Unlike the US, South Korea, or Japan, there is a very big difference between looking at salary in Taiwan and income. What? Yep, today’s Taiwanese economy, especially in the greater-Taipei area, Hsinchu and Tainan Science Parks, and in the major cities (but not in the countryside regions), there are all sorts of sources of income that are not related to your salary. For the high-tech companies, the big thing is hoping for a big payoff from your stocks, which is not part of your salary. Engineers at these companies can regularly get one time payoffs of USD $100,000-$1,000,000–many of which right afterwards start their own business, invest in real estate, etc, putting yet another low to no salary BUT very high income kink into our analysis here.

Also, there are tons of side projects. Ever hear people talk about accepting cases (接案子, taking on projects)? In big cities here, there is tons of opportunities for supplementary income, and really, Taiwan is in a sense just further ahead in the global trend towards outsourcing and contracting. You get paid for what you do, not for a long-term career.

Also, consider that 1 in 7 Taiwanese is a 老闆 (business owner). Unlike the Japan or the US, the payoff for trying to go the lifelong career/salary route is very low in Taiwan. On the other hand, the chance that you could start up your own little business, everything from the smallest street vendor (and believe me, some of them make hundreds of thousands of dollars US a year) to globally dominant corporations like TSMC, Hong Hai is relatively high. Low salaries plus skilled workers makes for a very flexible labor market and is very conducive to startups.

That’s income. On the consumption side of the coin… have you guys actually been to South Korea or have significant knowledge of what it’s actually like living there? Costs are super high, ESPECIALLY for big ticket items like housing and cars. Did you know Samsung makes cars? Do you think a Samsung car would be any good (hint: if it was, don’t you think they’d export it to the US?)? The much more closed economy of South Korea (yeah, the FTA might change things, but not yet) leads to very high prices for goods that are protected. I mentioned this in other comments–jack up the prices of everything (inflation), jack up all the salaries by the same percentage–you’re in same place you started but you have nice looking numbers and you’re hurting your export industry. You gotta compare apples to apples and oranges to oranges. Otherwise it’s really meaningless.

Well, the picture isn’t obviously all rosy. The Darwinian economic planet of Taiwan means that people that do not have skills are left behind those that do. The difference in economic opportunities between the countryside and large cities in Taiwan is also a problem.

Unlike what it would be in the US, I would really really hesitate to call this unskilled class the “middle class”. Everywhere you turn your head in Taiwan you are running into a 老闆. You’ve all heard it before–Taiwan is very medium and small business heavy. I think there needs to be a political solution here to help this unskilled class, whether it is retraining, social subsidies, housing or what not–but the salary situation… really… the true picture isn’t being painted by such a simplistic analysis.

Naruwan, I’m wondering if you might have just mentioned something quite important.

The cost of living in Korea is one of the highest in the world, with all factors considered.

Is this significant, or is it to be expected when wages are so much higher?

This is from the Korea International Labour Foundation:

For the 1st quarter of this year, regular employee’s per capita wage marked 2,626,000 won on monthly average, which is a 5.6% year-on-year increase from last year’s 2,487,000 won. And weekly working hours of an employee was registered at 43.3 hours, a year-on-year decrease of 1.0 hour per week from last year’s 44.3 hours.

Korea International Labour Foundation: Current status on wage and working hours (2007-07-02)

The statistics in the Reuters article are well supported, just as one would expect.