A local trade group yesterday urged the government to cap wage hikes for next year at 3 percent to avoid increasing inflationary pressure and corporate operating costs.
Lin Por-fong (林伯豐) — chairman of the Third Wednesday Club (三三會), which limits its membership to the top 100 firms of each business sector — discussed the limit during a monthly gathering, as the government plans to raise minimum wages to reflect GDP growth and inflation.
“It is better to keep the changing at 3 percent at the most if upward revisions are necessary,” said Lin, who is chairman of Taiwan Glass Industry Corp (台灣玻璃).
Photo: CNA
The government has raised basic and hourly wages for the past eight years, with cumulative increases of 37.3 percent and 52.5 percent respectively, he said.
The adjustments significantly drove up personnel costs that include wages, labor and health insurance, retirement fund contributions and other required spending, he said, adding that related expenses constitute 20 percent of overall personnel costs.
The wage review committee should invite representatives from commercial and industrial sectors who can provide different perspectives on the effect of pay raises on their businesses, Lin said.
Taiwan’s economy is expected to grow 3.94 percent this year, while the consumer price index rose 2.42 percent in the first six months, giving policymakers reasons to hike minimum wages so that employers and workers can share the benefits of GDP growth, he said.
However, rapid and steep wage hikes might fuel inflation and high youth unemployment as happened in South Korea, he said.
Further, policymakers should study the feasibility of delinking monthly basic wages from hourly pay, as well as separating wages for domestic and migrant workers, Lin said, adding that other countries have introduced similar measures.
The government should also provide financial incentives for companies that have consistently raised wages for their employees, he said.
The trade group also urged the government to extend the service lifespan of the Ma-anshan Nuclear Power Plant in in Ma-anshan (馬鞍山), Pingtung County.
By retiring the first reactor of the plant later this month as planned, Taiwan risks potential power shortages as the development of renewable energy has persistently fell behind the government’s schedule, Lin said.
Stable and affordable power supply is critical to local technology firms, which are heavy electricity users, but play a key role in driving Taiwan’s GDP growth, he said.
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