• Directory of Taiwan

Taiwan's wage issue a tough nut to crack

Taiwan's wage issue a tough nut to crack

While the talk of the town has been nothing short of the upcoming elections, the majority of the nation’s eligible voters are counting on the new government next year to help solve Taiwan’s long standing problem of wage stagnation resulting from conflicting economic and talent development policies.

According to the annual International Institute for Management and Development (IMD) World Talent Ranking for 2015, Taiwan ranked at 23rd among the 61 countries or areas listed. In the sub-indicator of brain drain, Taiwan remained at 50th, which indicated a dearth of skilled personnel.

What’s more, the Global Talent survey by business consultancy Oxford Economics has predicted that by 2021, Taiwan will become the most talent deficient country among the 46 in the survey, due to a brain drain and its failure to attract foreign talent.

In the latest data provided by the Directorate General of Budget, Accounting and Statistics (DGBAS), the average monthly wage of workers stood at NT$38,631 in the first three quarters of this year, which is a far cry from the likes of other Asian Tigers – Singapore, Hong Kong and South Korea, whose current minimum wage is 66-percent higher than Taiwan's.

Hence, it doesn’t take a rocket scientist to figure out why people would opt to seek jobs overseas, and how Taiwan’s talent pool continues to shrink over the years.

But the problem doesn’t stop there. Those that have no option to work abroad are still stuck with low pay as salaries have remained basically unchanged for the last 15 years.

But beneath the wage drama is a long-standing puzzle.

The prevailing mindset of employers in Taiwan is that no matter how big their profits are, or how rosy the economy is, the likely scenario is that they are still unwilling to shell out pay increases. While most of the companies in Taiwan are small and medium-sized enterprises, they are not usually internationally competitive, and therefore are often reluctant to pay high salaries or attract top-end employees. This leads to a massive exodus of skilled laborers and talents.

The sad truth is that the current government is simply inept at solving the low-wage issue. It is also worth mentioning that while the average monthly wage remains low, companies in Taiwan still fail to exhibit strengths in global competiveness.
Of course, it is not so easy to raise the average monthly wage, which involves much arm-wrestling between authorities and business groups. In many circumstances, businesses have often responded to calls for wage increases by threatening to leave Taiwan for places offering cheaper labor.

The incestuous relationship between government and corporations is testament to the existing low pay problem. Contrary to countries like Singapore, where its government can effectively jawbone companies to raise wages, the local government can hardly do more than “encourage.”

But is that the best the government can do? The problem is not only the minimum wage, which stands at NT$22,000, but also general salary levels.

In recent years, there have been pledges by government officials to make open calls on employers to raise salaries for their employees. But rhetoric or not, we have yet to see it happen.

The two main political parties and candidates in the January 16 presidential and legislative elections should confront the problem with no reservations and devise measures such as taxation and incentive systems to encourage businesses, particularly those in the services industry, to raise salaries and help them go global.

It is only by taking drastic measures will the problem of stagnant pay be resolved. It is certainly a tough nut to crack, but it has to be dealt with in one form or another. The ruling Kuomintang under President Ma Ying-jeou has failed to live up to people’s expectations during his eight years in power, and now all the eyes are on the Democratic Progressive Party and its presidential candidate Tsai Ing-wen.

For now, all there is to do is hope for the best, and let fate decide who will lead the nation for the next four years.

Updated : 2021-09-25 14:12 GMT+08:00