Raise Wages to Drive Wage Growth

Raise Wages to Drive Wage Growth
China Times editorial (Taipei, Taiwan, Republic of China)
A Translation
February 21, 2014

Summary: Salaries on Taiwan are too low. They have not increased for years. After accounting for inflation little remains. Private consumption is increasingly conservative. Salaries are apparently the most critical economic issue. Overall, salary increases will spur domestic consumption, thereby increasing revenue for all industries. They will enable Taiwan to lift the lid on its stifled economy, and advance toward greater growth and equal prosperity.

Full text below:

Salaries on Taiwan are too low. They have not increased for years. After accounting for inflation little remains. Private consumption is increasingly conservative. Salaries are apparently the most critical economic issue. According to reports, between January and November of last year, average real wages in the industrial and service sectors was 44,700 NTD. This is lower than the 44,900 NTD wage figure 15 years ago. The main reason is that in comparison to 1998, the consumer price index has increased 16%, while wages have increased only 15.5%. As a result, real wages have decreased relative to 15 years ago.

Subdivide real wages into industrial sector wages and service sector wages. Stagnation in industrial sector real wage growth began in 2007, and in the service sector in 2001. In 2007 the average real wage in Taiwan's industrial sector was 45,500 NTD. By 2012, it had fallen to 43,400 NTD. Exclude allowances, bonuses, and other non-recurring income. These sources of income are the most easily influenced by external conditions. Look only at regular salaries. One will find they have stagnated in recent years, or even retreated.

Regular salaries have decreased rather than increased. This is not because the economic situation is poor, or corporate profits have fallen. Double-digit growth is a thing of the past. We live in the aftermath of the financial tsunami. But Taiwan's average economic growth rate over the past 5 years has been 3.3%. Over the past 10 years it has been 4%. Taiwan's labor productivity has kept pace. Since the 1980s, it has risen in a straight line. Over the past 10 years, the labor productivity index for all industries rose, from 87.9 in 2003, to 105.8 in 2008. In 2012 it rose to 119.27. The 10 year average growth rate was 3.5 %. The 5 year average was 2.5%.

Labor productivity rose. But wages did not. This led to declining company unit labor costs since 1999. This means that in the production of a given unit of goods or services, labor compensation as a proportion of total production costs has declined. The labor cost burden on businesses is increasingly light. Considered separately. the most obvious decline has been in the industrial sector. In 2003 the index was 109.3. In 2007 it was 95.6. In 2012, it was only 80.7. Over 10 years, it declined 26%.

Consider overall economic performance. As past editorials have noted, the employee compensation to GDP ratio has decreased. The GDP is the sum of employee compensation, net indirect taxes, consumption of fixed capital, plus the total operating surplus. Our nation's enterprises operating surplus to GDP ratio shows a long term upward trend. This is the oppositie of employee compensation to the GDP ratio. During the 1980s and 1990s, the ratio was approximately 3%. After 1996 the corporate earnings to GDP ratio increased. In 2003 and 2004 it increased to 35%. Since 2007 it has fluctuated between 32.5% to 35.5%. In 2011 it again exceeded 35%. According to the latest first quarter data, the 2012 operating surplus to GDP ratio is 33%.

Corporate surpluses account for more and more of the GDP ratio. In recent years, average real GDP growth was 3.3%. Taiwan business performance has been quite good. Profits have also been handsome. But this means companies have benefitted from their employees' productivity gains. Yet the companies have not shared enough of the fruits of growth with their staff. The result has been a decline in real wages. As a result, wage earners enjoy no economic growth, and feel exploited. This has exacerbated the antagonism between employers and employees within the community.

The government has recently undergonoe significant restructuring. The establishment of the Ministry of Labour underscores the government's increased attention to income differences. The new structure has introduced a new climate. We urge the Ministry of Labour to act swiftly, and promote the "Ten Year Basic Salary Adjustment Plan."

Over the past five years, labor productivity has grown an average of 2.5%. The Ministry of Labour should consider making this figure its targe for real wage hikes over the next 10 years. That way wages and productivity growth can be synchronized. Diligent workers' job performance will then receive the rewards they deserve. Over the long run the national distribution of wealth will become more equitable.

Such a mechanism would not make corporate profits decline. Rising labor productivity increases will not erode the surplus. They will merely slow down the growth of corporate earnings. For enterprises, there may be other benefits. Productivity gains can become a criterion for raises. This will give staff members a further incentive to improve their productivity. Businesses may become more efficient. This would favor any company that seeks sustainable development.

Overall, salary increases will spur domestic consumption, thereby increasing revenue for all industries. They will enable Taiwan to lift the lid on its stifled economy, and advance toward greater growth and equal prosperity.

社論－以提高基本工資帶動薪資成長
稍後再讀
中國時報 編輯部 2014年02月24日 04:10

 台灣薪資水準太低，多年來未見成長，扣除物價上漲後所剩無幾，民間消費日趨保守，薪資問題儼然是當前悶經濟最關鍵的一環。據報導，去年一至十一月工業及服務業受僱員工實質薪資平均為44700元，尚不及15年前的44900元，主要是因為與1998年相較，消費者物價指數增加了16％，高於15.5％的薪資成長，實質薪資反較15年前減少。

若將實質薪資分工業、服務業兩部門來看，我國實質薪資成長停滯的現象在工業部門是從2007年、服務業是從2001年就開始出現，比如說，2007年台灣工業部門平均實質薪資為45500元，2012年反降至43400元。即使扣除最容易受外在條件變動影響的津貼、加給、獎金等非經常性薪資，只觀察實質經常性薪資的情形也差不多，近年來都呈現停滯、甚至衰退的態勢。

經常性薪資不增反減，並不是因為經濟情勢不佳、企業獲利減少所致。儘管昔年動輒二位數的高成長榮景不再，金融海嘯餘波盪漾，但是近5年來台灣經濟成長率平均也有3.3％，10年平均為4％；另一方面，台灣的勞動生產力逐年上升的腳步並未停頓，自1980年代以來始終直線攀升，近10年全體產業勞動生產力指數從2003年87.9增加至2008年的105.8，2012年則是119.27。10年間平均成長率高達3.5％，5年平均則是2.5％。

勞動生產力上升但薪資不升，導致企業的單位產出勞動成本自1999年開始逐年下降。代表了在生產一單位商品或服務時，勞動報酬占生產總額的比例減少，企業的勞動成本負擔越來越輕。分部門來看，以工業部門的降幅最為明顯，指數從2003年的109.3及2007年的95.6,減至2012年的80.7，10年間減少了2成6。

表現在總體經濟方面，如同先前社論說過，受僱人員報酬占GDP比率勢必減少。GDP是受僱人員報酬、間接稅淨額、固定資本消耗、營業盈餘的加總；我國企業營業盈餘占GDP比，和薪資占GDP比相反，長期呈現上升的趨勢。1980、90年代該比例多在3成左右，1996年以後企業盈餘占GDP比開始連年增加，到了2003、2004年已經超過3成5，自2007年開始在32.5％至35.5％之間波動，2011年一度又超過3成5，據最新一期資料，2012年營業盈餘占GDP比率為3成3。

企業盈餘占GDP比上升，實質GDP近年平均有3.3％的成長，表示台灣企業經營表現相當亮眼，利潤滿滿。另一方面，也代表了儘管公司從員工生產力提升上得到了好處，但公司將成長的果實分享給員工的程度不夠，導致實質薪資倒退。如此一來，受薪階級對經濟成長無感、甚至反感，也加劇了社會上勞資雙方的對立。

政府最近大幅度組織再造，勞動部的成立彰示了政府對廣大受薪階級的重視。趁著新部門新氣象，我們建議勞動部應該盡快為所當為，推動制定「十年基本薪資調整計畫」。

可以考慮將過去5年的勞動生產力平均成長率，也就是2.5％，作為未來10年實質薪資調漲的目標。如此一來薪資與生產力可以同步成長，勞動者工作表現的精進才能適切地反應在應得報酬上，長期下來我國所得分配就可以趨向平均。

這樣的機制不會讓企業利潤下降；勞工取得其生產力上升而增加的部分，不會侵蝕盈餘，只會讓企業盈餘的成長減緩。對企業而言，也可能有益處：以生產力提升作為加薪的理由，將提供員工進一步提升自身生產力的誘因，未來企業經營將可能因此更有效率，對任何希望以永續經營為目標的公司均有利。

在總體方面，薪水的調升更可帶動國內消費，進而增加各業收益，使台灣早日掀開悶經濟的鍋蓋，邁向成長與均富並進的大道。