accounting and Statistics, the share of labor compensation to GDP fell by 0.87 percentage points to 44.65 percent in 2013, the second lowest in Taiwan’s history, while the ratio of enterprise profits to GDP rose by 1.41 percentage points to 33.45 percent during the same period.”
Minister of Labor Chen Hsiung-wen (陳雄文) added that the decline of compensation for workers has been a decade-long trend.
“In 1992, it was 54.2 percent, while the share of corporate revenue to GDP was 30.69 percent,” Chen said.
Lai said that there are existing clauses in related laws that require that a certain percentage of surplus profit be distributed as employee bonuses in firms’ articles of incorporation, “but there are often strict qualification requirements attached.”
Amendments to the Company Act and the Labor Standards Act have been proposed, Lai said, to clearly stipulate that corporations are to distribute profits as employee bonuses or be subject to a fine of NT$500,000 to NT$5 million (US$15,900 to US$159,000).
Minister of Economic Affairs John Deng (鄧振中) said that although workers’ share of GDP — 46.17 percent in 2012 according to his ministry — has been declining, “South Korea actually has a lower figure at 43.51 percent.”
“However, we could do better and now the conditions for a pay raise have matured, as this year we’re expecting an economic recovery, both domestic and global. Corporations’ costs, such as business income taxes and bulk commodity prices, have declined, and their cash to asset ratio has also been increasing since 2008,” Deng said.
Shen, a former DPP lawmaker who currently has no party affiliation, went against the grain of the meeting and said that the nation’s stagnant wages have been the result of a number of complicated factors, and he expressed his doubt that amendments to existing laws could make substantial changes.
Shen said that the Ministry of Economic Affairs would not agree to the passage of the amendments anyway, “otherwise Taiwan would be laughed at for its violation of free-market principles and be downgraded by foreign evaluation firms in competitiveness.”
Shen said that the critical components of the problem are the New Taiwan dollar’s low exchange rate and the nation’s low tax rate.
“Unfortunately, neither KMT Chairman Eric Chu (朱立倫) nor DPP Chairperson Tsai Ing-wen (蔡英文), the two likely presidential candidates for next year’s election, are contemplating either problem,” Shen said.
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