The increase followed discussions among government agencies and private-sector representatives undertaken since February. The minimum monthly wage would rise from US$480.00 to US$523.64, and the minimum hourly wage from US$2.00 to US$2.88. This latter adjustment of 44 percent took into account the fact that monthly wages included an indirect increase due to the national reduction of working hours in 2001, which did not affect the hourly rate, the Cabinet-level Council of Labor Affairs said in a June 6 press release. Increases in monthly and hourly wages would benefit 1.41 million workers, including around 195,000 foreign workers but not those performing home care services, the council added.
"This is the most reasonable and satisfactory result at the current stage," the CLA stated. The wage adjustment took into consideration laborers' basic daily needs, changes in the consumer price index and possible impact on domestic industries' competitiveness, Chang said, explaining that it aimed to allow workers to share employers' profits in proportion to economic growth over the last 10 years.
As the minimum wage had remained unchanged since October 1997, whereas CPI had risen, this represented a decrease in real terms and a diminishing of laborers' purchasing power, Chang said. Citing the growth in labor productivity over the same period as one of the reasons for adjusting the minimum wage, he added that this would further protect laborers receiving minimum salaries.
The wage adjustment would especially benefit workers in the catering and service sectors, such as fast-food stores, hotels and gas stations, where a great many employees received hourly wages, the CLA said June 6.
Wang Yu-chia, a standing director of the Association of Chain and Franchise Promotion, Taiwan, expressed concern about the adjustment's potential impact on small and medium-sized enterprises, however. "Many SMEs experiencing poor economic health and hiring disadvantaged laborers might close if they cannot afford the new higher costs," he claimed in a June 7 report in the Chinese-language China Times.
Employers would also have to spend more on workers' labor- and health-insurance payments, which were calculated in proportion to their salaries, said Roscher Lin, chairman of the National Association of Small and Medium Enterprises. This, he claimed, would result in around 250,000 companies facing combined human-resource-cost increases of about US$1 billion per year, according to the China Times report.
Concerning these various potential impacts, CLA Chairman Lu Tien-lin announced June 6 measures to compensate employers. In a one-year trial, the government would provide subsidies of US$0.30 per worker per hour for SMEs whose employees work less than 32 hours a week.
Employers of disadvantaged workers would be subsidized by US$151.52 per worker per month--around US$0.30 per worker per hour--for up to one year. These measures were expected to safeguard SMEs with limited capital at the same time as protecting employees, the CLA said June 6.
Moreover, the catering sector would soon be able to apply for special loans totaling US$606 million, Economics Minister Chen Ruey-long said in a June 6 report by the Taipei-based Central News Agency. At present, such loans are open to the wholesale, retail and logistics sectors.
In the construction sector, around 11,000 foreign employees will also be influenced. A construction company hiring 200 foreign workers would face additional annual costs of around US$110,000 if wages were raised in July in accordance with the latest regulations, Chinese National Association of General Contractors said in the China Times report.
To deal with such problems, the CLA announced June 6 a complementary measure that raised, from US$121.21 to US$151.52, the recommended figures for deductions employers could make from foreign workers' monthly salaries for accommodation expenses. Although the full amount is not usually deducted, this would allow the employer and employee more space for negotiations and reflect the rise in CPI over the last five years, since the accommodation fee was last suggested, the CLA said June 6.
Labor unions asked for regular reviews of the minimum wage. In order that the policy would offer laborers systematic protection, Youthlabor95 called on the government to make an annual assessment to see whether and by how much the wage should be adjusted, accordimg to a June 6 YL95 statement. The Taiwan Labor Front made a similar appeal, demanding the CLA map out a means by which the adjustment would become an annual review, thus preventing the government subsidy from simply being a way for employers to lower costs, the CNA reported June 6.
Write to Annie Huang at shihyin@mail.gio.gov.tw