Taiwan’s tech boom masks a daily struggle of the masses
TAIPEI – Taiwan’s tech sector is booming thanks to companies like chip juggernaut Taiwan Semiconductor Manufacturing Co., but headlines in the rapidly expanding economy mask a daily struggle for much of the workforce. of the island.
To survive on the minimum wage of 160 New Taiwan dollars ($ 5.75) an hour, Vivian Liao, 22, found ways to eat for less than NT $ 200 a day. It takes careful calculations, but Liao has two advantages on his side. As a college student, she gets a discount at campus stores, including 7-Eleven where she works part-time. The other is Taiwan’s take-out culture.
Small breakfast stores – open from 6 a.m. to mid-afternoon – serve sandwiches, toast and noodles for under NT $ 50, while bento boxes can be purchased at convenience stores or street hawkers for NT $ 60 to 150. Buffets serving meat or Buddhist vegetarian alternatives allow customers to choose their meals and charge similar prices by weight. Inexpensive snacks are everywhere.
Despite this, Liao said meals took up most of his income.
“At the start of each month I will have a budget. I spend most of my money on food and use less in other areas,” she told Nikkei Asia at a cafe on her campus. in Taipei. “Due to the COVID-19 pandemic [regulations], I had four months with no pay and no job, so things are a bit tight right now. It would be sufficient under normal circumstances, but it is difficult. “
According to the Taiwan Institute of Economic Research (TIER), nearly a quarter of Taiwan’s workforce faces a survival scenario with minimum wages and cheap food. The “working poor” range from convenience store clerks to factory workers and domestic workers.
In January, minimum wage earners will receive a small 5% wage increase, bringing the monthly wage to NT $ 168 per hour and NT $ 25,250 per month. The increase, however, still places Taiwan behind its neighbors like South Korea and Japan.
Darson Chiu, researcher at TIER, told Nikkei Asia that the cost of living in Taiwan is relatively low compared to other parts of East Asia, thanks to healthcare, education and cheap utilities. Most Taiwanese workers, including blue-collar workers, typically earn more than the minimum wage – a rate mostly earned by part-time workers or foreigners employed in industries such as textiles and food processing.
There are also fears that increasing the minimum wage could lead to inflation. On October 22, the central bank said it was monitoring prices, expecting the consumer price index to rise 1.7% for the full year. Rising commodity prices are fueling concerns around the world about sustained inflation, prompting monetary authorities to raise rates.
The central bank recently raised the island’s gross domestic product growth outlook for the year to 5.75% – an expansion fueled by strong global demand for its tech products, as many people work and study from home. during the pandemic. Exports in September hit a monthly record
The growing demand for semiconductors has propelled companies like TSMC into the global limelight. The world’s largest contract chip maker is Taiwan’s largest company by market capitalization and accounts for a third of the local stock market’s value, according to a TIER estimate.
Taiwan’s low minimum wage, however, is a symptom that all is not well in the economy.
Since the early 2000s, Taiwan’s average salary – now at NT $ 55,000 a month, including bonuses and overtime – has largely stagnated as the price of its exports plummeted, said Tzu-Ting Yang, associate researcher. at the Institute of Economics of Academia Sinica in Taiwan.
The societal impact of this imbalance is profound, as wage stagnation is a key factor in the historic brain drain from Taiwan to countries like China. With parents fearing that they cannot afford to raise children, the island also has the lowest fertility rate in the world – the total number of children that would be born to a woman who would live to the end of her life. her childbearing years, according to the CIA’s “World Factbook”. “
In recent years, when Taiwan’s average wages have increased, the rate of change has largely mirrored increases in the minimum wage, according to Roy Ngerng, a Taipei-based fair wage advocate. But neither the average nor the minimum wage has kept pace with the rising cost of living in important areas of the economy, including housing, childcare and daily necessities.
“Asian countries as a whole are using low food prices to try to hide the fact that in reality the cost of living is not that low. I think that even though food prices in Taiwan for eating out are cheap, but if you compare [them] for wages, it’s not that cheap, especially with groceries and housing prices, ”Ngerng said. “The illusion is created that the cost of food is low, so wages can be kept low. This allows house prices and other prices to rise without the minimum wage rising. “
Taiwanese officials, however, told Nikkei Asia that minimum wage increases are having a positive effect on the economy.
The Directorate-General for Budget, Accounting and Statistics said government-imposed salary increases are only one factor behind last year’s salary increases in the industrial and service sectors, where many employees could start earning minimum wage. Consumption is low at the moment due to the pandemic, he said.
The Ministry of Labor told Nikkei Asia that since taking office, President Tsai Ing-wen has raised the minimum wage for six consecutive years, adding that the minimum wage is mainly earned by young people. youth employment program ”to provide resources to help them navigate their way into the workforce. Real wages, the ministry added, have increased over the past four years, from 2017 to 2020.
The Numbeo Consumer Price Index calculates that the cost of living in Taiwan is comparable to that in Germany, where the minimum wage is around $ 12 an hour, while prices in major cities like Taipei and Kaohsiung are similar to those of Prague and Berlin.
The index calculates that before rent, the average single person needs a minimum of NT $ 22,676 to get by in Taiwan. Depending on where they live, they may need a minimum of NT $ 8,000 per month for housing, although this cost can be considerably higher in urban areas.
Vincent Lu, 24, saved money by living at home while in college, earning minimum wage at a fruit and vegetable stall on weekends.
“It was not enough [money], because the work was very tiring. It was just standing, there was very little chance of sitting down, ”said Lu, as most of his work day was spent organizing products and calling customers.
Even with a second job as an inline skate teacher at an elementary school during the week, Lu managed to save only NT $ 5,000 per month despite living at home. If he was alone and paid rent, Lu said he didn’t think he could survive.
Another sign that things are wrong with the Taiwanese economy is that while the overall GDP numbers are good, ordinary people are not spending as much as one might expect.
One indication comes from the consumer price index, which rose only 2.63% in September year-on-year, just over half of the 5% increase in the minimum wage last year, indicating that wages are not rising fast enough to stimulate consumption, Ngerng said.
“Taiwan’s overall growth has been driven by exports and investment, two of the components of GDP,” said Nick Marro, chief analyst for world trade at the Economist Intelligence Unit. “Taiwanese factories produce and sell goods to the rest of the world, but on the other hand, private compensation is not working well. This indicates that there is a pretty big imbalance between what is actually going on in the economy. Taiwanese.”
“Microchip companies and electronics companies are doing well, so they have the resources to increase staff salaries – and that can be a flat annual rate or bonuses like we have during the Chinese New Year.” , added Marro. “But that story is not the same when you consider restaurants and malls that cater to Taiwanese, or businesses that cater to the tourism industry.”