Taiwan’s Low and Inadequate Wages Have Led to Taiwanese Becoming Unhappier and Self-Centered

In the first part of this article, we saw how Taiwan’s inadequate minimum wage has exacerbated the social problems in Taiwan, leading to one of the highest levels of injury deaths among the advanced countries, and mental health problems like schizophrenia.

But Taiwan’s low and inadequate wages also cast an impact on the mental and social well-being of individuals. This article will compare a series of mental and social well-being indicators with the adequacy of minimum wage, and look at how Taiwan compares with other advanced countries. The adequacy of minimum wage is calculated based on Numbeo’s Cost of Living Index, to estimate the optimal level of income needed for a basic standard of living in a country, and to then see whether a country’s actual minimum wage is adequate to meet this optimal income level. (Numbeo’s data was also cross-referenced with the data sources from the European Union and other local research-based data sources for validity.) Accordingly, Taiwan has one of the least adequate minimum wages among the advanced countries – its minimum wage is only adequate to cover 49.5% of the basic needs of Taiwan’s workers. (The method can be viewed in the first part of this article.)

Indeed, Taiwan’s inadequate wages have led to poor mental and social well-being among Taiwanese, but this is rarely discussed. Among advanced countries, Taiwan has one of the least adequate minimum wages, and the life satisfaction of Taiwanese is also comparatively low.

A study of 143 countries found that income inequality is related with lower life satisfaction, particularly when there is limited social mobility, and people cannot move up the social ladder no matter how much they study or how hard they work. A data analysis of 25 countries had the same conclusion. In Taiwan, it is now common to hear young Taiwanese lament about being worse off than their parents due to Taiwan’s low and stagnant wages. 78.8% of Taiwan’s university students say they expect to face problems finding a suitable job that pays an adequate salary.

On the same note, Taiwanese also have comparatively low evaluations of their lives, and this is correlated with Taiwan’s inadequate wages.

Life evaluation is measured by Gallup for the World Happiness Report, by asking respondents to rate whether they are currently living their best possible or worst possible life, on a scale of 1 to 10, averaged out across three years.

As a result, Taiwanese have become comparatively less trusting among peoples in the advanced countries.

As well, a research conducted in 25 Organization for Economic Cooperation and Development (OECD) countries found that both higher inequality and lower life satisfaction leads to lower social trust, and recommended that “policies aiming to increase trust should decrease income inequality”.

As to why this is so, research explains that economic inequality leads to greater stress and anxiety as individuals feel compelled to attain a higher socioeconomic status in order to have greater resources and autonomy, but as a result, this damages social relations and undermines shared values, and leads to greater distrust and unhappiness. Inequality then leads to greater class conflict, as society develops stronger stereotypes about the rich and poor, whose groups start to perceive both the rich and poor as being less friendly and moral, leading to further social erosion.

Taiwanese have become one of the most lonely people among the advanced countries, and this is again correlated with Taiwan’s inadequate wages.

Researchers who studied the phenomenon in the United States and 16 European countries explained that when people live under poorer material conditions and relative deprivation, it affects them psychologically, and they have limited integration into social activities, and lack community support and trust, leading to greater risks of loneliness.

Again, the researchers explain that programs to reduce social isolation and loneliness should be focused on reducing income inequalities. Among a study of China and 12 European countries, researchers also found that higher government social expenditures can also reduce the likelihood of loneliness. Unfortunately, Taiwan’s government expenditure on social protection is the lowest among the advanced countries, as we will see in the next part of this article.

Under the backdrop of lesser trust and openness, Taiwanese have also become comparatively less giving.

The World Giving Index measures whether individuals have helped a stranger, donated money to charity and volunteered at an organization a month preceding the survey.

Similarly, Taiwanese are also starting to show one of the least altruistic behaviors among the advanced countries, and which is again correlated with Taiwan’s inadequate wages. Altruism is measured by the three indicators similar as the World Giving Index, as well as including data on blood, kidney and bone marrow donation rates, and the humane treatment of non-human animals.

A study on individual narcissism found that Taiwanese have become one of the most narcissistic peoples among the advanced countries. Narcissism in this instance is measured by a three-item scale where respondents indicate whether they believe that their group deserves special treatment, whether people do not fully understand the importance of their group, and whether they will never be satisfied unless their group gets the recognition they believe they deserve.

In a study of 49 countries, researchers explained that in more unequal societies, power and authority become more entrenched, and a more hierarchical system develops, leading to people more likely to promote themselves and the interests of their group, and thus developing psychological entitlement and greater narcissism. A study of 15 developed and developing countries explained that in less equal countries, individuals tend to view themselves as superior to others, while in more equal countries, individuals tend to see themselves as more similar to others. In other words, in more unequal societies, individuals tend to have a greater biased self-perception and superiority, and engage in greater self-enhancement. Higher inequality therefore undermines the norm of modesty, the researchers say.

More concerning, individuals in less equal societies tend to become more overconfident and overstate their knowledge, leading them to take more financial risks. Also, higher inequality leads to individuals becoming more self-centered and reduces their sense of control, leading to them adopt unethical behaviors, which causes greater harm to society. We saw in the first part of this article how greater narcissism and sense of entitlement also leads to more dangerous driving behaviors and a higher rate of road traffic deaths, as is Taiwan’s case.

Given that Taiwan has one of the least adequate minimum wages among the advanced countries, and one of the most corresponding social problems as a result, it might not be surprising that Taiwan also has one of the lowest fertility rates not only among the advanced countries, but also in the world.

In the first part of this article, we saw how inadequate wages are correlated with social problems, like road traffic deaths and suicide deaths.

When viewed over the longer term, Taiwan’s road traffic deaths have been increasing since 2017. In fact, traffic deaths rose by 6.8% in the first six months of this year.

However, due to bad global press about Taiwan’s “living hell” traffic, the government finally introduced a series of measures this year, which it said brought down the number of traffic deaths in the first nine months of this year to 2,224 deaths, as compared to 2,266 deaths in the same period last year.

The legislature also this month passed the traffic safety basic act, which has the apparent goal of eliminating traffic-related deaths by 2050 through human-centric design and public transportation. This is a very ambitious target considering that Taiwan has the worst road traffic death rates among the advanced countries.

Notably, the DPP government had seven years thus far to introduce policies to address Taiwan’s severe road traffic death rates, and the data was already showing traffic death rates rising right in the year after DPP took power, but they did not do so until international bad press and election pressure pushed them to rush through various policy changes within the past year – which showed how much the DPP squandered away the last seven years, and was not proactively handling social problems.

Taiwan’s suicide deaths also hit a three-year high this year.

It is even worse among youths, where suicide deaths have been rising since 2014.

Again, it is thus perhaps not surprising that Taiwan’s fertility rate has been declining over the last decade.

While Taiwan’s social problems are exacerbating, this comes on the heels of Taiwan’s income inequality rising to its higher level in the past decade.

Given how Taiwan’s inadequate minimum wage and income inequalities are exacerbating Taiwan’s social problems, a comparatively high proportion of Taiwanese think that economic inequality is a threat to Taiwan’s democracy, as can be seen in the chart below.

A major concern for Taiwan is that citizens in countries with less adequate wages also show less support for their democracies. As compared to other advanced countries, Taiwan’s citizens have one of the lowest support for their democracy.

In fact, researchers who conducted an analysis of 40 democracies assert that, “inequality is the single largest determinant of democratic support”. Another researcher of 35 democracies came to the same conclusion, that “income inequality matters much more” to support for democracy, then a high level of economic development. Robert Andersen, Brian Burgoon and Herman van de Werfhorst emphasized: “if governments want to facilitate the growth of democracy, policy should take account of not just economic prosperity, but how prosperity is distributed.” These might be an especially important point for Taiwan’s government to take note given how the protection of Taiwan’s democracy is top on the agenda.

Given Taiwan’s inequalities and inadequate wages, this could explain why among the advanced countries surveyed, Taiwan’s citizens were the most likely among the advanced countries to agree that Taiwan’s government should fight income inequality.

However, among countries with less adequate minimum wages, their governments are also seen as less responsive to change.

Taiwan has one of the least adequate minimum wages among the advanced countries, and its government is also comparatively less responsive to change.

I previously wrote that among the advanced countries, those with lower minimum wages also tend to have less adequate minimum wages, as can also be seen in the chart below.

Taiwan’s low minimum wage is therefore an indication of how inadequate its minimum wage is, given that consumer prices between most of the advanced countries do not vastly differ.

It should also be noted that countries with lower minimum wages also have lower median wages, as can also be seen in the chart below.

In other words, Taiwan’s low minimum wage also prevents workers at other income levels from earning higher wages.

I also wrote that among advanced countries with the least adequate minimum wages, they have been rapidly increasing their minimum wages in order to catch up with the cost of living.

As can be seen in the chart below, the countries with more inadequate minimum wages than Taiwan (see the yellow bars to the right of the chart) have been raising their monthly minimum wages by an average of NT$1,400 to NT$2,500 a year since 2016 (see the red dots). Even the countries with slightly more adequate (but still inadequate) minimum wages than Taiwan (to the left of the chart) are raising their monthly minimum wages by an average of NT$1,100 to NT$2,500 a year.

The exception is Taiwan which has been raising its monthly minimum wage by a measly average of NT$933 a year. Even Japan where wages are also widely known to have stagnated has been raising its monthly minimum wage by a higher average of NT$975 a year.

Not only that, even among countries where their minimum wages are more adequate, they have continued to raise their minimum wages by larger magnitudes than Taiwan, in order to enable their minimum wages to become more adequate – these countries have been raising their monthly minimum wages by an average of NT$1,780 to NT$3,600 a year.

As such, even as Taiwan’s minimum wage is one of the least adequate among the advanced countries, it has however been raising its minimum wage the slowest, when it should be raising it one of the most rapidly.

Of note, Taiwan People’s Party presidential candidate Ko Wen-je said that Taiwan’s tertiary education is to be blamed for Taiwan’s low wages. We can put this idea to a test.

In the chart below, the minimum wage is compared against the science scores as measured by the OECD's Program for International Student Assessment (PISA). The countries can be banded according to different wage levels: among the countries with the highest minimum wages (Switzerland, Denmark, Iceland, Norway and Luxembourg), there seems to be a trend where higher science scores are correlated with higher minimum wages. The same trend can be seen among the other wage bands, where countries with higher science scores also have higher minimum wages.

However, Taiwanese have already achieved one of the highest science scores globally but are paid one of the lowest minimum wages among the advanced countries – Taiwan is in the same wage band, and both Taiwan and Japan have one of the least adequate minimum wages, and have been increasing them the slowest. This would make sense if Taiwan’s cost of living is much lower than the other advanced countries, but as we saw above, Taiwan’s cost of living is higher than Slovenia, and moving closer to that of Sweden and Germany. Given Taiwan’s high educational standard and cost of living, Taiwan’s workers should be earning a minimum wage close to NT$50,000 if corresponding to Slovenia, or even more to be on par with Sweden and Germany.

It is clear when comparing when Mathematics scores – countries with higher PISA scores also earn higher minimum wages. Taiwan has one of the highest PISA score but its workers are paid one of the lowest minimum wages among the advanced countries.

Translate into Traditional Chinese: As such, Taiwan’s low wages cannot be blamed on its Taiwan’s tertiary system – Taiwanese already have a very high level of academic performance. The real issue here is that Taiwan’s minimum wage is set too low. It is therefore evasive to not come out with a clear target as to the level to raise the minimum wage to, but instead put the blame on Taiwan’s tertiary system.

Indeed, we saw above that Taiwan’s minimum wage should be about NT$55,500 if it is to correspond with Taiwan’s cost of living.

As I have written, several advanced countries have come out with multi-year plans to hike their minimum wages in order to ensure that their minimum wages would be able to achieve adequacy for the cost of living. In Singapore, the government implemented plans in 2021 to raise the minimum wages of cleaning and security worker by 84% and 145% respectively within six years.

If Taiwan implements a similar plan by raising Taiwan’s minimum wage by NT$3,500 every year (which is what New Zealand has been doing since 2016), Taiwan’s minimum wage would grow to NT$48,470 in six years and NT$55,470 in eight years, to reach the level that is adequate for the cost of living by today’s standards.

As such, Taiwan’s low and inadequate wages have contributed to its social problems exacerbating, lower support for its democracy, and also to the poor mental and social well-being of Taiwanese.

But Taiwanese recognize that Taiwan’s economic inequality is a threat to its democracy and want the government to do more to address it. Taiwan’s government has however been relatively less responsive, and has been raising the country’s minimum wage by the slowest level among the advanced countries, even as Taiwan has one of the most inadequate minimum wages.

Taiwan’s government needs to implement a clear multi-year plan to raise the minimum wage to an adequate level. However, the current government or presidential candidates for 2024’s election do not seem to recognize the severity of the problem, and have not proposed any plan to do so.

It should be noted that the exacerbation of Taiwan’s social and economic problems snowballed under successive governments which consecutively suppressed wages after the 1997 economic crisis, and the fault does not solely lie on the current Democratic Progressive Party (DPP) government or President Tsai. Ing-wen, who in fact raised the minimum wage at a faster level than prior administrations after 1997, but nonetheless the wage raises are still too low to make up for the severity of Taiwan’s wage stagnation over the last two to three decades. At the same time, the DPP also did not do enough to curb housing price growth which doubled in some places over the last few years, and therefore worsened Taiwan’s wealth inequality.

Taiwan’s social and economic problems require a government to develop a holistic understanding of the underlying issues that exacerbate the problems, and to address them at the roots. But the political will to do so has been lacking.

In the next part of this article, we look at how Taiwan’s low and inadequate wages are not the only problem for workers. Compared with other advanced countries, Taiwan’s workers also face poor labor conditions, in terms of their days of leave work, leading to great dissatisfaction at work.

TNL Editor: Kim Chan (@thenewslensintl)

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Taiwan’s Low and Inadequate Wages Have Led to Taiwanese Becoming Unhappier and Self-Centered

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