The Basic Wage Deliberation Committee under the Ministry of Labor yesterday proposed to increase the monthly minimum wage in Taiwan to NT$24,000 (US$816), taking effect in 2021. The plan must be approved by the Cabinet.
Unsurprisingly, employers have expressed disapproval. But Taiwan’s workers don’t get paid enough compared with other countries with a similar GDP per capita.
In 2019, Taiwan’s GDP per capita was US$25,893. The graph below compares Taiwan with eight countries within a range of plus or minus US$5,000 of Taiwan’s GDP per capita.
While Taiwan is third in GDP per capita in this group, its minimum wage ranks 6th and the median wage of middle-income workers ranks 7th.
The chart below shows the ranges of the minimum to median wages in each country, measured in New Taiwan Dollars.
If we arrange the countries from highest to lowest GDP per capita, Taiwan’s low wages become more apparent.
Generally, the higher a country's GDP per capita is, the higher its wages. Taiwan is an anomaly.
We can see that Taiwan’s minimum and median wage is on par with countries like Estonia, Portugal, the Czech Republic, and Lithuania. But this means that Taiwan’s wages are as low as countries with GDPs per capita 10% to 25% lower than Taiwan.
However, when looking at countries with GDPs per capita 10% to 25% higher than Taiwan, we can see that Taiwan’s wages fall far short. Taiwan’s minimum wage is only 55% that of South Korea and 65% that of Spain. Taiwan’s median wage is also only 60% that of South Korea and 55% that of Spain.
Taiwan has a GDP per capita nearly identical with Slovenia — US$25,893 to US$25,739, respectively. But both its minimum and median wage are about 80% of Slovenia’s.
Slovenia’s minimum wage is NT$31,101 (US$1,508). A plurality of Taiwanese think their own minimum wage should be at about this level. The same survey found that 89.3% of Taiwanese workers agree that the minimum monthly wage should be increased.
Labor groups have also called for the minimum wage to be increased to about NT$28,000 (US$952) to be on par with Taiwan’s cost of living.
Even President Tsai Ing-wen and Vice-President William Lai have said that the optimal minimum wage in Taiwan should be at NT$30,000 (US$1,020).
Taiwan’s proposed NT$24,000 minimum wage will still be about 20% lower than those of other countries with comparable GDPs per capita, as well as domestic expectations.
Rethinking ‘competitiveness’
Taiwan used to have the highest minimum wage among several countries with comparable GDPs per capita in the 1990s, but the glorious days of the miracle years are long gone.
As more Taiwanese overseas workers are considering to repatriate to Taiwan because of its effective Covid-19 response, the pathetic domestic wages remain a discouraging factor.
Unfortunately, Taiwan adheres to a low-cost labor model whereby “competitiveness” (meaning attractiveness to foreign investment) is valued more than providing fair compensation to workers.
What is urgently needed in Taiwan is to move away from privileging the interests of employers above all else. Taiwan’s current government and businesses don’t appear willing to change. Demanding a higher minimum wage than the modest increases proposed is one of many moves that should be done to counter this.
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TNL Editor: Nicholas Haggerty, Daphne K. Lee (@thenewslensintl)
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