In August 2019, Taiwan’s Ministry of Labor Basic Wage Deliberation Committee decided to raise the minimum wage for workers across the country from 1 January 2020. The measure follows the previous increase (1 January 2019) and was considered against a number of factors, including Taiwan’s current state of economic development, the employment landscape, the consumer price index, and industrial performance. The Committee’s decision has since been approved by the Executive Yuan.
Taiwan reviews its minimum wage rates every year but with the 2020 implementation date imminent, now is the time for employers to get to grips with the details of the wage increase, and how it will affect their payroll process...
2020 Minimum Wage Rates
From 1 January, Taiwan’s minimum wage will rise in the following ways:
- Monthly wages will rise by NT$700 - from NT$23,100 to NT$23,800
- Weekly wages will rise by NT$8 - from NT$150 to NT$158
Under the new minimum wage rates, monthly wages have gone up by 3.03% and weekly wages by 5.33%.
Minimum wages in Taiwan are protected under the Labor Standards Act which is the most important statute for working conditions in the country and is intended to protect the basic livelihood of workers. Despite that objective, however, Taiwan’s wages have been depressed over the past two decades as a result of stagnating economic growth. During the late 20th century, compared to countries with similar GDP figures, Taiwan had one of the highest minimum wages but, around 2001 that trend reversed and, in 2019, it has one of the lowest minimum wages.
With that economic backdrop in mind, labour groups in Taiwan including the Labour Rights Association and the Solidarity Labour Union, had appealed to the Taiwanese administration, during the deliberation process, for a 2020 wage increase of at least 5%. By contrast, business groups including the Chinese National Association of Industry and Commerce, and the Chinese National Federation of Industries, called for no increase in the minimum wage.
Economic Benefits and Criticism
Chinese Premier Su Tseng-chang backed the wage increase and suggested that the monthly rise will enhance the income of 1.36 million domestic members of Taiwan’s labour force and 465,000 foreign workers. Similarly, President of Taiwan, Tsai Ing-wen, pointed out that the 2020 wage rise is the fourth of her tenure and represents an accumulated NT$3,792 for workers receiving a monthly wage, and NT$38 for workers receiving an hourly wage.
By comparison, under the previous administration (2008-2016) Taiwan’s minimum wage only rose by an accumulated NT$2,728 for monthly wages, and NT$25 for hourly wages. While the wage increase goes some way to addressing the wage stagnation, the pace of growth still lags behind comparable economies and is unlikely to alleviate the pressure on the government to continue to address the plight of lower paid workers.
Employers in Taiwan must act quickly to ensure their payroll departments implement the minimum wage hike in time for the 2020 implementation date. If your company outsources your Taiwanese payroll, consult with your payroll provider to determine whether any action is necessary to ensure compliance.
For more information about Taiwan’s payroll and tax system, browse activpayroll’s Taiwan Global Insight Guide.