Productivity-to-Pay Gap Widens in Taiwan

Although Taiwan is well known for high labor productivity worldwide, pay for manufacturing workers have dropped over the past 10 years to show the nation's makers have enslaved workers to achieve such productivity, according to Taiwan's Ministry of Labor.

The ministry's latest statistics show Taiwan's labor productivity has grown 6.2% yearly in the past 10 years through 2012, trailing only South Korea's 6.7% among 10 developed economies, with Taiwan's employers having cut wages 2% annually on average, the worst of the 10 said  economies.

The ministry's officials cite data for the 10 developed economies from the U.S. Bureau of Labor Statistics for Germany, France, Canada, the United States, Japan, Italy, England, Singapore, South Korea and Taiwan.

The ministry defines “labor productivity” as gross domestic product (GDP) divided by  amount of work hours.

According to the ministry, Taiwan has performed relatively well in global productivity based on uptrend in its productivity despite the 2012 European debt crisis, when the island's productivity rose 0.4% versus downtrend for most developed economies.

The statistics from the ministry show Taiwan's manufacturing workers in 2012 made only US$9.5 hourly, far behind South Korea's US$20.7 and Singapore's US$24.2 not to mention Germany's US$45.8.

Between 2002 and 2012,  Taiwan's manufacturing workers  increased only 3.3% annually, compared with Singapore's 7.1% and South Korea's 7.3%.

P.L. Hsin, associate professor of Graduate Institute of National Development, National Taiwan University, says the widening productivity-pay gap is due to  Taiwan's industrial structure shifting from labor intensive to capital intensive, as well as  corporate resource allocation.

He suggests the problem to be alleviated by market mechanism, not government intervention, failing to clarify how his suggestion would work, also stopping short to blame employers for gouging. Therefore the government should demand the island's leading manufacturers to publicize wage scales to serve as reference for workers.

Before the import of foreign labor into Taiwan in the 1980s, the island's manufacturers and workers basked in prosperity, with rising wages. Since then the makers have cut labor cost by using cheaper foreign workers to the detriment of Taiwanese workers, whose wages have dropped in the past decade. Yet the ministry and other state bodies have not addressed the issue of fair pay, especially if  employers remain profitable but refuse to share gains with workers. 

Some scholars in Taiwan suggest  employers to allow employees access to compensation  administrations to know their pay scale relative to market trends. (KL)