Foreswear Political Struggle: Increase Living Wages

Foreswear Political Struggle: Increase Living Wages
China Times Editorial (Taipei, Taiwan, ROC)
A Translation
November 5, 2014

Executive Summary: Porter said that the Mainland is like a one ton gorilla sitting in one's doorway. It gives Taiwan a terrific geographical advantage. Taiwan's political struggles have affected cross-Strait economic cooperation. The public on Taiwan should reach a consensus. Taiwan should sign the STA and MTA as soon as possible. It must not allow politics to undermine Taiwan's trade opportunities on the Mainland. The service industries must expand onto the Mainland. Taiwan goods must enter the Mainland tariff free. These will all raise wages on Taiwan.

Full Text Below:

Global competitiveness guru Michael E. Porter has taken Taiwan's competitiveness pulse. He said the problem is that salaries are too low. We agree. We call on society to acknowledge the problem. The government should implement countermeasures and propose improvements.

Porter came to Taiwan to lecture on the ISC competitive model, to analyze Taiwan's overall global competitiveness. In overall economic competitiveness Taiwan ranks 18 among 144 countries. This is an impressive showing. But Taiwan's per capita income ranking was a mediocre 60. On cross-strait economic and trade cooperation issues, Porter argued that Taiwan's cooperation with the Chinese mainland need not be limited to the FEPZs. It can also include purely economic cooperation. More importantly, political troubles must not be permitted to delay Taiwan's economic growth.

Since 2000, Taiwan's average economic growth has been 4.1%. Nominal wages have not risen for 16 years. Even taking into account inflation, this was a backwards move. But Porter also believes that Taiwan has a tremendous competitive advantage, and a well-trained workforce. To ensure a bright future for Taiwan, it must remain competitive. Taiwan's competitiveness and labor wage growth have slowed. This means that Taiwan has not done enough to upgrade its competitiveness. It has not met international standards.

The performance of Taiwan businesses in the international arena has been outstanding. Taiwan companies are thrifty. They lead their sectors in cost savings. Even when prices are low, they can still fill orders and eke out a profit. This is a result of the OEM model. Taiwan businesses win bids by lowering prices. Or they meet international companies' specifications through low overhead and lowball pricing. Taiwan companies quietly accept these tough conditions. The environment may become polluted. The documentary film "Beyond Beauty: Taiwan from Above" depicts a situation everyone is familiar with. Wages are driven down to achieve cost savings. As a result employees' salaries remain stagnant.

Taiwan's current industrial structure is mainly a case of “Taiwan fills the orders, but manufacturing is offshored.” Export orders in September of this year reached a record high. But the export orders to overseas production ratio also reached a record high of 56.6%. Production and investment on Taiwan has largely been offshored. Naturally this will not raise wages on Taiwan. Any capital gains accrue to the owners. As a result real wages have not increased.

Therefore Taiwan's industries must be upgraded and restructured. Profits from OEM production alone are quite meager. Mr. Stan Shih has long been aware of this. He has advanced a “smile curve theory” that describes the two ends of a product's life. The front end involves research and innovation. The back end involves marketing and branding. These tend to yield higher profits. Porter said wage increases on Taiwan were smaller than in neighboring countries. The average wage for labor has not risen. This means that industrial competitiveness has not improved. Business earnings must be shared with employees. That is social responsibility. Lowering wages is not profit, but exploitation. Taiwan companies should be able to make money. We should emulate Apple and Google. These top notch overseas companies offer both good products and good services.

Another problem is an oversupply of the same kind of employees on the market. Bosses will naturally be reluctant to pay high wages. How can one enhance employee ability? How can people make the most of their talents? How can a competitive staff help companies improve their performance? Taiwan's educational system is cultivating more and more generalists. The latest national survey of seventh and eighth grader found them interested in becoming cooks, bakers, hairdressers, and other beauty industry workers. Technical and vocational education on Taiwan was once provided mostly by “black hand bosses.” Their technical skills, practical experience, and small scale open market nature, made working for them the ideal training ground for SMEs.

But the technical and vocational education system has collapsed. The era of globalization has arrived. A stronger team is required. The government should bolster technical and vocational training. It should enable upgraded technical institutes to be more effective than the vocational schools of yesteryear. SMEs must expand abroad. They will need organized data and help in product promotion. This must all be put in place, enabling businesses to make money and offer their staff dividends. Large scale enterprises and government employees should have the same salary mechanism. This will enable price comparisons, and help raise wages for all industries.

The “Taiwan takes the orders, manufacturing is offshored” model must be reversed. The government should use tax and other incentives to encourage production on Taiwan. This will create jobs on Taiwan. It will ensure that the value added stays on Taiwan. Otherwise it merely creates employment opportunities for others. Money and profits are all hidden overseas. The sharks then return home and make a killing in real estate and the stock market. This is does not help development on Taiwan.

Porter said that the Mainland is like a one ton gorilla sitting in one's doorway. It gives Taiwan a terrific geographical advantage. Taiwan's political struggles have affected cross-Strait economic cooperation. The public on Taiwan should reach a consensus. Taiwan should sign the STA and MTA as soon as possible. It must not allow politics to undermine Taiwan's trade opportunities on the Mainland. The service industries must expand onto the Mainland. Taiwan goods must enter the Mainland tariff free. These will all raise wages on Taiwan.

社論－擺脫政爭 拚薪資提升
2014年11月05日 04:09
本報訊

全球競爭力大師麥可．波特（Michael E. Porter）替台灣競爭力把脈，點出問題出在薪資太低。我們贊成波特的觀點，呼籲社會應認清問題，政府應該圖謀對策，提出改進方法。

波特來台的專題演講以其ISC競爭力模型分析世界總體競爭力及排名，台灣在144個國家的總體經濟競爭力排名第18名，表現相當亮麗，但是台灣平均所得排名只有第60名，只是中段班。對於兩岸經貿合作議題，波特認為台灣與中國大陸合作的模式、不一定要侷限於自由經濟貿易區，也可以是單純的經濟合作，更重要的是，不要讓政治紛擾延緩台灣經濟成長。

從2000年後，台灣平均經濟成長率有4.1％，名目薪資卻16年不漲，甚至經過通膨平減，有倒退的狀況。波特看到了，但波特也認為台灣有很棒的產業競爭優勢，以及訓練有素的勞動力，台灣未來如果要持續亮麗表現，就得有競爭力。台灣競爭力提升、勞動薪資成長卻放緩，這代表在競爭力的提升項目上，台灣做得不夠，沒有國際水準。

台灣的企業在國際的舞台上表現出眾，是因為企業克勤克儉，在成本節約上可以領先群倫。因此明明報價不佳，仍可以接單，賺取微薄的利潤。這部分尤其是代工文化的影響，台企業不是在國際市場上能夠以相對低價取得標單，就是國際大廠開出規格，精算成本，壓低價格，台企業也默默承接。然而環境可能汙染，《看見台灣》紀錄片所描想的狀況大家都不陌生；工資也盡量壓低，進行成本節約，因此員工無法調薪。

另方面目前台灣產業結構主要是台灣接單、海外生產，今年9月外銷訂單金額創新高，但是外銷訂單海外生產比也創新高，達56.6％。原本要在台灣生產、投資，大部分移到海外，台灣民眾的薪資自然不會增加；而且產生之利潤又歸於資本擁有者，因此加大實際所得不平均的程度。

準此，台灣的產業，一定要想辦法升級轉型。只是做代工生產，能夠產生的利潤，相當微薄。施振榮先生很早就看到這個問題，提出微笑曲線理論：以產品生命的兩端，前端的研發創新跟後端的行銷品牌，往往有更高的利潤。波特認為台灣工資漲幅低過鄰近國家，而勞工平均工資不上升，就表示產業競爭力沒有提升。企業賺取的盈收必須讓員工分享，這也是社會責任。壓縮員工的薪水，不是利潤，是為剝削，但企業也要真的能夠賺得到錢。我們要學學蘋果、谷歌，這些外國的頂尖企業，真的有好的產品、好的服務。

另外，現實的問題是市場上同質員工供過於求，老闆用人自然給不出高薪。如何提升員工的能力，人能盡其才，當個有競爭力的員工，能夠幫公司，創造業績？台灣的教育，現在培養的是越來越多的通才。最近媒體報導，國中七、八年級學生的最新調查發現，職業志願是廚師、麵包師和美容美髮師等注重一技之長的行業。然而過去台灣的技職體系，培養非常多的黑手老闆，因為有技術、實務經驗，加上小型開放的經濟體質，非常適合中小企業的培養。

但是如今技職體系教育的崩壞，加上全球化的時代來臨，需要更強的團隊作戰。政府應該加強技職的訓練，讓升級的科技大學比過去的工專、商專，發揮更強的功效，另方面對於中小企業走出去需要訊息的整合提供、會展平台的輔導使用，都必須到位，讓企業賺錢，員工分紅。而大企業及政府員工應有確切的調薪機制，形成比價效應，帶動百業的薪資上漲。

台灣接單，海外生產的現象必須扭轉。政府應利用租稅及各式的誘因，鼓勵台商在台生產。一方面在台創造就業機會，二方面將價值留在台灣。否則創造的是別國的就業機會，錢、利潤又都藏在海外，鯊魚返鄉炒房炒股，非常不利台灣的發展。

波特指出中國就像是「一隻一噸重的大猩猩坐在門口」，讓台灣先天具備了絕佳的地理位置優勢，台灣政爭卻影響了兩岸經濟合作。台灣社會應該認清事實，趕快凝聚共識通過服貿、貨貿協議，不要讓政治拖累台灣在大陸的經貿機會，服務業進軍大陸，台灣商品零關稅進入大陸，都有益台灣的薪資提升。