Business and labor groups divided over minimum wage increase

Taipei, Oct. 8 (CNA) Business groups have panned the minimum wage hike for 2022 proposed by a Ministry of Labor (MOL) committee on Friday, worried that it will hurt service sector companies hit hard by COVID-19, while labor groups generally supported it.

The Minimum Wage Review Committee proposed that the minimum monthly wage be increased by 5.21 percent to NT$25,250 from NT$24,000 at present and that the minimum hourly wage go up by 5 percent to NT$168 from NT$160 at present, to take effect on Jan. 1, 2022.

The decision still has to be approved by the Cabinet, but the Cabinet almost invariably follows the committee's recommendations.

The MOL said the hikes in the minimum monthly and hourly wage could benefit about 1.94 million and 510,000 workers, respectively.

They will also apply to migrant workers in the manufacturing, ocean fishing, construction, and institutional nursing sectors, but not to caregivers or helpers employed by families.

No explanation was provided for why the increase was set at this year's meeting at roughly 5 percent, which fell short of the expectations of labor groups who had hoped for a hike of 6-10 percent.

Business groups felt the increase overshot the mark.

Ho Yu (何語), director of the Chinese National Federation of Industries, opposed the hike, especially given that the future course of the pandemic remains uncertain.

The 5 percent rise may have been linked to expectations of 6 percent GDP growth in Taiwan this year, Ho suggested, but he said the projection overstates actual growth because it includes extra funding for COVID-19 relief measures, private sector vaccine purchases, and arms purchases.

At the same time, he argued that the 5 percent increase will impose a heavy burden on Taiwanese business, whose labor costs for migrant workers alone are expected to rise by NT$7 billion.

Hsu Shu-po (許舒博), chairperson of the General Chamber of Commerce, said the minimum wage increase will take a toll on the service sector, which has been losing money due to the pandemic and related restrictions that have kept consumers at home.

Hsu contended that before the pandemic ends, the government should prepare a plan to subsidize businesses. "I will keep an eye on the plan," he said.

Lin Por-fong (林伯豐), chairperson of the Chinese National Association of Industry and Commerce, said the wage hike's timing was poor.

Because of the impact of the pandemic, the government is carrying out relief programs covering some 300,000 enterprises, and the number of workers on unpaid leave has remained stubbornly high, he said, and the increase will only make it harder for enterprises to operate.

But if the minimum wage is to be raised by 5 percent, then companies' contribution to employees' labor insurance premiums should be cut from 70 percent to 60 percent, he argued.

On the labor side, Taiwan Confederation of Trade Unions President Chuang Chueh-an (莊爵安), who attended the meeting, said the 5 percent hikes did not meet his group's expectations, but he felt they were acceptable.

Chuang said both labor and business representatives pressed the government to come up with a plan to deal with the downsides of the minimum wage increase, but no plan was introduced at today's meeting as had been promised.

Labor Minister Hsu Ming-chun (許銘春) said the MOL plans to convene a meeting with the Ministry of Economic Affairs and National Development Council next week to come up with a plan, which could be rolled out in late October.

Outside observers felt that government relief would be needed to help businesses absorb the increases.

Hsin Ping-lung (辛炳隆), a professor in National Taiwan University's Graduate Institute of National Development, said the hike was relatively high this year to make up for last year's increase of less than 1 percent, and it could encourage domestic consumption as COVID-19 wanes.

While some have worried that the wage hikes would lead to higher unemployment, Hsin said their impact on business could be offset by the government's relief package and subsidies.

C.Y. Cheng (成之約), a professor in the Institute for Labor Research at National Chengchi University, said businesses would likely compensate for the higher labor costs by lowering year-end bonuses or increasing prices even before the new minimum wage takes effect.

Cheng suggested that the Ministry of Labor roll out the subsidy plan as soon as possible to prevent pre-emptive layoffs.

The committee meets once a year to negotiate changes to the minimum wage, but in a statement following the meeting, the Taiwan Labour Front called for the establishment of a minimum wage law to make the process more transparent, reasonable and fair.

The law, part of President Tsai Ing-wen's (蔡英文) platform when she ran for president in 2016 but never acted on by the Executive Yuan, would set clear indicators and benchmarks for adjusting the minimum wage, the group said.

Since Tsai took office in 2016, the committee has recommended minimum wage increases six years in a row, totaling a cumulative NT$5,242, or 26.2 percent, rise in the monthly wage and a cumulative NT$48, or 40 percent, rise in the hourly wage.