The Chinese National Federation of Industries (CNFI, 全國工業總會) yesterday urged the government to limit a minimum wage hike to 3 percent next year, saying many firms have been affected by a global economic slowdown and expect business to further worsen next year.
The call came ahead of a meeting on Thursday of the Ministry of Labor’s Minimum Wage Review Committee, which reportedly leans toward a 4.8 percent increase.
The trade group comprises 159 associations and represents a majority of local manufacturing firms.
Photo: CNA
It said that 76 percent of its members found a 3 percent wage hike acceptable, citing a survey it conducted among its members from Aug. 1 to Aug. 15.
Twenty-two percent of polled companies support a freeze on wage hikes, citing weak financial performance, it said.
Fifty-one percent reported revenue declines in the first half of this year, while 20 percent said revenue held steady, the survey showed.
Twenty-eight percent, mostly electronics suppliers, reported top-line growth, it showed.
CNFI said most of its members are small and medium-sized enterprises (SMEs) that are poorly equipped to cope with production cost hikes.
If the government insists on steep wage hikes, these businesses would have to pass extra personnel costs to their customers, which would fuel inflation, the group said.
Only 13 percent of SMEs reported revenue growth in the first six months, whereas the ratio was 58 percent for listed companies, it said, citing Taiwan Stock Exchange data.
More than 50 percent of steel, textile, metal, paper and cement product makers filed disappointing earnings reports, and expect business to worsen next year, CNFI said, citing its survey.
A company’s size apparently influences its outlook on business, the group said.
While 44 percent of listed companies expect GDP growth next year, only 10 percent of SMEs share the positive sentiment, while 67 percent are concerned about an economic downturn, it said.
The world is heading toward stagflation as Russia’s invasion of Ukraine pushes up global energy, raw material and food prices, while recurring COVID-19 outbreaks clog supply chains and the flow of trade, CNFI said.
The backdrop explains the reason 38.3 percent of polled companies have a negative view about revenue and profit next year, it said.
A minimum wage hike would not be an issue for large, profitable manufacturers, but would “rub salt into the wound” at smaller firms, CNFI said, urging policymakers to take a cautious approach in dealing with the matter.
Several labor unions, including the Taiwan Confederation of Trade Unions, the Taiwan Federation of Financial Unions (TFFU), the Taiwan Labor Front (TLF), the Taiwan Women’s Links, and the Taiwan Alliance for Advancement of Youth Rights and Welfare, reiterated their demand that the government raise the minimum wage to NT$28,000 next year, saying that soaring inflation has diminished people’s purchasing power.
Despite COVID-19 interruptions, Taiwan is still expected to report relatively high GDP growth this year, so increasing the minimum monthly wage to NT$28,000 and the hourly wage to NT$186 would allow workers to share the economic benefits, TFFU secretary-general Han Shih-hsien (韓仕賢) told a news conference.
The ministry in 2018 submitted a draft minimum wage law to the Executive Yuan, where it has since languished, TLF deputy secretary-general Yang Shu-wei (楊書瑋) told reporters.
Yang urged the government to quickly send the bill to the Legislative Yuan for approval so that a legal mechanism to govern wage hikes can be implemented.
Currently, a minimum wage hike can only be implemented by an executive order following a committee meeting, Chen said.
Additional reporting by CNA
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