Adjustments to the national minimum wage

  • Date: 2016-10-19

I. Background

Taiwan wage levels have been stagnant for many years due to slow growth in the domestic economy and the reluctance of many companies to share profits with their employees. To improve salaries for young people, alleviate poverty among low-income earners, and help workers keep up with the cost of living, the Ministry of Labor (MOL) on September 8, 2016 convened labor, management, academics and government representatives for the 31st meeting of the Basic Wage Commission to deliberate on minimum wage adjustments. After reviewing the economic growth rate, the consumer price index, labor productivity and the national dependency ratio, the committee passed a resolution to raise the national minimum wage as follows:

Beginning on January 1, 2017 the monthly minimum wage will be increased by NT$1,001 (US$32) or 5 percent, from NT$20,008 (US$634) to NT$21,009 (US$666). The hourly minimum wage will be raised by NT$13 (US$0.41) or 10 percent in two stages—to NT$126 (US$3.99) on October 1, 2016, and further to NT$133 (US$4.21) on January 1, 2017. These decisions were approved by the Executive Yuan on September 12, 2016.

These adjustments will not only lift stagnant salary levels but also promote the ideals of the International Covenant on Civil and Political Rights as well as the International Covenant on Economic, Social and Cultural Rights. According to MOL estimates, raising the monthly rate to NT$21,009 will benefit over 1.62 million workers, and increasing the hourly rate to NT$133 will help more than 390,000 workers.

 

II. Purpose of minimum wage

Maintaining a national minimum wage guarantees a basic standard of living for disadvantaged and low-income workers. Pursuant to Article 21 of the Labor Standards Act, a worker shall be paid wages as determined through negotiations with the employer, and such wages shall not be below the basic (i.e., minimum) wage. This basic wage provision means that workers can earn enough to afford basic living expenses, and it extends to all workers employed under the Labor Standards Act, regardless of nationality. Home care aides not covered under the Labor Standards Act, meanwhile, are paid wages as determined through agreements with their employers.

 

III. Determination of minimum wage

Pursuant to Regulations for the Deliberation of Basic Wage promulgated on March 21, 1985, both the dollar amount and percentage of minimum wage increases shall be set by the Basic Wage Commission and submitted to the Executive Yuan for approval. The labor minister doubles as the chief commissioner, while labor and management representatives, experts and scholars, and officials from the Ministry of Economic Affairs and National Development Council serve as commission members.

In principle, the Basic Wage Commission convenes in the third quarter of each year to deliberate on adjustments to the minimum wage. They review work force and economic development conditions including the consumer price index, labor productivity, employment statistics, surveys of household incomes and expenditures, workers’ wages in different industries, the national income and the wholesale price index.

 

IV. Recent minimum wage adjustments

To create a happier and friendlier workplace environment in Taiwan, the government has taken numerous actions to reduce working hours and raise salary levels. Since 2011 the national minimum wage has been raised every year, with the most recent increase being the largest—more than NT$1,000 per month (5 percent), far exceeding the general expectation of a 3 percent raise. Raising wages in general will improve labor efficiency, and hiking the minimum wage will hopefully encourage more companies to increase employee salaries on the whole, which in turn will spur domestic consumption and boost economic growth.

 

V. Conclusion

Safeguarding workers’ rights and interests while improving the performance and competitiveness of companies is both an important and ongoing effort for the government. The purpose of raising the national minimum wage is to ensure that workers can enjoy a basic standard of living. If employers fulfill their social responsibility to economically disadvantaged workers and give more of their profits back to hard-working employees, their workers will feel motivated to perform at a higher level. This will ultimately create a harmonious, win-win relationship between labor and management that can move the nation forward into new frontiers.