The sustained wage decline is shrinking individual purchasing power and retarding the government’s efforts to boost private consumption amid the economic downturn, analysts said yesterday.
The latest statistics showed the nominal regular wage, which excludes annual dividends and bonuses, averaged NT$35,130 (US$1,039) in January, down 0.79 percent from a month earlier.
The figure has contracted for four months in a row and has hovered around the same level for the past decade despite inflation, the survey by the Directorate-General of Budget, Accounting and Statistics (DGBAS) showed on Monday.
Headline wage amounted to an average of NT$33,068 in 1999 and had risen to NT$36,423 last year, DGBAS tallies showed.
The trend has prompted people to cut expenses despite government attempts to encourage spending in the hopes of tempering the blow from slumping external demand.
Retail sales dropped 4.65 percent year-on-year in January and last month combined, leading the Ministry of Economic Affairs to voice concern on Monday that the issuance of shopping vouchers in January may have failed to boost consumer spending and were mainly used for regular expenses.
The government began the distribution of NT$3,600 in consumer vouchers to citizens and their foreign spouses on Jan. 18 in an attempt to increase private consumption, especially in the first quarter, when the recession is expected to hit the hardest.
Liang Kuo-yuan (梁國源), president of Polaris Research Institute (寶華綜合經濟研究院), said the wage cuts were unfavorable to economic growth and that industrial exodus was partly to blame.
“It is commonplace for companies to receive orders here but manufacture their products in China,” Liang said by telephone. “The practice helped keep wages down because labor costs are much lower there.”
Liang said the pace of migration decelerated last year after a series of tax cuts and deregulation on cross-strait trade, but the global financial crisis sent exports plunging on an unprecedented scale and drove up unemployment.
The outlook of wage improvement is grim in light of the expected drab business climate this year, Liang said.
Tony Phoo (符銘財), head economist at Standard Chartered Bank, said wages have much to do with competitiveness and Taiwanese makers, mostly contracted to manufacture electronic components, do not have the upper hand in negotiating prices.
“Some jobs are well paid while others are not,” Phoo said by telephone. “That is why innovation is such a valuable quality in the job market.”
He said that the country’s online game and IC design industries enjoyed impressive competitive edges, but that they were not big enough to offer mass employment.
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