To Increase Average Wages, Raise the Minimum Wage

To Increase Average Wages, Raise the Minimum Wage
China Times editorial (Taipei, Taiwan, ROC)
A Translation
August 21, 2014

Summary: Only good wages can retain talent, can make young people feel there is hope. Our society needs a sense of crisis. If we do not raise wages, our employment environment will fall behind the other three Asian tigers. The Mainland and Southeast Asian countries may even catch up. Large numbers of young people will become rootless "Tai lao." How will we feel then? The government and the public must pay attention to this issue.

Full Text Below:

Premier Jiang Yi-hua and representatives from business groups such as the Chinese National Federation of Industries recently met. Outside, labor groups protested low wages, rising prices, and difficulty getting by. Premier Jiang immediately arranged to meet with them, and promised to change the minimum wage policy decision-making process.

Premier Jiang's swift response to peoples' hardship was commendable. Economic growth is stable this year. Tax revenues are more than adequate. The government can afford a general pay raise.

During the second quarter of this year, foreign demand for electronic products, machinery, base metals, and other exports led growth and triangular trade. Domestic demand rose with stock market prices and volume. The income effect and wealth effect increased consumption. Tourism grew. Transportation equipment, construction investment, and manufacturing equipment purchases increased private fixed investment. The employment situation continued to improve. Second quarter unemployment fell to 3.89%, economic growth rose to 3.74%, and the annual growth forecast rose to 3.41%. National Tax Administration statistics indicate tax revenues from January to July approached 1.19 trillion NT, a record high. The Treasury is optimistic. If the last five months of this year match performance over the same period last year, the estimated annual revenue may increase by 30.3 billion NT.

Wages are a topic of concern for all. ROC minimum wages are established by the Basic Wage Committee, which meets and makes recommendations. The Executive Yuan approves Ministry of Labor reports. During the third quarter of last year, committee adjusted the minimum wage and made certain proposals. The consumer price index (CPI) annual growth rate must reach 3%. Only then will the committee consider adjusting wages. This resolution was agreed to by employees, employers, the government, and academia.

Prices in the ROC have been relatively stable. CPI annual growth rate in recent years has been between 1.8 to 2.5%. It rarely exceeds 3%. This year there was a slight increase in the CPI, but still within the stable range. But food prices rose 3.84% between January and July, and as much as 4.27% in July. Food price increases hit ordinary people the hardest. Last year, during the third quarter meeting, GDP growth rate was stuck at 2%. It is currently well over that. Therefore we urge the minimum wage council to reconvene as soon as possible and rethink the minimum wage.

The minimum wage and overall average wage increases may not appear related. The minimum wage was increased in one fell swoop from 15,480 NT to 17,280 NT in 2007. But between 2007 and 2010, in response to the financial tsunami, average wages fell 573 NT. Between 2010 and 2013 the minimum wage was increased 567 NT, or 6.5%. But the average wage over the same period increased only 1305 NT, or 2.9%.

Basic economics states that increases in the minimum wage will make employers vote with their feet, close their plants, and move elsewhere, or else limit total expenditures by cutting staff, pushing out the disadvantaged. But based on two theses by Princeton University professors David Card and Alan Krueger, published in 1994 and 2000, modest minimum wage increases will not result in companies cutting unskilled workers. The claim that minimum wage increases will lead to unemployment do not apply in general. It does not take into account the complexity and diversity of economic problems.

Local research indicates that in 2013 the percentage of workers earning the minimum wage, compared to those earning the average wage, was 43.97%. Among service and sales staff, entry level skilled labor and labor, the percentage was as high as 72%. By contrast, in the United States, Japan and other countries the percentage was 35% or less.

CLA data also shows that at the beginning of the year, nearly 30% of all workers receiving labor insurance, earned 20,100 NT or less. Only 27.6% of workers receiving labor insurance earned over 40,000 NT. In other words, 30% of those receiving labor insurance were earning close to the minimum wage. Nearly 75% of those receiving labor insurance were earning less than the average wage. The positive correlation between the minimum wage and the average wage is quite strong, Raising the minimum wage will increase the average wage.

Increasing the minimum wage will also have other positive effects. In recent years, taxes on business income have been cut from 25% to 17%. This means a significant increase in corporate profits. But there has been no increase in employee bonuses, and wage increase have been limited. The government should find ways to make businesses raise wages. For example, it should offer tax incentives to encourage businesses to raise wages.  It should increase the amount paid for commissions, require contracting firms to raise wages, or organize activities providing information, giving outstanding employees the opportunity to change jobs, enabling them to compare wages, thereby enabling overall wage levels to increase.

Only good wages can retain talent, can make young people feel there is hope. Our society needs a sense of crisis. If we do not raise wages, our employment environment will fall behind the other three Asian tigers. The Mainland and Southeast Asian countries may even catch up. Large numbers of young people will become rootless "Tai lao." How will we feel then? The government and the public must pay attention to this issue.

社論－提高基本工資帶動薪資上漲
2014年08月21日 04:10
本報訊

行政院長江宜樺與全國工總等商業團體代表座談，有勞團在場外抗議基本工資偏低，物價上漲，生活難過。江揆立即安排接見，並做出修正基本工資決策模式的政策宣示。

江揆反應迅速，苦民所苦，值得嘉許。今年以來經濟成長穩定，稅賦超收，對於整體薪資的調升，政府是可以有更大的格局。

今年第2季外需因電子產品、機械及基本金屬等出口成長及三角貿易的帶動，內需則因股市價量齊揚，在所得效果及財富效果帶動下，民間消費有不錯表現；又因為觀光旅遊持續增長，運輸工具、營建投資，及生產廠商的設備購買讓民間固定投資亦有增長，就業情勢持續改善。第2季失業率降至3.89%，經濟成長率3.74%，預測全年經濟可成長3.41%。政府全國賦稅統計，累積1到7月稅收高達1.19兆元，創下歷史紀錄。財政部樂觀認為，今年後5個月表現若可維持在去年同期之上，預估全年可望超徵303億元。

工資問題是全體國民最為關切的議題之一，我國基本工資是透過「基本工資審議委員會」開會提出建議案，由勞動部呈報行政院核定。去年第3季開會時，除提出基本工資調整方案外，同時提出附帶決議，必須消費者物價指數（CPI）年增率達3%，審議會才會討論是否調整工資，此一決議是當時勞、資、政、學的共識。

但我國物價一向相對穩定，近年CPI年增率都在1.8到2.5%之間，很少破3%。今年以來，CPI雖然略有增加，但仍算穩定，可是若把食物類單獨抽出，今年1到7月漲幅達到3.84%，7月更高達4.27%。民以食為天，食物類漲價讓基層民眾感受最深。去年第3季審議會時，GDP增幅還停留在2%左右，目前已遠遠超過，因此我們贊成盡快召集基本工資審議會，重新思考適時調整基本工資。

雖然基本工資與整體平均薪資上揚好像並沒有必然的關連性。2007年基本工資一口氣由15480元調升至17280元，但受金融海嘯影響，2007至2010年平均工資下滑573元。2010年至2013年間基本工資調升567元，成長6.5%，但同期平均薪資只漲1305元（2.9%）。

基礎經濟學推理也認為，基本工資調高，老闆可能用腳投票，關廠另移他方，或是以總支出固定，減少工人雇用，會產生排擠弱勢的問題。不過，依據1994年和2000年普林斯頓大學教授卡德和克魯格的兩篇論文，適度的基本工資上調並不會導致企業減少非熟練工人的雇傭，所謂上調基本工資一定會導致失業的說法，不僅沒有普遍適用性，也沒有考慮經濟問題的複雜多樣性。

我們看到有本土研究指出，2013年台灣基本工資占平均工資比重高達43.97%，其中服務及銷售人員、基層技術工及勞力工的比重更高達72%以上，對比美日韓等國都在35%以下，我國領取基本工資人數偏高。

勞委會資料亦顯示，今年年初勞保投保薪資中，投保薪資在20100元以下者逾30%，僅有27.6%員工投保薪資在40000元以上，也就是說有3成的投保薪資十分接近基本工資，將近75%投保薪資在平均薪資以下。基本工資與平均薪資的正向關係相當強烈，調升基本工資將有利平均工資的提升。

在提高基本工資之餘，還可以有更積極作為。近年營利事業所得稅從25%調降到17%，企業儲蓄大量增加，但員工分紅不增，薪水提高有限，政府應該運用辦法讓企業加薪。例如，以稅賦優惠鼓勵企業加薪，提高委託案件金額，要求承包廠商提高薪資，或是舉辦活動，提供訊息，讓優秀員工有跳槽的機會，形成比價效應，讓整體薪資水準提升。

有好的薪資，才能夠留住人才，才能夠讓年輕人覺得有希望。我們社會要有危機意識，再不提高薪資，就業環境就會被其他三小龍狠狠比下去，甚至被大陸及東南亞國家追上，大量年輕人成為流浪台勞，情何以堪？政府及社會要重視這個問題。