The Executive Yuan last week approved a Ministry of Labor proposal to raise the monthly minimum wage by 4.05 percent to NT$27,470, and the minimum hourly wage by NT$7 to NT$183. The revisions to the current monthly minimum wage of NT$26,400 and hourly minimum wage of NT$176 are to take effect on Jan. 1 next year, benefiting more than 2.39 million workers, of which approximately 2.05 million would be Taiwanese citizens, the ministry estimated.

The minimum wage is designed to safeguard people’s basic livelihoods — especially marginal workers such as apprentices and part-time and unskilled workers — and represents the lowest hourly or monthly pay that employers may legally offer workers. Given rising inflationary pressures — the consumer price index (CPI) is forecast to grow 2.14 percent and core CPI is expected to rise 5.51 percent this year — the government is raising the minimum wage to help workers cope with cost of living increases and ensure real purchasing power.

It is the eighth consecutive year that the minimum wage has been raised since President Tsai Ing-wen (蔡英文) took office in 2016. Over the past eight years, the monthly minimum wage has increased from NT$20,008 to NT$27,470, a total adjustment of 37.3 percent, while the hourly minimum wage has risen from NT$120 to NT$183, a total raise of 52.5 percent.

Last week, Premier Chen Chien-jen (陳建仁) also demanded that the Ministry of Labor swiftly examine whether further revisions are necessary for an existing draft proposal for minimum wage legislation. Currently, there is no law that authorizes regular minimum wage increases, resulting in heated negotiations among all parties at an annual review committee meeting in the third quarter of each year.

Thus, it is necessary to pass minimum wage legislation as soon as possible, as this would allow the nation to establish a solid foundation of review standards with a stable and transparent formula for calculating wages, while reducing tensions during the review committee meeting. As Taiwan’s income distribution has become increasingly M-shaped, and economic inequality is worsening, a special law is needed for the minimum wage, so that workers in different industries and minority groups can receive the most timely protection and support.

However, the minimum wage hike is still not enough to tackle Taiwan’s perennial low pay problem, where about 25.5 percent of salaried workers have not had a raise in the past five years and nearly 90 percent are unsatisfied with their pay, the highest percentage in five years, a survey conducted by the 1111 Job Bank Web site showed earlier this month. Moreover, the latest wage increases affect only 2.39 million workers, accomplishing nothing for about 80 percent of the nation’s salaried workers who earn above the minimum wage.

For example, the average monthly starting salary for college graduates is about NT$31,000, according to the ministry’s data. Although higher than the monthly minimum wage, such a salary level does not guarantee a comfortable living for many, as steady consumer price increases in recent years have cut into people’s disposable income and the salary of new workers has been stagnant for many years.

That is why minimum wage increases are often considered insignificant for many, as the problem of low wages, especially for young people, stems from structural issues such as bottlenecks in domestic industrial upgrades, many companies moving production lines abroad and a growing mismatch between Taiwanese workers’ educations and labor-market needs. The solution to the low wage problem also demands closer and more effective dialogue among unions, social groups, enterprises, education institutions and government agencies.