Economic Upturn Calls for Wage Increases
China Times editorial (Taipei, Taiwan, ROC)
June 20, 2014
Summary: The Executive Yuan recently convened a "National Economics and Trade
Conference." The government promoted economic growth. It used the
Mainland's inclusive economic development model to promote labor market
reforms, It improved the employer/employee relationship. . Only then was
it able to prevent the worsening of wealth inequality. and realize the
ideal of social justice. Now that the fiscal situation has
improved and tax revenues are sufficient, the government should ensure
that the fruits of economic growth are shared by all the people.
Full Text Below:
The global economic environment has improved. Taiwan's economy is also enjoying a new dawn. The Ministry of Finance announced the latest import and export trade statistics. May exports totaled $ 26.67 billion USD. This was the second highest month of the calendar year, the result of four consecutive months of growth. Electronics exports totaled $ 8.56 billion USD. The annual growth rate was 15.2%. This was a record single-month high. Among exporting countries and regions, the Chinese mainland accounted for 41.5%. Exports from Hong Kong increased 6.4%. This was the main reason exports increased in May. Between January and May exports from Mainland China, including Hong Kong, the ASEAN-6 countries, Japan, Europe, and the U.S., increased. European and American exports increased over 5%. Economic forecasters predict economic growth this year. They think a 3% increase is likely. Some forecasters even predict 3.6%. The NDC has shone green for three consecutive months. The Business Cycle Indicator rose 29 points. It hit a hundred year high in May. Indications are that Taiwan's economic growth this year will surpass the global average.
Government revenue has also increased noticeably. Between January and May of this year, tax revenues totalled 708.4 billion NTD. This represents an increase of 1.6 billion NTD. Growth went from negative to positive, enjoying a small increase of 0.2%. Total tax revenue reached a new high. Add to this improved stock market performance. Since June the average daily trading volume for listed and over the counter companies totalled 139.7 billion NTD. This exceeded the initially projected turnover of 116.6 billion NTD. Over the past five months capital gains taxes totalled 36.1 billion NTD, growing by more than 3%. The shortfall for the fiscal year has been alleviated.
The job market has continued to improve. In April 11.04 million people were employed, up 0.12%. The number of unemployed fell by 14,000. The unemployment rate was 3.91%, lower than the 4% low for the past 70 months. In April, the labor force participation rate was 58.39%. This was 0.03% lower than last month. Between January and April the average number of people "not in the labor force" totaled 8.171 million. This was a 22.000 person or 0.27% increase over the same period last year. The April unemployment rate for those with university or vocational school degrees was 4.21%. For those with university degrees and above the unemployment rate was 4.80%. For the 15 to 24 age group the unemployment rate was as high as 12.27%. Employment clearly remains a major problem for young people.
As everyone knows, salaries have remained frozen for the past 16 years. This has led to public discontent and complaints that "Low salaries are a national embarrassment." Demands for salary increases are heard everywhere. In early February, New Taipei Mayor Eric Chu proposed increasing the number of legal holidays in order to increase economic prosperity. Taipei Mayor Hau Lung-bin gave employees a raise. He suggested that the central government consider raising the minimum wage. Premier Jiang Yi-hua proposed three ways to increase the number of vacation days. He asked the Ministry of Labor to investigate policy measures to encourage businesses to raise wages. Conditions have stabilized and the fiscal situation has improved. Therefore the government should consider raising wages across the board.
First of all, the relationship between employers and employees has reduced employer dependence on labor. Over the past 20 years Taiwan has imitated Japan's labor dispatch system. This has significantly reduced personnel costs for both government and industry. But the government's extensive use of dispatched labor may result in large scale private sector emulation. It may worsen labor conditions. This is an important contributor to the long-term freeze in real wages. Recently opposition to the personnel dispatch system has intensified. Labor Minister Pan Shi-wei thinks the public sector should prohibit the use of dispatched labor. County and city governments agree. But the central government currently imposes a 173,000 man limit. Many departments continued restructuring last year. They have added labor requirements. A total ban on dispatched labor will increase costs and create difficulties. How will dispatched labor be reduced? That is already a problem. The central government and its many agencies must swiftly draw up plans for manpower utilization and the attendant measures.
Base salaries were increased from 19,047 NTD on July 1 to 19,273 NTD a month. But compared to the other Asian tigers, this is not very high. The government should raise wages again as soon as possible. Increasing base wages will result in top down comparisons. All wage earners will eventually benefit from upward salary pressures. When 4 million wage earners can benefit, raising the base wage is a top priority.
The government should develop a ten year base wage adjustment program. It should establish a rational wage distribution system, in order to reduce the wealth gap, and adopt the correct path for economic and social development. Mainland Chinese authorities implemented the Ten One Five and Eleven One Five programs to promote inclusive economic development. They focused on environmental protection, social responsibility, as well as base wage adjustment. Salaries were doubled. Social security and other measures were expanded. This has allowed Mainland wages to soar in recent years, greatly narrowing the gap between the Mainland and Taiwan.
The Executive Yuan recently convened a "National Economics and Trade Conference." The government promoted economic growth. It used the Mainland's inclusive economic development model to promote labor market reforms, It improved the employer/employee relationship. . Only then was it able to prevent the worsening of wealth inequality. and realize the ideal of social justice.
Now that the fiscal situation has improved and tax revenues are sufficient, the government should ensure that the fruits of economic growth are shared by all the people.