Conclusion? Let’s all move to the Philippines … or Angola …
Simple solution to conundrum: the NT$ is massively undervalued.
That explains the PPP data etc.
But the government has linked the NT$ to the RMB, so it wont revalue untiil the RMB does.
The reason that wages tend to the minimum in all countries is that rent* always takes the surplus. And let’s not get it confused, wages in all countries are low and always tend to subsistence levels.
*i use rent in the proper, economic, sense
One of my favourite subjects. I dislike ‘sewage connection’ being used as a yardstick of civilisation because treating poo as refuse and dumping it in the river - along with a cocktail of chemicals to make it “safe” - is the exact opposite of civilised and efficient.
It’s true that Taiwan dumps a large fraction of sewage untreated (bearing in mind that “sewage” is usually 40-60% industrial effluent, not domestic blackwater/greywater). However the Philippines is a poor comparison because they have a lot of sparse communities which rely on local anaerobic tanks (septic tanks), which empty their contents into a leachfield. That’s fine if the system is designed properly, but they’re often not (worldwide, not just there). So it depends how you define ‘sewage connection’. The reason they have better disposal is that it is 100% illegal to discharge untreated blackwater into the environment - unlike in Taiwan. House builders are responsible for ensuring there is a downstream processor or local provisions. As someone mentioned back there, Taiwan is lax about such things because they think environmental regulation harms business “competitiveness” (whatever that means).
Incidentally, GDP is not a measure of income (in countries with significant industrialisation, a large component is the burn rate of natural capital) and has only a very loose correlation with quality of life. Looking at numerical descriptions of the economy can often be very deceiving - you end up not seeing the wood for the trees, even when most of the trees have been cut down and given away to foreigners.
I agree. A very succinct summary.
It is common practice in Taiwan to under report income of employees. National averages get skewed as a result.
There is also a fairly common occurrence of people who are just not hungry enough to have big goals and put forth a huge effort in attaining them. hence many people tend not to try hard for a better career or make their own career and push it further. I see lots get sometime OK then just settle. In fact the poor workforce and lack of drive make it a good place for the motivated to cash in given the ease of government restrictions in certain areas. I mean, if someone doesnt want to do something, thats their choice (as far as low pay). If they enjoy low pay and shitty conditions, have at it. Those of us who dislike it tend not to live it.
It is far far easier to make money here than in North America, by a long shot. You just need to be willing to tap teh export market in probably damn near any field.
You mean like the export market for iron, gold, oil, gas, corn, beef? Or memory chips, LED panels, solar panels (all of which seem to be losing money now)? Tuna or wild fish, fishermen might not agree these days.
Just having some fun.
This is not the reason wages are low, because if everybody did that , and there are already a lot of companies exporting, then they would just increase competition for themselves and among themselves. And it wouldn’t be called wages. We are talking about wages here.
A succinct illustration: I worked in a buxiban which was in a row of ordinary 5 story houses in a residential area on the edge of a large city. Next door was a residential house - they paid 8kNT a month rent. My school paid 80kNT. The landlord was laughing all the way to the bank (probably the only work he did was walk to the bank…)
Well, I have always said most buxban owners are total idiots. 
Disagree Mucha man. I’ve been looking into the waste disposal in the Philippines for a sponsor project for my ol company.
What was reported on paper was not existing. If you only take in consideration the official housing, it might be “OK” but all the nation-wide slums, locating a few million of people are simply not connected to closed sewer system. It’s a fact and reports are obvioulsy scrutinized by those before the current Pinoy President.
As for the TW wages in relation to dasaints remark:
After my first 4 months in the headhunter / HR field, I can simply observe that the wages are “compressed” for young talents. NTU students , Harvard grads, they are indeed underpaid for what they are able to contribute - but the blame is only the lingering - export oriented - economy. I have met a lot of these people, scratching my head as showing China on the map.
Never the less, mid to Senior Mgt average incomes are at par with other developed APAC countries and - let’s not forget - Cost of living vs. Spending power remains high. (but a lot of Taiwanese are masters in potting-up for rainy days - or a second -third property )
Yes, China offers now more opportunities for Taiwanese talents but one day - turn it as you want - they will have to come back to take care of their elders and they all know that they might not fit within this economy anymore. It’s a vicious circle for many.
The most scary remark I heard lately is the term “Taiwanese maids” - from one graduated professional referring to Taiwan 10 years from now.
I re-open a debate from 2008 on LinkedIn. Things have changed a lot over 4 years - related to wage as such:
linkedin.com/groupItem?view= … BhypZ_w8Ep
Neither are millions of Taiwanese homes. And as I mentioned, official figures are questionable here too.
In any case, I long ago in this thread stopped the direct Philippine analogy. But no one should dispute that Taiwan until lately had third world levels of sewerage connectivity and even now lags far behind its regional neighbors such as Korea, Singapore, Japan, Malaysia, and even China. We can perhaps move this to another thread.
You don’t need to read the statistics, you can see the open sewers running through cities. Taichung has plenty of them. They don’t even cover them over :loco: . This is off-topic anyway.
I am just pointing out that just because the OP thinks that wages in Taiwan are so low doesn’t mean it is a fact. The best proof of that are all the foreigners who keeps whining and yet are still on this rock. If salaries and living conditions are better elsewhere, lets say for example like China, then why are the people who are pointing this out still here? Would you not say their actions contradict their assertions?
IMHO, Taiwan’s so called “low wage” helped propel it to become one of the emerging industrialized country in the 80s and early 90s. It is this same “low wage” that has propelled and made China one of the biggest economy in the world. I have witnessed with my own eye the massive migration of Taiwanese factories to China in the early 2000 as a result of this, thus creating havoc to Taiwan economy.
In the argument that a stronger union would equate to higher wages and better economy, the Philippines have strong unions that the government even categorizes as militant and yet they have one of the lowest wages in South East Asia. Has it help the Philippine economy? Nope, on the contrary, the strong union has been one of the major reasons most companies do not invest in the Philippines.
As for having no sense of humor, I find that remark FUNNY! (read that dripping with sarcasm)
Even the government mandarins are publically concerned about low wages (at the same time they blocked a meagre rise in the minimum wage recently) . This is not a new discovery by some ‘white foreigners’ , nor is the theory invalidated because the OP is a foreigner.
Comparing wages in Taiwan to wages in the Philippines and China is not bolstering your case. It’s also true that wages in those countries are rising rapidly. I still think you posted first without having read the whole thread.
Your logic is also flawed, because many Taiwanese earned more in the past than now (taking inflation and overtime into account). Also you seem to have got the horse and cart backwards. You claim that the economy was and is a success due to ‘low wages’. So if you are low paid worker you are part of a successful economy, pats on the back all round people. :bravo: . Long may low wages continue as they obviously bring such success to everybody!
Taiwan’s wages being low is a problem not only for the lowest earners. It’s hard to hang onto experienced and skilled staff as the differential exists at higher levels also. I would have left Taiwan already but I was able to work for employers based outside of Taiwan. It’s not that some companies cannot afford to pay higher wages, it’s the cultural remit of ‘costing down for everything’ that tends to keep them down also. The wages scales are set so low that if they want to match pay with ‘global professional level’ you may have to join the company at higher pay than the departmental or business unit managers! And that understandably causes a stink with the other staff and looks weird. Yet this is the situation they create.
This is definitely true in my industry. If they’re really serious about English here, they need to be competitive with other nations in terms of the amount of funding, and how they direct that. The Persian Gulf and Brunei pay much more (something like at least twice as much, plus better holidays, really good accommodation, etc.). Korea pays more, I believe, though I don’t know for sure. Hong Kong pays more. Even Malaysia is almost on a par (and cheaper to live in). Yet to make Taiwan competitive, they’d basically have to pay foreign teachers more than principals, and probably more than many people in the MOE. It’s never going to happen because of the massive shitstorm it would create. I personally don’t think they do need to have foreigners working as teachers here (trainers, certainly), but given that the government obviously thinks this is necessary, they need to be competitive. They simply can’t attract, or retain, professional teachers here. What they end up with is three types of people: retirees looking for health care outside the U.S. who are way past their prime in their career, people on an Asian jaunt for a year or two, and people married to locals. The smart people in the third category eventually get out also and do other things also. There is such a deeply ingrained mentality here of cheaper is better. Yet they get what they pay for.
I enjoyed reading the debate - my only regret is having been to busy to come back here and add in my two cents. I thoroughly enjoyed Mucha Man and headhonchoII’s responses, however. I especially liked the photos contrasting Belgium and Taiwan. Taiwan seriously looks like a third-world country; I visited Calcutta for a month in the past, and when I first got to Taiwan (Zhonghe), it was deja vu. Of course, there are nicer areas in Taipei City…
So, back to the debate.
I posited that wages are low in Taiwan because the affordability of modern conveniences (i.e. standard of living) vs. the average wage is so vast. Sure, sure, food here is dirt cheap… if you like ingesting cockroach legs and old people’s hairs and eating out on the sidewalk. But, there is no food available in developed nations with such appalling standards of hygiene.
If the average person living in Taipei makes $44,000/month (the mean, not even the mode… according to a recent report from Apple Daily), then a $20,000 smartphone kind-of costs a lot. Computers, decent clothes, airfare, makeup, appliances, Internet connection, movie theatre tickets, electricity, etc. are no cheaper than in countries where the absolute wage is much higher.
Rent takes up about the same proportion of monthly wages as it does in other countries… but you can throw that all out the window if you want to buy a two-bedroom place out in the suburbs of Taipei (with a one-hour commute to the city) for $5,000,000. A car? F’get about it! Well, at least the scooter provides some sort of affordable personal transportation for the masses here (public transit in Taipei is very cheap, too, as others have pointed out).
Structural inflation works like this: the unions are strong, so they get higher wages for the workers. The factory owner finds that he is making less money, so he raises the price of his products to make up for his loss… and one day, the workers find out that they can’t afford as much as they could at the beginning of their raise, so they again demand more pay… and thus it continues upward. Such a country may not have a higher standard of living as the next, but compared to other nations, they certainly make a lot more and can import more.
Arguments could be made for keeping wages low, yes, but not when it concerns the individual wage-earner.
I was reading some scholarly economic articles about why wages are so low in developing countries, and the gist of it was this: employers don’t value or invest in their employees and thus do not think in value-added ways when it comes to their product, either. What this creates is merely a factory that creates a commodity, the lowest common denominator for products in general. Since their thinking is to create the cheapest product with no differentiation other than price, it of course follows that they are going to treat their workers in this exact same way. Thus, the entire country suffers.
Oh, I also should add that the average Taipei resident’s wage is their salary. But, when you consider the hours that many people here work, it is absolutely appalling. Twelve-hour days, unpaid overtime, weekend shifts, taking work home, etc.
Thus, what seems like a decent wage versus the cost of living in Taipei is actually not that decent…
And as MuchaMan pointed out, back in 1998 and earlier, people were making more in both real and absolute terms. That’s crazy! I’ve heard anecdotes about how people working in electronics factories were making $50,000 + per month, how beggars could earn quite a decent wage, how the taxi business was booming, etc. And here we are, 10-20 years later, with fresh graduates considering themselves lucky if they can make anything over $22,000 per month.
Excellent post, Shawn, but beware. Some will say: if you don’t like Taiwan, the GET LOST! Your post shows that you hate Taiwan! If you “believe” what you just posted, then you should just get on a plane and get out of here! Everything here is OK, and those who have something to complain about should book their airfare ASAP! Don’t ever “complain” about Taiwan! You are not pointing out facts, you are “dissing” Taiwan, so why don’t you just leave??? Haaaahaaa!!!
Yes there are many that get defensive here , and stoop so low as to say, it is better than China or Philippines. Well I would bloody hope so!
The pay is one thing, and as Shawn pointed out, the work conditions are another. The work conditions are actually worse in Taiwan than neighboring countries such as Japan and Korea with long working hours culture because there are far less public holidays here. So you don’t get paid as much AND you have less vacation.
Even China has far more public holidays than Taiwan, only Taiwan does not get the week off for Moon Festival among Korea, Taiwan, China and Japan, yet Moon Festival is supposed to be a core Chinese cultural event.
Also Taiwan does not give public holidays if they fall on a weekend, this is a rarity in the world.
Recently you will see that the minimum wage hike of 2% was blocked, and only two weeks later they are allowing 10,000s more foreign workers to come into Taiwan. The EPA blocked formosa petrochemical plants due to negative environmental reviews, now the government is trying to take away their veto and the EPA minister is so spineless he actually agrees with this!
Taiwan is controlled by big business interests make no mistake about it, the legislators make lots of money being in their pocket.
I hate to be the boring picky guy, but can you guys bring out a few sources to back up your claims/facts/ideas? I like this topic a lot and have always wondered about it as well. Can some of you send me some of the literature that you have used to back your point? I will read through it all… I really want to understand what exactly Taiwan is lacking.