A recent study from the Japan Center for Economic Research projects that Taiwan’s GDP per capita will overtake Japan’s by 2028 and nearly match the figures for South Korea.
Do workers in Taiwan have any reason to celebrate? Let’s take a closer look.
Taiwan’s GDP per capita will reach US$47,305 in 2028, surpassing Japan’s GDP per capita of US$46,443. South Korea’s GDP per capita is expected to reach US$46,519 in 2027.
The minimum wage tells a different story. South Korea’s and Japan’s minimum wages have grown to the equivalent of NT$46,718 and NT$41,128 this year, respectively. But Taiwan’s minimum wage is still NT$25,250—or only 54% and 61% that of South Korea’s and Japan’s.
Projecting from annual rates of growth over the last six years, South Korea’s minimum wage would be NT$70,969 by 2028 and Japan’s would grow to NT$49,932. But Taiwan’s minimum wage would only grow to NT$31,865.
While Taiwan’s GDP per capita would exceed Japan and be roughly on par with South Korea, Taiwan’s minimum wage would still be only less than half that of South Korea’s (45%) and only two-thirds that of Japan’s (66%).
Also, Taiwan’s median wage was only NT$41,500 in 2020, lagging behind Japan’s (NT$88,210) and Korea’s (NT$70,153). Taiwan’s minimum wage was only about half that of Japan’s and 60% that of South Korea’s in 2019.
Based on their annual rates of growth over the last eight years, both Japan and South Korea’s median wages are expected to grow to above NT$90,000 by 2028. But Taiwan’s median wage would grow only to NT$47,323.
What about the higher costs of living in Japan and South Korea? If we adjust for cost of living, then Taiwan’s minimum wage would still have grown to NT$31,064 today if pegged to Japan, and to NT$37,784 if pegged to South Korea.
Based on the rate of growth in the last six years, Taiwan’s minimum wage would grow to NT$41,039 in 2028 and NT$52,772 if pegged to Japan and South Korea, respectively. But with Taiwan’s current rate, the minimum wage is set to grow to only NT$31,865.
If we compare the minimum wages of these countries with their GDPs per capita, we see that South Korea’s minimum wage has climbed from 15.3% of its GDP per capita in 1988 to 60.7% in 2020. In Japan, the minimum wage has also grown from 30.4% of GDP per capita in 1988 to 44.6% in 2020.
But in Taiwan, the minimum wage has instead gone in the other direction, falling from 45.4% of the GDP per capita to only 34.0% today.
If trends continue both South Korea’s minimum wage and Japan’s minimum wage will continue to grow or remain at about 60% and 45% of their GDP per capita, respectively. But Taiwan’s minimum wage could decline further to only 28.9% of GDP per capita.
To be on par with Japan, Taiwan’s minimum wage would need to be at about NT$30,000 today, or NT$40,000 to be on par with South Korea.
Let’s look at median wages. Japan’s median wage has hovered at about 100% of its GDP per capita since 2010, while South Korea’s median wage has grown from 79.4% of its GDP per capita in 2010 to 97.2% in 2020.
But Taiwan’s median wage has declined from 70.1% of its GDP per capita to only 59.7% in 2020.
This means that less and less of Taiwan’s GDP economic production is being returned to its workers. To be on par with both Japan and South Korea, Taiwan’s median wage would need to be about NT$65,000 today, also about where Taiwan should be today if median wage corresponds to the costs of living in Taiwan.
Taiwan’s GDP per capita will soon be at level with Japan and South Korea, but you can see that as compared to these two countries, very little of the GDP per capita is actually returned to the wages of workers, for both low- and middle-income workers.
What we need to focus on is not the GDP per capita, but whether wages have grown adequately to meet the cost of living needs of Taiwan’s workers. As I have written about in previous articles, Taiwan’s minimum wage is still vastly insufficient by this measure.
Don’t just take it from me. The majority of respondents (45.6%) to recent survey in Taiwan believe that the minimum wage needs to be raised even further.
A plurality of respondents agreed with the idea to increase the minimum wage by over NT$28,000. This is at least 10.9% higher than the minimum wage this year.
There’s no need to be too excited over GDP per capita growth when workers still face stagnant wages, and the government does not want to do much to make them higher. I hope for a future in which growth redounds to the benefit of all, where reports of projected growth can truly be celebrated as a bounty for society.
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TNL Editor: Bryan Chou, Nicholas Haggerty (@thenewslensintl)
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