Who are the low-wage xvorkers in Taiwan?

Low-wage growth has become a global phenomenon. According to the Global Wage Report 2018/19, published by the International Labour Organization (ILO), in 2017, as shown in Figure 16.1, the global real salary (inflation-adjusted) growth rate was 1.8%, reflecting the lowest growth rate since 2008. While this may also suggest that the world is experiencing a slow growth trend for wages, nevertheless, in the case of Taiwan, the low-wages dilemma has become a real and chronic challenge. Taiwan’s low-wages dilemma can be examined either through a direct comparison of the wages trend over the years, or through a direct comparison between the corresponding relative magnitude between average wage statistics and median wage statistics. The reason for the latter comparison method is that the wages for the higher-income group can effectively boost the average

Figure 16.1 Comparison of changes in real wage growth among selected Asian countries (2013-2017)

Figure 16.2 Median and average total wages (2012-2017)

Source: Labour statistics compiled by the Directorate-General of Budget, Accounting and Statistics (DGBAS), Executive Yuan, ROC

wage figure, while the wages for the low-wage group grow at a much slower pace and will then lower the corresponding median wage income statistics. As such, the wider the gap between the average and median wage statistics, the more serious the low-wages dilemma is for a society.

By comparing the median statistics and average statistics for wages for labour in Taiwan over the 2012-2017 period as shown in Figure 16.2, we found that the average annual total wage for the past six years has increased from NT$547,000 to NT$600,000, and the corresponding median annual total wage has also risen, but only from NT$436,000 to NT$470,000. It is obvious that the median wage has not increased as much as the average wage, which, therefore, suggests that the lower-income group workers’ wages are experiencing a much slower rate of growth than their higher-income group counterpart. In Figure 16.2, both the absolute difference between the median (m) and average (a) wage statistics (m-a) as well as the ratio of ‘m’ to ‘a’ statistics (m/a) are included for the purposes of comparison. The figure shows that the ratio of the median wage to the average salary (m/a) is experiencing a downward trend and, as such, we can confirm a stagnation in the wage growth for the lower-wage group among workers in the labour force in Taiwan.

We can also use the median wage statistics as the basis for defining different lower-paid workers’ groups in the labour force. For example, the EU countries define low-paid workers as workers whose wages are less than two-thirds of the national median wage level (Grimshaw, 2011). If we adopt the EU definition and re-calculate the relevant low-wages threshold for Taiwan by using the individual taxation data obtained from the Ministry of Finance, it is shown that for the 2011-2015 period, the monthly low-wage threshold for identification in Taiwan

Figure 16.3 The characteristics of low-wage-group workers Source: Ministry of Finance, ROC (2017)

is around NTS22,000 or NT$23,000 and is slightly higher than the minimum wage levels for the corresponding period (i.e., NT$18,000 to NTS20,000). In addition, the total number of low-wage workers in Taiwan during the 2011 — 2015 period was around 1.3 million people.

In terms of the structure of the enterprises, as we can see from Figure 16.3, the low-wage labour only accounted for some 10% of workers in listed companies, while 95% of all low-wage workers were clustered in non-listed companies in Taiwan. As for the age and gender distribution of the low-wage workers in Taiwan, the figure shows that in 2015, the largest proportion (32.6%) of low-wage workers were in their 20s, which is in accordance with the public impression of the so-called young working poor generation. The figure also suggests that females are more likely to be part of the low-wage group.

Aside from the previously mentioned EU standards for identifying low-wage workers, President Tsai Ing-wen of the ROC (Taiwan) publicly announced on December 24,2017, that her dream would be to raise the monthly minimum-wage level from the current 20Kto 30Kso as to be more beneficial to the mass of low- wage workers in Taiwan. If we take 30Kas another important reference to identify the low-wage group and then utilise another set of data, namely, the ‘Manpower Utilization Survey (MUS)’ data, compiled by the Directorate-General of Budget, Accounting and Statistics (DGBAS) as another statistical reference, we can obtain more information on the background of these low-wage workers.

To be more specific, in terms of the size of the low-wage labour force, when the threshold of the monthly income is set at NT$30,000, according to MUS survey data, as shown in Table 16.1, the figures suggest that 33.28% of the total number

Table 16.1 Monthly income of major job for employees, by industry (2018)

of employed workers in 2018 would be classified as low-wage workers. In addition, from Table 16.1, we find that the low-income workers are mainly concentrated in labour-intensive manufacturing as well as in traditional services sectors, i.e., wholesale, retail, accommodation, catering and support services. Table 16.2 shows that workers in the 25-29 age cohort have the highest low-wage ratio. This result is consistent with that shown in Figure 16.3.

How is education related to the low-wage dilemma in Taiwan? Are those low- wage workers those with little education? Based on 2018 MUS data, we are able to decompose the workers according to their education levels and Table 16.3 reveals that, contrary to common belief, it is not the workers with the lowest education in Taiwan who are regarded as low-wage workers. Instead, it is the workers with senior high and vocational school education that have the highest low-wage ratios. The main reason is that, because of the low birth rate and rapid population ageing, Taiwan is facing a serious labour shortage problem particularly in the non-skilled blue-collar worker jobs, and thus blue-collar workers with relatively little education can enjoy relatively high wages.

In addition, although the average monthly income of workers with a tertiary education or above is NTS43,549, in 2018, 22.96% of workers in this category still received wages of less than NT$30,000 per month. Based on President Tsai’s standards, they can be regarded as ‘working poor’.

Table 16.2 Monthly income of major job for employees, by age groups (2018)

Table 16.3 Monthly income of major job for employees, by educational attainment (2018)'

Source: Report on the Manpower Utilization Survey, DGBAS (2019)

To sum up, based on the EU’s definition of a low-wage worker, our analysis reveals that around 25% of workers in the employed working population in Taiwan can be regarded as low-wage workers. Most of them are associated with SMEs in Taiwan. Workers in the low-wage group are also characterised as workers who are more likely to work in a labour-intensive manufacturing or traditional services sector. In addition, workers with a senior high or vocational senior high school education are among the group of workers who are more likely to become low-wage workers.