Although it is fairly well-known, that the concept of a basic-living wage (i.e. enough pay for proper food, clothing, shelter, rest and comfort) originated in Australia early this century, it is far less well-known that minimum wage legislation in the ROC dates as far back as 1936. In that year, the ROC givernment promulgated the Minimum Wage Act (MWA), which stipulated that the minimum wage should be set at the lowest level which could support the livelihood of an adult worker and two of his dependents. However, due to the Sino-Japanese war which broke out in 1937 and some other internal factors, the MWA has never been implemented.
One of the main economic reasons why the MWA was not implemented thereafter was that the minimum wage standard was set too high. This made the regulations in the law very difficult, if not impossible, to enforce. Thus, in the 1950s, after the ROC government had retreated from the mainland to Taiwan, the government decided to reintroduce basic wage legislation. The legislation was essentially based on the concept of the minimum wage, but, in order to circumvent the unrealistically high standards laid down by the MWA, if was not described as such.
The system was formally introduced in 1956, and the basic wage was set at 300 NT dollars per month for an adult worker, such an amount being roughly equivalent to 67.11 percent of the average wage of an adult worker in the manufacturing sector in that year. The level of the basic wage has since been revised upwards nine times over the past three decades and, between the period of 1983 and 1988, the minimum-wage ratios (defined as the ratio of the basic wage to the average wage of an adult worker in the manufacturing sector) averaged between 44 and 48 percent. Furthermore, it is worth noting that Article 21 of the Labor Standards Law (LSL), which was promulgated in 1984, stipulated that wages shall be determined by both the employer and the worker but shall not be lower than the basic wage. The MWA, which was formally suspended by the Legislative Yaun in 1986, said basically the same thing except that it used the term “minimum wage” as opposed to “basic wage.” It is thus clear that, since the MWA’s suspension, the ROC’s basic wage has legally become the “minimum wage.”
The present basic wage policy encompasses all of the employees in the ROC covered by the LSL, and thus includes workers in (a) agriculture, forestry, fishery and livestock industries, (b) mining and quarrying, (c) manufacturing, (d) construction, (e) water, electricity and gas supply, (f) transportation, warehousing and communications industries, (g) the mass media, and (h) other industries duly designated by the competent authority at the central level. The statistics show that roughly 63.75 percent of the employed workers in the ROC were covered by the basic wage regulations in 1986.
An argument frequently raised by the labor-protection activists is that the basic-wage level in accordance with the LSL is far lower than the minimum-wage level as stipulated in the suspended MWA. Thus it is argued that workers’ interests have been adversely affected by the stipulations contained in the LSL. One way of attempting to clarify the above argument is to compare the minimum-wage ratios in the ROC with those of other countries in the world in order to see whether the ROC’s minimum wage ratios and, hence basic-wage levels, are substantially lower than those elsewhere. This study shows that the ROC’s minimum wage ratio for the year 1988 is significantly higher than its Korean, Japanese, British, and American counterparts. Therefore, the minimum-wage ratios show that the ROC’s minimum wage is, relatively speaking, significantly higher than that in many developing and developed countries.
In this study, we also have found that one of the key factors which led to the rapid growth of the minimum-wage ratios was the reference minimum wage formula which was developed by the Ministry of the Interior in 1984 and used to calculate the minimum wage levels during the 1984-1988 period. We, therefore, try not only to point out where the deficiencies of the current reference formula lie but also to propose an alternative in order to determine the appropriate minimum wage levels.
By utilizing various surveys conducted by the Directorate-General of Budget, Accounting, and Statistics (DGBAS) of the Executive Yuan, we try to calculate, for full-time workers, the percentage whose expenditure levels or initial wages are lower than the prescribed minimum-wage ratios. From the above exercise, this study found, if we set our minimum wage at 46 to 48 percent of the current average wage in the manufacturing sector (i.e., by pegging the minimum-wage ratios at 46 to 48 percent) then this minimum wage level can cover at least 10 percent of total workers in the manufacturing sector when they are ranked in order by their initial wages. However, this study found that using the minimum-wage level described above, it covers 24 percent of full-time workers in the labor force when they are ranked in order by their expenditure level.
This study also verified that the stipulation of the minimum wage does not have any significant impact on capital-intensive industries such as chemical, petrochemicals, metals and transportation, for workers’ initial wages in these industries are far beyond the current minimum-wage levels. Whereas, under the current minimum-wage levels, the study found that it would have a significant impact on those low-wage labor-intensive industries such as garment and leather products, for the study found that there exists a significant percentage of workers whose initial wages are just slightly above the current minimum wage level.
In terms of workers, this study found that the workers who would be more likely affected by minimum-wage legislation are unskilled operators, manual laborers, clerical workers and garment workers. In terms of the low-wage worker’s sex and age composition, this study found that 70 percent of these low-wage workers are female and that they are more likely to be in the age groups of 15 to 18 or 60 and above.
In light of the above findings and our international comparisons, this study suggests that the government may consider setting the minimum wage at a level equal to the consumption level of the lowest 15% of full-time workers. Furthermore, the government should also swiftly introduce a lower minimum-wage standard for teen-age workers, the handicapped, and those workers who are receiving basic training, so that their job opportunities will not be adversely affected by the stipulation of the minimum wage. This is especially important and urgent in Taiwan. Since minimum-wage levels are already too high.
