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Labor Affairs Minister Wang Ju-hsuan

Higher Wages Better than More Foreign Labor


Higher Wages Better than More Foreign Labor


How should Taiwan entice enterprises that have moved abroad to come back home, while ensuring quality employment for Taiwanese workers? In the following exclusive interview, Wang Ju-hsuan, minister of the Council of Labor Affairs, tackles this thorny question.



Higher Wages Better than More Foreign Labor

By Kwangyin Liu, Jimmy Hsiung
From CommonWealth Magazine (vol. 506 )

To attract business persons to bring their operations back home, different nations adopt different approaches. South Korea and the United States opt for offering tax incentives, while Taiwan is somewhat more peculiar, always hoping that allowing a higher ratio of foreign laborers will serve to entice them back.

The labor shortage that businesses talk about is a fact, but what is the cause? Are Taiwanese simply unwilling to work, or are labor conditions really that bad? It may be that there is some truth in both assertions.

Improving Work Conditions for Manual Laborers

A hot topic of conversation lately, for example, is why so many young Taiwanese want to go to Australia to work. It's quite simple, because over there they can earn NT$100,000 per month, while here in Taiwan they can only earn the basic monthly wage. Unfavorable working conditions have created the labor shortage phenomenon.

Businesses reliant on exports need to compete with others on price. But if domestic demand-driven businesses improve working conditions and employees earn more, they'll spend more. It's actually a virtuous cycle. We need to find a point of compromise between maintaining our international competitiveness and providing workers with decent quality of life. So there has to be a certain quota on foreign labor, so that overall wages are not dragged down.

In theory, businesses should employ foreign labor in response to a labor shortage and not just as a means of securing cheap labor. Therefore, businesses that employ foreign laborers should have to pay the Employment Stability Fee to prove they really are short of workers.

For example, for the same job in the job market, the monthly compensation for a domestic worker is about NT$25,000, but if foreign workers are employed, that figure is only NT$19,000. We're now pushing toward requiring employers [of foreign labor] to pay a few thousand extra [per month] in Employment Stability Fees.

As for whether [overseas] Taiwanese businesses returning to Taiwan should be exempted from paying the Employment Stability Fees for the first few years, that's something that's still open for discussion.

The objective of the Council of Labor Affairs is clear: that when foreign workers are hired, we also promote the employment of local workers too. The statistics show that as the numbers of foreign workers have grown, so too the numbers of locals employed in manual labor have continued to grow [Editor's note: Over the past 30 months, 64,000 foreign workers have been brought into the industrial sector, while the overall numbers of Taiwanese nationals in the workforce have swelled by 604,000 during the same period].

This issue is not entirely black and white but rather one for which a compromise must be found.

Attracting Industries Advantageous to Taiwan

The incentives we offer will have an influence on what types of industries return to Taiwan. We have to consider what kinds of Taiwanese businesses we want to lure back. Will they be those that pursue low-cost labor? Or will they be those that can create higher value for Taiwanese society?

We're quite clear on what the captains of industry want: The cheapest possible labor, and the cheapest possible land. But what is it that our nation and our people need?

We are currently in consultations and considering the conditions for exemptions from the Employment Stability Fees. These may be given to international brands, businesses that possess critical technology, or those that want to return to Taiwan and establish R&D centers or corporate headquarters here. These may be the very businesses workers want, and that would be advantageous to the overall environment in Taiwan.

Here is where we need to have a consensus, looking at which industries have relatively greater future potential. Otherwise, as wages in South Korea and Singapore take off, Taiwan will remain stuck in the same rut.

Translated from the Chinese by Brian Kennedy