Sun, Sep 08, 2024 page8

• EDITORIAL: Taiwan needs wage transparency

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  Executive Yuan Secretary-General Kung Ming-hsin (龔明鑫) on Tuesday said the government should consider measures to improve salary compensation across industries.

  The measure would let people know “whether the salary structure of a company is reasonable,” he was quoted by the Central News Agency as saying.

  While seeking the Chinese Nationalist Party’s (KMT) presidential nomination in 2019, Hon Hai Precision Industry Co founder Terry Gou (郭台銘) also called for wage transparency.

  Gou said at the time that such transparency would allow those looking for employment to better understand “which companies are willing to share their profits with their employees by offering good pay.”

  Salary transparency and pay gap reporting have become the trend in many places. For example, over the past five years about a dozen US states have enacted legislation requiring employers to disclose salary ranges either in job postings or during the hiring process.

  In a 2016 report by the New York Times, Washington University academic Jake Rosenfeld was cited as saying that salary transparency raises wages “in part by lending legitimacy to employees’ arguments in wage bargaining.”

  In contrast, a lack of transparency could facilitate discriminatory wage gaps. For example, women could get paid less. Without knowing that male colleagues are paid more, female employees might assume an offered salary is reasonable based on their past wages. Parents might receive lower salaries — on the basis they might need flexible scheduling — or people from different age groups might receive different offers.

  Another downside of a lack of transparency is that it wastes jobseekers’ time. Jobseekers might spend a lot of time preparing for a job application before even learning about the salary range.

  A lack of transparency also means that a company might secretly offer higher wages to some employees than others with similar responsibilities or who are more senior. If an employee’s higher salary is later discovered by others, it would cause distrust or resentment and hurt its ability to hire and retain talent.

  Knowing salary ranges also helps employees gauge their prospects within an organization and gives them goals to work toward. If an employee knows they could potentially receive a 5 percent increase in their salary annually, it could motivate them to reject other companies’ offers.

  Real wages in Taiwan are hard to measure, because large companies tend to rely on bonuses to prevent criticism about low monthly salaries. The problem with that approach is that bonuses vary greatly. Different industries offer different bonuses, while a company’s yearly performance often affects them, and even employees at the same company might receive varying amounts.

  For instance, during the COVID-19 pandemic, some shipping companies and large tech companies offered bonuses equivalent to almost two years’ worth of salary — well above the nationwide average of a-month-and-a-half’s worth. A large bonus like that drives up an employee’s annual income tremendously, temporarily putting them in a higher tax bracket and increasing their National Health Insurance premiums.

  Companies often lack good metrics for measuring employee performance and they could be inconsistent. Therefore, more transparency, or better metrics, should also apply to bonuses.

  Regulating pay transparency would benefit employees and companies. It might help ease the brain drain that has plagued Taiwan in the past and even attract foreign talent in areas such as tech and renewable energy. That transparency should start from the recruitment level to help jobseekers use their time more effectively.
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