Sat, Mar 24, 2018 - Page 3 News List

Higher pay could ease brain drain

LAGGING:Premier William Lai has urged IT companies to take advantage of tax breaks that would allow them to pay higher wages without eroding their bottom line

By Sean Lin  /  Staff reporter

The key to countering Chinese behemoths poaching skilled Taiwanese workers lies in Taiwanese employers’ attitude on curbing the brain drain, Premier William Lai (賴清德) said yesterday, calling on the nation’s top-performing enterprises to make use of government policies to respond to the issue.

Lai made the remarks at a question-and-answer session at the Legislative Yuan with Democratic Progressive Party (DPP) Legislator Julian Kuo (郭正亮), who said the government has failed to propose policies to prevent large Chinese companies from poaching skilled Taiwanese workers.

For example, Tsinghua Unigroup has reportedly wooed engineers from Taiwan Semiconductor Manufacturing Co (TSMC) with a yearly salary of between NT$6 million and NT$7.5 million (US$205,691 and US$257,113), which is about five times what TSMC pays, Kuo said.

Low pay is the main reason behind the nation’s exodus of talent, especially in the high-tech industry, Kuo said.

Citing a report published by Hong Kong-based recruitment firm Morgan Phillips, Kuo said the average yearly salary of workers in Taiwan’s IT sector in 2015 lagged behind that of workers in the Philippines, India, China and Hong Kong.

According to an Organisation for Economic Co-operation and Development report, 61.1 percent of the nation’s skilled workers chose to work overseas in 2013, of which about 80 percent of those who worked in high-tech industries went to China, Kuo said.

In today’s knowledge-based economy, skilled workers are the driving force behind industries, he added.

The government has introduced measures to slow the exodus of workers, including in January passing tax reforms that lowered the highest individual income tax rate from 45 percent to 40 percent, and promulgating the Act for Industrial Innovation (產業創新條例), which grants tax deductions to angel investors and innovative firms that contribute capital to innovative sectors, as well as lifting a regulation that stipulated shares linked to technology transfers must be taxed within five years, Lai said.

The Executive Yuan has approved draft amendments to the Company Act (公司法) that are also expected to help local firms retain workers, Lai said.

However, the key to motivating skilled workers to stay in Taiwan lies with local companies, as government policies are meant to function as general guidelines and cannot make up for the difference in salaries offered to workers, the premier said.

With the legal tools having been put in place, “companies need to cooperate with the government so that they can make talent stay,” he said.

He called on local firms to proactively grant their valuable workers pay rises using existing government measures.

Citing TSMC as an example, Lai said the company’s annual expenditure amounts to several hundred billion New Taiwan dollars, and if it is willing to spend just a small proportion of that on employee pay, it could declare the extra spending as a tax-deductible expenditure without denting its finances.

Had TSMC taken NT$100 million from its annual expenditure and given former research and development director Liang Mong-song (梁孟松) and former chief operating officer Chiang Shang-yi (蔣尚義) a pay raise of NT$50 million each, it would likely have been able to keep them, Lai said.

Another legal way for companies to retain workers is to set up a private equity fund and distribute the resultant shares to its employees, which is also tax-deductible, he said.

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