What you need to know
Though lower in nominal terms, Lithuania’s minimum wage is more adequate for its cost of living than Taiwan’s, and catching up fast.
As interest in Lithuania surges in Taiwan due to warming diplomatic relations, I thought it may be useful to see how the minimum wages of the two countries compare. Also, Lithuania happens to be the country that is catching up to Taiwan fastest.
First, here’s a general, comparative picture of Taiwan’s stagnating minimum wage in nominal terms.
Countries that had minimum wages previously on par with Taiwan have all surpassed Taiwan. Those which had lower minimum wages than Taiwan have either caught up or are on pace to overtake Taiwan in the next few years.
Take Spain, a country that had a minimum wage similar to Taiwan in 1995. Spain’s minimum wage was NT$14,525, at about the same level as Taiwan’s NT$14,880.
Spain’s minimum wage has since grown by 2.6 times to NT$37,195, while Taiwan’s minimum wage has grown by only 1.7 times to NT$25,250.
In the next chart, we can see that due to Taiwan’s minimum wage stagnating for the last 20 to 30 years, Eastern European countries like Lithuania are catching up with Taiwan as well.
In Lithuania, the minimum wage increase of 38.75% in 2019 and 13.71% this year has allowed its minimum wage to be pushed upwards to NT$24,118 this year, to be only about NT$1,000 behind Taiwan. If not for Taiwan’s currency having grown stronger against the Euro over the last few months, Lithuania’s minimum wage would have overtaken Taiwan this year.
Take note as well that after two economic crises, Lithuania saw two bouts of wage depression similar to Taiwan, from 1999 to 2002, and from 2008 to 2011. But instead of allowing minimum wage to remain low after the crises, Lithuania lifted its minimum wage after 2002 and after 2011.
After the 1997 economic crisis, Taiwan’s government allowed the minimum wage to stagnate for nine years. Former president Chen Shui-bian only increased the minimum wage in one year of his eight-year presidency. After the 2008 economic crisis, former president Ma Ying-jeou also allowed the minimum wage to stagnate. Between the 1997 and 2008 economic crisis, Taiwan’s minimum wage was only increased once in 2007, and only by 9.09%. When Ma started increasing the minimum wage, it was only increased by 3.47%, 5.03%, 2.63% and 3.81% in 2011, 2012, 2013 and 2015.
It was only after President Tsai Ing-wen took office that Taiwan’s minimum wage saw continuous increases, and overall increases higher than the two prior administrations.
Let’s compare the minimum wages of these countries against their cost of living.
Taiwan is actually the second most expensive among this group of countries.
With Taiwan’s higher cost of living, the minimum wage should be higher than the majority of these countries to be commensurate with its cost of living.
Accordingly, if Taiwan’s minimum wage is to be commensurate with its cost of living corresponding to that of these other countries, then its minimum wage should be between NT$30,000 and NT$45,000.
Note that comparing with Lithuania gives Taiwan a higher minimum wage, which suggests that Lithuania’s minimum wage is more adequate for its cost of living than Taiwan’s, though there is still room for Lithuania’s minimum wage to grow.
Let’s hope that the burgeoning of Lithuania-Taiwan ties extends to measures that promote the common dignity and welfare of workers in each country.
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TNL Editor: Nicholas Haggerty (@thenewslensintl)
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Taiwan’s Minimum Wage Is Not Adequate for Its Cost of Living
Roy Ngerng on the Minimum Wage
Roy Ngerng, a researcher and fair wage advocate, has written extensively on Taiwan's minimum wage. His work amounts to a comprehensive case for raising the minimum wage, which he shows to be too low for Taiwan's cost of living, too low by international standards, and increasing at a rate too slow to alleviate these problems. We are honored to collect and present his work here.All feature article