Survey: New Labor Act led to pay cuts for 30% of workers

Latest 104 Job Bank survey reveals new Labor Standard Act led to average 11.1% pay cut for 30% of respondents

The Waiter

Water taking orders at a hot pot franchise store of EZ.Kon in Taichung City. (Photo courtesy of flickr user Adikos)

Taipei (Taiwan)—Up to 30 percent of employees surveyed by 104 Job Bank reported the amended Labor Standards Act effective since last December has led to a decrease in their salaries, as companies reduced overtime hours and related payment.

The average pay cut was 11.1 percent for 30 percent of employees surveyed by the 104 Job Bank, due to diminished overtime payment, as companies tightened overtime management or outsourced jobs to temp workers.

"Some companies try to avoid high overtime payments by preventing employees from working overtime during holidays, or bypass overtime pay with flexible work hours," said 104 Human Resource Institute senior deputy general manager Stanley Hua (花梓馨).

"Industries that heavily rely on overtime for additional income have been the hardest hit, such as hospitality, retail and service sectors," he added.

To illustrate, adjustments in company work hours caused the salary of a cosmetic counter worker at a department store, surnamed Chen, to plunge from NT$70,000 to NT$50,000, reported Liberty Times. Her company's decision to ban employee overtime led to a monthly deduction of NT$10,000 in overtime wages for Chen.

The new labor law amendment, "one fixed day off, one flexible day," (一例一休) system effective since Dec. 23, 2016, requires all workers to be given two days off for every week worked to ensure workers are guaranteed a 40-hour workweek.

The amendment introduced higher overtime pay, stipulating employees be paid an hourly wage of 2.34 times the regular hourly wage if they work less than two extra hours on a day off, and be paid 2.67 times the hourly wage for three or more extra hours worked.

The survey found only 35 percent of respondents received overtime payment from companies under the new labor law, 34.1 percent were unclear of company overtime policies, while the remaining 31 percent did not receive any overtime payment.

Hua projected workers salaries will dwindle even further in the future from the impact of the new labor law, as living costs rises and employers turn to more conservative salary and benefits policies. 

Increased salary expenditures are pressuring dining, transportation and entertainment industries to raise prices charged for their services.

The new Labor Standard Law raised total expenditures on salaries by Taiwan enterprises by at least NT$17.5 billion and a maximum of NT$73 billion, the extra costs were transferred to downstream manufacturers or consumers, and increased commodity prices by 0.14-0.36 percent, according to data compiled by Directorate-General of Budget, Accounting and Statistics.

The survey was conducted from Jan. 20-Feb. 3, 2017 among 104 Job Bank members seeking jobs. A total of 638 valid samples were collected, with a margin of error of plus or minus 3.9 percentage points.