The Cabinet is expected to announce this week that the minimum wage will be raised for the first time in almost 10 years, despite questions being raised as to whether the increase will really help employees or simply raise costs for businesses.
The minimum wage was last raised by 3.13 percent to NT$15,840 (US$476.20) a month on Oct. 16, 1997. It has been kept unchanged since then, while the rate of inflation (also known as the consumer price index) has risen 7.5 percent, Council of Labor Affairs' statistics showed.
The size of the increase in the minimum monthly wage, which was the focus of a heated discussion in the council's Basic Wage Deliberation Committee on Friday, is likely to fall between 7.5 percent and 9.5 percent, while the minimum hourly wage may increase by as much as 41 percent.
The planned hikes, assuming the Cabinet approves them, will take effect on July 1, and will see the minimum wage increase to between NT$17,028 and NT$17,345 per month. The minimum hourly wage, meanwhile, will climb from NT$66 to between NT$93 and NT$95.
The council estimated that some 1.72 million low-wage workers would benefit from the proposed wage hikes and claimed that the increase is necessary to maintain workers' living standards and their purchasing power.
That may be easier said than done, however.
Foreign workers in the manufacturing and construction sectors, who represent a major group of minimum wage earners, could find their free lodging and meal allowances disappear should their bosses decide to cut back once the minimum wage increases.
Most Taiwanese workers, on the other hand, earn more than the minimum wage. But since the proposed hikes will lead to a higher health insurance and labor insurance burden for employers -- an extra NT$10 billion annually for all employers in this country, as estimated by the Ministry of Economic Affairs -- it may lead to some reductions in fringe benefits, more stringent work requirements and even job cuts.
The minimum wage hike is not an issue of right or wrong, but rather one of when and how. All parties need to take the possible impacts into consideration, because there won't be any gain without pain.
The problem is that people tend to look at the minimum wage issue in different ways, which can easily result in emotional face-offs between the various interest groups, resulting in debates that often run off course. Mutual understanding is needed from all sectors of society if a sound and balanced nation is what we want.
Ultimately, however, it is the government that needs to bear the most responsibility. Much more is needed than for it to chant its slogan that it needs to increase the minimum wage because it has not kept up with inflation over the years.
The government has to explain how the new minimum wage level has been determined and why it believes this is a "feasible" way to improve the lives of poorest sectors of society. It needs to plan what other assistance it can offer low-wage earners in order to lift them above the poverty line, as well as the subsidies it should consider for small businesses to help them cope with a higher minimum wage.
Above all, the potential for confrontation between employees and employers should also be in the government's mind. Another fact that should not be lost in the rhetoric is the increase in the minimum hourly wage will have a major impact on the employment of temporary and dispatch workers, who represent a growing segment in the service industries.
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