Mon, Jun 21, 2010 page3

• ANALYSIS : Changes to minimum wage invite debate

  UNIVERSAL EFFECT Labor rights advocates say that lowering salaries for migrant workers would put pressure on industries nationwide to decrease their pay packages

  • By Shelley Huang / STAFF REPORTER
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  Of all the issues on which business owners and labor groups disagree, the most controversial revolve around the minimum wage — in particular, which kind of workers it applies to, whether it should be adjusted upward, downward or kept the same and, in some cases, whether it should exist at all.

  The recent minimum wage debate started when Premier Wu Den-yih (吳敦義) said the government was considering scrapping the monthly minimum wage of NT$17,280 for foreign workers in special economic and free-trade zones. This immediately drew protests from labor groups for domestic and migrant workers alike, who believe the plan would lower salary standards and worsen working conditions for all workers in Taiwan.

  For business owners like Hon Hai Precision Industry Co chairman Terry Gou (郭台銘), who has announced two wage hikes in the past two weeks for workers at Hon Hai subsidiary Foxconn Technology Group factory in Shenzhen, Guangdong Province, this proposal would be a major incentive to bring factories back to Taiwan. Taiwanese business owners who have the flexibility of dropping foreign workers’ wages below the minimum wage would have a competitive edge because of lower labor costs, especially as the era of cheap Chinese labor is ending.

  BLIND EYE

  However, how does the government encourage economic growth without sacrificing workers’ rights? Where should it draw the line between offering cost-saving solutions to businesses and turning a blind eye to exploitation?

  Chan Cheng-tien (詹正田), executive director of Chinese National Federation of Industries and chairman of Yi Jinn Industrial Co, is in favor of waiving the minimum wage requirement for foreign workers in the free-trade zones.

  “Businesses have been hoping for a plan like this for many years,” he said. “Special economic and free-trade zones are so-called ‘special’ areas because they obey special rules that do not apply to other parts of the country. If the rules in the special zones are not different from those outside the special zones, then what is ‘special’ about them?”

  Chan said a win-win situation would be created because businesses in the free-trade zones would benefit from a more flexible employee compensation system, while the country’s main set of labor laws, the Labor Standards Act (勞動基準法), would remain unchanged in terms of the minimum wage.

  This way, small and large businesses would be attracted back to Taiwan, while foreign companies would be more willing to invest in Taiwan. As a result, the country as a whole would prosper, he said.

  Without increasing businesses’ willingness to invest capital in Taiwan, businesses will seek cost-saving solutions elsewhere, he said.

  “The more factories move offshore, the emptier Taiwan’s industries become and the higher the unemployment rate for middle-aged and elderly workers,” he said.

  “Labor groups say that the minimum wage protects workers, but without businesses that are willing to hire workers in the country, where are the job opportunities?” he asked.

  Does the minimum wage hurt or help workers? Labor groups say it is a safety net for those who have the least negotiating power to fight for higher wages from their employers.

  Taiwan International Workers’ Association chairperson Ku Yu-ling (顧玉玲) said that if foreign workers’ monthly salaries were allowed to drop below NT$17,280, both Taiwanese and foreign workers would face exploitation, just like the workers who committed suicide at Foxconn’s Shenzhen plant.

  Ku said different salary levels for migrant workers and Taiwanese workers who are essentially performing the same tasks violates the internationally accepted principle of “equal work, equal pay.”

  SAME TASK, SAME PAY

  “Lower wages are not only unfair to migrant workers, but will also make them cheaper to hire, causing more domestic workers to lose their jobs and working conditions throughout the country to worsen,” she said.

  “The minimum wage is supposed to protect the most disadvantaged, but it also stimulates changes in the labor market. When the minimum wage is raised, it is a signal to businesses to increase wages, even for employees who already earn more than the minimum wage,” she said.

  While businesses may enjoy lower production costs from paying lower wages, in the long run, it hurts the industry as a whole because companies that already enjoy a comfortable profit margin become reluctant to upgrade and improve productivity, Taiwan Confederation of Trade Unions ­secretary-general Hsieh Chuang-chih (謝創智) said.

  “It is true that we want to attract businesses to bring their production facilities back to Taiwan, but we shouldn’t encourage labor-intensive industries to come back,” he said.

  Labor-intensive industries, such as traditional manufacturing, are industries in which workers’ wages make up a large proportion of a company’s production costs. Countries that offer relatively cheap labor, such as Vietnam and Bangladesh, attract businesses whose production processes have high labor intensity.

  Hsieh said lower wages for foreign labor in the special zones could also cause labor shortages at companies there, because foreign laborers would rather seek jobs outside the zones, where the minimum wage is applied.

  “The minimum wage is the bare minimum that a worker needs to survive each month. Taking it away would mean the workers’ last line of defense against exploitation would be lost,” he said.
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