Scholars praise minimum wage hike, warn of possible negative effects

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According to the ministry, about 1.36 million Taiwan workers and 465,000 foreign labors receive the minimum wage. (NOWnews)
According to the ministry, about 1.36 million Taiwan workers and 465,000 foreign labors receive the minimum wage. (NOWnews)

TAIPEI (CNA) — Taiwan scholars on Wednesday praised a Ministry of Labor (MOL) committee decision earlier in the day to raise the minimum wage next year, but also warned of possible negative effects, including commodity price hikes.

The committee decided to raise Taiwan’s minimum monthly wage by 3 percent and the minimum hourly wage by 5 percent, effective Jan. 1, 2020.

Once approved by the Cabinet, the minimum monthly wage will increase from NT$23,100 (US$737) to NT$23,800, while the minimum hourly wage will rise by NT$8 per hour to NT$158.

This will mark the fourth consecutive minimum wage hike since President Tsai Ing-wen (蔡英文) assumed office in May 2016. Before Tsai’s presidency, the minimum wage was set at NT$20,008 per month and NT$120 per hour in early 2016.

Taiwan Labour Front Secretary-general Son Yu-liam (孫友聯) welcomed the decision, even though it was less that the 5 percent increase in the monthly minimum wage called for by local labor groups.

“For many grassroots level Taiwanese laborers, the annual minimum wage hike is the only way to get a salary increase,” Son said.

To better protect the rights of laborers, the government should set up a mechanism for such wage increase by passing a minimum wage law as soon as possible, Son added.

The MOL has previously said it drafted a minimum wage law in late May which is currently being reviewed by the Executive Yuan.

Meanwhile, two Taiwanese scholars praised the committee’s decision to raise the minimum wage for another year, when asked by CNA to comment on the issue.

Hsin Ping-lung (辛炳隆), an associate professor at National Taiwan University’s Graduate Institute of National Development, said the committee takes into account important economic data such as the consumer price index, jobless rate and commodity index, when it studies possible minimum wage hikes.

All these numbers are relatively positive compared with the same numbers a year ago, meaning the committee had no reason not to raise the minimum wage, Hsin said.

This is a good way to boost the domestic market amid a bleak global economic outlook with the ongoing trade wars between the U.S. and China, and to alleviate the possible impact after Beijing recently banned individual travel by Chinese nationals to Taiwan, he added.

Echoing Hsin’s view, Lee Chien-hung (李健鴻), a professor in Chinese Culture University’s Department of Labor and Human Resources, said the decision to raise the minimum wage for a fourth consecutive year will help tens of thousands of workers who live on the minimum wage.

According to the ministry, about 1.36 million Taiwan workers and 465,000 foreign labors receive the minimum wage.

However, Hsin and Lee also warned that the government has to be prepared for the potential negative effects of the salary hike.

Hsin said businesses will come under pressure from higher operating costs and labor costs.

Taking Taiwan’s manufacturing sector as an example, he said about 10 percent of total costs are spent on personnel, while the retail and food/beverage industries spend 20-30 percent on personnel.

A 5 percent salary hike means a 0.015 percent hike in personnel costs for a company, he noted.

A company may increase the price of their products or decide not to hire new workers, preferring to ask current employees to work overtime to cope with the salary hike, he noted, adding that the government needs to be aware of such potential responses.

By Wu Hsin-yun, Tsai Peng-min and Joseph Yeh