Business ties with China, influx of migrant workers causing stagnant wage growth: Taiwan Cabinet

Cabinet explains why Taiwan's wages are not growing and touts solutions to address stagnant wage growth

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(By Central News Agency)

TAIPEI (Taiwan News) - Intimate relationships between Chinese and Taiwanese businesses, an oversupply of college graduates, and a rapid influx of foreign blue collar workers have been blamed for the stagnant wages affecting Taiwan over the past two decades, said the Vice Premier Shih Jun-ji (施俊吉) on Monday.

Taiwan's real wages have been stagnant for two decades. In 2016, the government under the Tsai administration dedicated itself to tackling the problem of low pay.

At Monday's press conference, Shih offered an explanation for the slow wage growth. He first attributed the problem to close trade ties between Taiwan and China, whose low-skilled workers are paid relatively lower than Taiwanese workers. He noted that free trade between the two countries has progressively equalized the wages of workers from the both sides over time, according to a "Factor-Price Equalization Theorem" as cited by Shih. 

The second reason is said to be an oversupply of college graduates over the past two decades. The rapid expansion of higher education in the country after 1998 has led to a devaluation of degrees, creating fewer and fewer incentives for employers to pay college graduates decent wages.

A third reason is the rapid increase of foreign blue collar workers in Taiwan. Migrant workers have been included in the country's wage statistics, and are usually paid the minimum wage, but their demographic has skyrocketed from less than 10,000 people 25 years ago, to more than 600,000 in 2017, creating a drag on national wage averages. "Only by setting migrant workers' salaries aside can the figures truly reflect the growing trend of domestic workers' salaries," said Shih.    

Shih added that pay levels have increased in recent years but they have yet to be felt by a majority of the population because the gain has been mostly used to pay extra costs of labor and health insurance fees, and retirement pensions by employers.  

However, the country's real wages experienced notable growth in 2017, reaching NT$47,271 (US$1,588), and setting a new record high, thanks to the government's continuous efforts, said Shih. 

The Cabinet touted near-term and long-term solutions on Monday to address the issue of slow wage growth, which include increasing minimum wages of the lowest-paid public sector employees and contractors to NT$30,000 (US$1,008) per month "progressively," with a gradual raise of the minimum hourly rate, and with a wage boost for part-time or substitute teachers at elementary schools.