Financial and Technology News

Ministers defend minimum wage hike plan

 2018/10/15
BIGGER PICTURE:The increase would raise GDP growth by about 0.06 percentage points next year, as people would be able to spend more, the DGBAS minister said.
 
The government’s decision to increase the minimum wage next year would have little effect on companies’ bottom line, the National Development Council (NDC) said on Friday.
 
The minimum wage hike is expected to raise companies’ operating costs by about NT$39 billion (US$1.27 billion) a year, which is an insignificant amount, council Deputy Minister Cheng Cheng-mount said.
 
The Ministry of Labor’s announcement on Thursday that the minimum wage would be raised by 5 percent, from NT$22,000 to NT$23,100, and the hourly minimum wage would be increased by 7.14 percent, from NT$140 to NT$150, on Jan. 1 next year, pending the Cabinet’s approval, triggered complaints by the Chinese National Federation of Industries.
 
The federation said it was particularly worried about the effect on the labor market and on small and medium-sized enterprises, which it said are vulnerable to rising labor costs.
 
However, Cheng said the increase was a conservative one, based on evaluations of workers’ needs and the ability of employers to pay higher wages.
 
The wage hike would improve workers’ welfare, which in turn would boost consumption and benefit of the business sector, he said.
 
Directorate-General of Budget, Accounting and Statistics (DGBAS) Minister Chu Tzer-ming said the wage hike would lift GDP growth by about 0.06 percentage points next year on higher consumption and boost consumer price index (CPI) growth by 0.04 percentage points.
 
The agency on Friday forecast the economy would grow 2.69 percent this year and 2.55 percent next year, with CPI likely to increase 0.93 percent next year.
 
Deputy Minister of Economic Affairs Kung Ming-hsin said the ministry would provide assistance to SMEs to improve their competitiveness as they seek to deal with higher operating costs.
 
The wage hike is expected reduce the rate of return among local food and beverage business by no more than 0.24 percentage points from the current average of 11 percent, he said.
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