Hiking the Minimum Wage Will Not Drive Salary Growth

 Hiking the Minimum Wage Will Not Drive Salary Growth

China Times Editorial (Taipei, Taiwan)

August 16, 2017

 Translation of an Excerpt

On Friday, August 18^th, the Minimum Wage Review Committee will be convened. Media reports say the Labor Ministry is prepared to hike the minimum wage by 5%, claiming that it will solve the problem of low salaries. Enterprises, however, believe that as there was already a 5% hike last year, and businesses have been impacted by added manpower costs in view of the “one mandatory holiday, one flexible day-off” policy, we should not have another increase this year. We must point out that the government’s belief that hiking the minimum wage is a path for solving the problem of low salaries is a very obvious mistake. Past data have proven that hiking the minimum wage will not drive salary growth; the version of the Labor Ministry shows that either it did not study the subject well, speaking without foundation, or was attempting to mislead society. In either case, it should be condemned.

Since the new government came to office, many of its policies have gone off key: from the stalemate in cross-Strait relations, the deterioration in labor-management relations, to “one mandatory holiday, one flexible day-off” and the shadow of power rationing, have all dealt a blow to the willingness of domestic private sector investment. In the past, among the annual growth of Taiwan’s investment, 80% were domestic and 20% outbound. Now it has become the opposite; 80% are outbound. Big enterprises such as the Formosa Plastics Group, the Hon Hai Group, and the E United Group plan to invest in the United States with a rough estimate amounting to around NT $1 trillion.

A question may be asked. How many job opportunities would eventually be created if the Tsai government could understand the crux of the matter, and not devote its efforts on how to hike the minimum wage, but instead wholeheartedly do its utmost to improve the investment climate. How many job opportunities would eventually be created if the NT$ trillion investments of these leading enterprises would stay in Taiwan, stimulating a supply chain clustering effect and investment? As long as employment opportunities increase and the demand for labor rises, salaries as a whole will inevitably go up.

The government and enterprises, instead of haggling over how the minimum wage should be adjusted, should communicate with each other about how to improve the investment environment, so that enterprises would be willing to invest more domestically. This is the only path for allowing Taiwan to extricate itself from the predicament of low salaries.

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