Wage hike proposal scares service sector, tech giants remain calm

Taipei, Aug. 28 (CNA) Service providers showed signs of distress Thursday of a proposed increase to Taiwan's minimum wage, while technology manufacturers remained relatively calm by comparison. The two largest convenience store chains in Taiwan -- 7-Eleven and FamilyMart -- said the proposed 5.5 percent increase in minimum hourly wage announced Wednesday would have a huge impact on personnel costs, as hourly employees make up a large portion of their workforce. 7-Eleven estimated that its annual expenses would increase around NT$600 million (US$20 million) if the hourly wage hikes are approved by the Cabinet. FamilyMart, where 80 percent of employees are on hourly wage, said it would also be greatly affected, but gave no exact estimate of the costs it would incur. 7-Eleven operates around 4,800 chain stores in Taiwan, while FamilyMart runs around 3,000. Online job bank yes123 said that the proposed wage hikes combined with a plan to raise electricity rates in October will hit catering and other service providers hard, meaning rising costs may be passed on to consumers. On the other hand, 1111 Job Bank, another job site, said that since salaries in Taiwan are relatively low, raising wages could attract an influx of talented workers. A gradual and steady wage increase could benefit both businesses and workers, it said. While the service sector expressed anxiety, Taiwan's technology giants, which make up the backbone of the local economy, remained unperturbed. Contract chip leaders Taiwan Semiconductor Manufacturing Co. and United Microelectronics Corp. both said that the rising wages would have little affect as their employees are paid above minimum wage. AU Optronics Corp., one of Taiwan's leading flat panel makers, said it would comply with government wage policies, while another leading flat panel maker Innolux Corp. said its employee salaries are already above the minimum. Hon Hai Precision Industry Co., which assembles iPads and iPhones for Apple Inc., said its employees were receiving higher than the industry average. The proposal to raise minimum wages came from the Council of Labor Affairs (CLA) Wednesday, which recommended upping hourly wages from NT$109 per hour to NT$115 from Jan. 1, 2014. Monthly wages would go from NT$19,047 to NT$19,273, pending Cabinet approval. (By Hsu Hsiang-hsin, Wu Ching-chun, Chang Chien-chung, Chung Jung-feng and Christie Chen)