The base wage (minimum wage) adjustments in 2013 are separated into two steps. Step I launched on hourly wage adjustment from NT 103 rise to 109 on Jan. 1st , Step II focused on monthly wage adjustment from NT 18,780 increase to 19,047 on April 1st .The spirits of minimum wage setting can be referred to the International Labour Organization (ILO) Convention 131, so as to reach the consensus agreement between “maintenance of the needs of workers and their families” with “economic growth”. However, the issues of minimum wage are controverted owing to dragging the interests of labors, the costs of the business operation, and linkages with the social security system. Through literature reviews, questionnaire surveys and quantitative empirical study, we evaluate the impacts of the minimum wage adjustment in 2013 on business and marginal labors. On questionnaire survey, we focused on the impacts of step I “hourly wage adjustment” to enterprise business, and the results showed the hourly wage adjustment has no significant impacts on employment mode, such as increased or decreased all time and part time work employed staff, work time, staff welfares or related allowances, education trainings or on job trainings, and salaries. There is no reaction on hourly wage adjustment for most (over 90% above) of manufacturers might result from the gap between hourly wage pay and monthly wage pay decoupling just only 3 months, or the adjustments are still within the scope of firm’s standings, or the time span is not long enough for business action. The views of surveyed business on minimum wage system and the job opportunities implemented on marginal workers, mostly think it should be a positive impact. They believe that the minimum wage system will encourage the willingness and raise job opportunities for marginal labors. However, most of the firms think that the base wage system does not satisfy the purchasing powers and basic living needs of marginal workers. Comparing minimum wage system with the social welfare systems provided by Ministry of the Interior (MOI), the comments of firms tend to be opposite and it is significant in statistically between those who think it’s not sufficient to maintain basic needs and purchasing power with those who think it’s enough. We employed Taiwan’s real GDP, labor productivity index in industrial sectors and real base wages (deflated by CPI) as empirical case study. Those time series would be stationary by means of the first difference, and then we could apply co-integration analysis to test the long term equilibrium relationships between those variables. After causality test, it is confirmed that the real base wage is Granger caused both on real GDP and labor productivity index. However, it is in-significant for real GDP, labor productivity Granger caused on real base wage. The results imply the applications of wage-led growth policies are adopted in world nowadays. According to ILO(2013), there are over 90% countries have carried out minimum wage system in the world. However the effectiveness of minimum wages depends, first, on the legal coverage of minimum wage , second, the level at which minimum wages are set; and third, the ability to ensure compliance with legal minimum wage provisions. Among them, level at which minimum wages are set, we used ILO global database for 2000 to 2011 to calculate Kaitz index (the ratio of minimum wage against average wage) and most of them fell on 35% to 40%. Taiwan’s Kaitz index is about to 39.1% which is counted in average wage, if it counted in terms of regular average wage, it would be 48.5% in 2011, and it is approximately 40.9% and 50.3% in 2012, respectively. According to questionnaire survey, most of firms prefer to monthly minimum wage than to hourly minimum wage. Besides, there are key factors must be taking into account as minimum wage adjustment such as inflation, economic growth rate, the lowest costs of living needs. They are consonant with ILO(1970). The formula suggested by the committee of minimum wage examination in 1983 has been taking into account for inflation, growth rate of labor productivity index which is in line with modern trend and can still be strict. However, we recommend the frequency of adjustment can be attached as the cumulative inflation rate (proxy as CPI growth rate yoy) reached 3%; or economic growth rate greater than 3% for at least 4 quarters. Although the direct effects of minimum wage adjustment may be tiny, the indirect effects would be considerable huge owing to the minimum wage has been linkages with many decrees measures, such as labor insurance, national health insurance, subsidies for marginal and disabled workers. Due to the social welfare system has being sane, we recommend to reduce the connections minimum wage and other associated regulations in order to purify the responsibility, to avoid distorting market mechanism and reduce the impacts of minimum wage system.
