Minister of Labor Pan Shih-wei (潘世偉) on Friday backtracked from his proposal for regional differentiation of the minimum wage, days after the idea ran into strong opposition, saying it was a misunderstanding that the ministry planned to scrap the uniform nationwide minimum wage as reported.
However, it was not a matter of Pan being misunderstood, but a policy that had been formulated for some time by the ministry, which had looked to the US, Canada, Japan and China as its guides to consider region-based minimum wages.
During the proposal at the meeting of the legislature’s Social Welfare and Environmental Hygiene Committee on Wednesday, Pan said that “counties and cities in central and southern Taiwan might not think the same way as Taipei that there should be an increase to minimum wages,” because commodity prices in Taipei are higher than elsewhere.
Apparently, Pan considers the issue of the minimum wage from the perspective of employers, not the workers. He cares more about how business costs would rise with wage hikes than about the stagnation of lower wages which affects many people, especially those living in central and southern areas.
The reasons the minimum wage should not be differentiated by region are simple.
A key question is the suitability for the nation of the oft-cited theory that minimum wages should be tied to the cost of living, which varies by geographic location. Taiwan is a small country, where people lead a highly mobile lifestyle.
Second, the theory that an employee in one area should receive higher wages than a counterpart at a comparable job in another area with a lower cost of living is open to dispute, because it treats labor simply as a commodity whereby wages can be set as in any other market, ignoring whether wages are just and enable workers and their families to live decent lives.
Regarding the assumption that workers’ wages are linked to productivity and the revenue of a firm they are employed by: The theory wrongfully presupposes that there is a difference in productivity between workers in Taipei and those in other parts of Taiwan and that companies outside the city do not generate similar profits.
As the assumption that one gender should be paid more for doing an equivalent job is considered unreasonable, differences in minimum wages due to geographical factors are also both unfair and unjustified.
If the theory of geographic pay differentials is sustained, the ministry might as well propose to decouple migrant workers’ wages from the national minimum wage, another controversial issue that has been under consideration by the government. It could also entail a policy that employees in the proposed free economic pilot zones, which aim to showcase liberalization and deregulation, and in other special economic zones be exempted from the minimum wage provisions.
Designated by the International Labor Organization as an international labor standard, the national minimum wage should be set at a level that can keep pace with the rising cost of living. It is also an attempt to equalize the differences in the costs of production in different countries to prevent a country from implementing a wage competition strategy by suppressing wages. Likewise, tying minimum wages to a cost-of-living index that varies by geographic location within a country could only lead to ever-decreasing wage levels.
As the nation’s first minister of labor since the ministry was upgraded from council status in February, Pan has numerous challenges ahead: real salaries shrinking back to the level of 16 years ago, job-market newcomers’ low pay, the unemployment rate, the prevalence of atypical employment relations, long working hours, etc. The last thing he should concern himself with is a policy that would damage labor solidarity, such as a regional differentiation of the minimum wage.
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