Taiwan's Central Bank calls for minimum wage increase

Central Bank Governor faces opposition from big business

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New Taiwan Dollars (by Pixabay)

(Taiwan News) -- Taiwan Central Bank Governor Yang Chin-long (楊金龍) has called for a reasonable increase to the national minimum wage, invoking resistance from business leaders.

Governor Yang maintains that a reasonable increase would incentivize workers and create a positive business cycle, with workers' salaries flowing back into the economy and spurring growth. The Labor Ministry's Minimum Wage Review Committee (基本工資審議委員會), which is responsible for adjusting the minimum wage, is set to convene on August 14.

The governor’s proposal was met with opposition from Taiwan Cement Corporation Chairman Nelson Chang (張安平). Chang said the minimum wage should grow in tandem with production and that people’s wages are unquestionably linked to how much they can produce.

Taiwan, along with various other developed countries, has been facing low wage growth over the last few years. The Central Bank has stressed that stagnant wages lead to a widening of the wealth gap and inhibits consumer spending, negatively impacting sustainable economic growth.

Major economies such as the U.S., South Korea, Japan, and Germany have been promoting minimum wage increases of late, using tax breaks and subsidies to incentivize businesses to play their part. Taiwan, however, faces some unique challenges.

Since 2000, Taiwanese companies have invested more in research and development than regional competitors Japan and South Korea. This, combined with prominent industries reliance on subcontracting and the constant need to update and replace equipment, mean that a greater share of profits is funneled back into the means of production instead of employee bank accounts.

Taiwan’s current sluggish GDP growth might be a reason for Governor Yang’s proposal, as he hopes increased spending will boost the economy. Minister of Labor Hsu Ming-chun (許銘春) has echoed the governor’s call, publicly pledging her support for a minimum wage hike.

Taiwan’s current minimum salary is set at NT$23,100 (US$744) a month, or NT$150 (US$4.83) per hour. The minimum monthly salary was increased by 5 percent and the hourly wage by 7.14 percent at last year’s Minimum Wage Review Committee meeting.