Last year, the nation’s average household disposable income rose 3.9 percent year-on-year to a record NT$1.21 million (US$37,986), but the income ratio of the highest-earning 20 percent and the lowest-earning 20 percent widened to 6.17, the highest in 14 years, from 6.14 in the previous year, data released earlier this month by the Directorate-General of Budget, Accounting and Statistics (DGBAS) showed.
The average disposable income among the top 20 percent of households increased 3.9 percent to NT$2.45 million last year from the previous year, and that of the bottom 20 percent rose 3.5 percent to NT$397,000. That divide likely reflects a booming stock market, strong tech industry performance driven by demand for semiconductors and artificial intelligence (AI) products, and widening wage disparities across industries, even as Taiwan’s GDP grew 8.76 percent last year.
Structural differences across counties and cities also contribute to income disparities. For example, many technology professionals who live in Hsinchu city and county and work in the Hsinchu Science Park bring home more income from bonuses and overtime pay due to the high concentration of major tech firms in the region, while some households in Taipei receive income from dividends and rent. Unsurprisingly, out of Taiwan’s 22 administrative regions, Hsinchu City was the richest last year, followed by Hsinchu County, with average annual household incomes of NT$2.04 million and NT$2.01 million, respectively, while Taipei ranked third at NT$1.9 million. In comparison, the national average rose 3.3 percent to a record NT$1.53 million last year from a year earlier, the data showed.
The average income in Miaoli County was NT$1.4 million last year, ranking it ninth-richest in Taiwan, ahead of Tainan’s NT$1.3 million. Previously, the county never broke the top 10 for household income, but following investments by tech firms such as Taiwan Semiconductor Manufacturing Co, Micron Technology Inc and MediaTek Inc — as well as that many tech employees live in the county’s Jhunan (竹南) or Toufen (頭份) townships because of the lower housing costs and commute to the Hsinchu Science Park — Miaoli’s income ranking has significantly improved over the past few years.
Rising household incomes in Hsinchu city and county and Miaoli County reflect the emergence of high-income clusters in Taiwan, as the nation’s semiconductor industry has gained a strong foothold globally and local tech firms are benefiting from growing AI-related business opportunities. However, imbalanced regional development and uneven industrial progress persist, and the income gap between Hsinchu city and county and other areas continues to widen.
Economic growth can come with income inequality, and during economic downturns, that gap can widen further, with low-income households bearing the brunt of it. For example, during the 2008-2009 global financial crisis, the disposable income of the highest-earning 20 percent of households shrank 2.43 percent from the previous year, but the lowest-earning 20 percent faced a larger 7 percent decrease, with the income ratio rising to 6.34 from 6.05 a year earlier, DGBAS data showed.
The government has in the past sought to address income inequality through social welfare and healthcare reforms. However, amid global supply chain restructuring and a profound industrial transformation driven by AI, how to effectively resolve the imbalance between economic growth and income distribution will be a crucial challenge for Taiwan.
The government has used vouchers, cash handouts, rental subsidies and family support schemes over the past decade to aid low-income households. However, beyond temporary cash support, government policies should also focus on enhancing the income-generating capacity of young people, the service sector and minority households in seeking long-term gains.
Tamkang University banking and finance professor Lee Wo-chiang (李沃牆) said that the government’s plan for another universal cash handout to share the economic benefits of AI with the public might please Taiwanese, but it does not address widening income inequality. He said the government should help small and medium-sized enterprises, traditional industries and the service sector to use AI to reduce the costs of digital transformation. In addition, the government should do more to promote digital education and AI-focused vocational training for low-skilled workers, while transforming the gains brought by AI into social investment to reduce the cost of living for low and middle-income families, thereby narrowing the income gap.
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