The Weakening Taiwan Dollar
February 4th, 2007 by MarkLongtime readers of this blog will know well that I’ve never really suggested coming to Taiwan and teaching EFL purely for financial reasons. In fact, I’ve always found it a little hard to believe very many westerners, especially Americans would be able to earn anything like what they could at home. Now that the NT has been weakening against pretty much everything but the US dollar, the situation is a little less rosy for non-Americans as well. Canadians haven’t been hit too hard, but the deal really isn’t as sweet as it used to be for Europeans.
| Euro | UK | Australia | Canada | |
| NT per | 42.2 | 62.5 | 25.4 | 28.7 |
The average salary for EFL teachers in Taiwan is about $600NT per teaching hour. For most teachers, this means about there’s about half an hour of unpaid prep work for every two hours of teaching. The “real” earnings of a teacher here is about $480 per hour.
| Earnings per hour | Euro | UK | Australia | Canada |
| 600 NT (per class hour) | 14.22 | 9.60 | 23.65 | 20.90 |
| 480 NT (real earnings) | 11.37 | 7.68 | 18.92 | 16.72 |
Considering that teachers rarely teach over 30 class hours per week, this isn’t a lot of money by western standards. Taxes are reasonable, though. Short term teachers have to pay 20%, and longer-term teachers almost pay less (unless they have unusually high earnings). I’m not sure if these taxes are less than what a British person earning 800 pounds a month would have to pay, though. I think Taiwan is still an easier place for teachers to save money than Japan, but it doesn’t compare with working at home quite as well as it used to.
:
February 5th, 2007 at 6:13 pm
When I first came to Taiwan back in 1999 it only took NT$19 to buy one Australian dollar. It now takes NT$25. Teaching here is definitely no longer as attractive financially now as it was back then. Wages have risen little while costs of many things have increased.
February 5th, 2007 at 6:53 pm
I am Canadian and the exchange rate was around 20 NT for 1 Cdn dollar. Painful.
February 5th, 2007 at 6:53 pm
When I first arrived.
February 6th, 2007 at 1:28 am
Hey,
Look at http://www.x-rates.com to see the fluctuation in the NTD over the last 5-10 years. You’ll find it’s actually about level vs. the dollar, and the recent crapness vs. the pound is to some extent the product of an overly strong pound rather than a particularly weak NTD, as people diversify away from dollars or play the carry trade between Asia and the UK.
High interest rates in the UK are a big factor in the pound’s strength, but I think people will start waking up to the accompany high rate of inflation in the UK in the near future too.
I think the NTD will change eventually though towards it’s historic average again. Why? Rates are slowly but steadily continuing to climb and the central bank sounds VERY much like they want to raise into the foreseeable future. Central bank of TW said as recently as December that interest rates “are not at the neutral level yet.”. Personally, I believe that means more rises still to come rather than any suggestion of an overshoot!
Then again you have speculation about rate cuts:
http://www.taipeitimes.com/News/biz/archives/2007/01/04/2003343356
as well as Thailand dropping rates (though handing out cheap money is certainly a nice way to gain public support for a military coup leadership) and Japan refusing to raise theirs.
I suspect if Japan’s central bank grows some balls, and starts raising rates a bit more, and stops playing silly beggars with the currency markets to maintain high exports, then TW will have a free-er hand to raise rates too. The RMB is still gradually appreciating too, which frees the hand of all the Asian countries.
Still. I doubt TW’s government wants to topple the cards of the housing boom here, it’s already wobbly as it is. Which means crappy exchange rates for the short-medium term future.
Mu.
February 6th, 2007 at 4:25 am
A note on UK income tax:
Earning £800 a month you’d be paying £103.96 in income tax and National Insurance, so roughly 13% of your income. Against short-term taxation rates in Taiwan that’s pretty favourable, but as you say after 183 days in one tax year the rate here drops.
If you earn an equivalent NT$50,000 a month here, then once you’re a “resident tax-payer” you’re looking at NT$2,251 in income tax a month once the standard deductions are figured in. Of course, there’s still NHI and Labor Insurance contributions to factor in, but there’s a comfortable NT$3,000 per month saving compared with the UK.
In the UK you’d also have to factor in Council Tax (perhaps £60 a month) and the much higher cost of living. Salaries are higher, though - around £1,500 a month for recent graduates.
When I arrived in Taiwan (in 2002) the rate was £1=NT$48 - the money I earn here is now worth 23% less than it was when I arrived. Bugger.
February 6th, 2007 at 7:40 pm
I always saw Taiwan as one of those places to escape to to earn real money. Guess I was wrong. And I don’t know much about exchange rates except what I’ve seen here on the Mainland the last seven years: When I arrived, RMB 4:1 NZ$. That dropped to 3:1 about 3 or 4 years ago, and was up to 5:1 last I heard. Doesn’t mean shit to me, though, I earn RMB and live on the Mainland. It only becomes a consideration when I think of taking a trip home. So far as I can tell, though, coming from a bigger, wealthier country makes life easier in the exchange rate aspect. Come from NZ and your currency is constantly flopping about all over the place like a fish on a wharf trying to find water.
February 7th, 2007 at 6:00 pm
Still, for Canadians, it is good. The last I checked on xe.com, the exchange rate was 1CDN$ for 27.76 NTD. When we arrived back in September, the exchange rate was closer to 1 CDN $ for 30NTD.
Teaching in Taiwan makes a lot of sense for Canadians. Income tax is a lot less. My marginal income tax rate in Canada was 45%, same as my wife’s. That means that if we made 4000 $CAN per month, we would loose almost half of it in income tax.
Right now, I am earning about 110000NTD per month, which is about 4000 Can$. I do work close to 70 hours a month and will not be doing this every single month, however it is possible to make some good money here. Most of this money goes back to pay some debts off, but we earn good money here and there are a lot of opportunities, such as going back to school fulltime and receiving scholarships to study in Taiwan, which can be as high as 30000NTD per month.
The big thing that we do not have here are liabilities. No mortgage, no car payments. Everythings is in cash and right away.
Back in Canada, our mortgage was 1300$, our car payment was 667$ etc. It just keeps piling up. Here the cost of living is a lot cheaper than in Canada, and our dollars go a lot further.
Still, I do not speculate in currencies but in our terms, it was actually beneficial, because the NT dollars that we earn here make more Canadian dollars when we send them back home than when we arrived.
Anyways, just my opinion.
February 7th, 2007 at 6:21 pm
I am earning about 110000NTD per month, which is about 4000 Can$. I do work close to 70 hours a month
Wow, an average of about $1500 per hour. Here in Taichung the starting wage is about $600 per hour which would be about 42 000 based on 70 hours per month.
February 7th, 2007 at 7:28 pm
Good point Elliot. Range earning $1500/hour here would be the equivalent of a Canadian earning $130k/year there. Even with the taxes, that would allow for savings of 4k/month. He’s just in a far higher earnings bracket compared to his peers here than he was back there.
February 7th, 2007 at 9:04 pm
Hey guys,
To answer some questions, I am currently employed full time at a bilingual school in Hsinchu. That takes up about 45 hours a week. I just saw a typo, I work 70 hours a week, not a month! That is about 360NTD per hour. By far, this is the position that is the least desirable, because it isn’t hourly paid, so I have a lot of office hours that are included in that. I teach 30 hours a week at that school.
I work at an adult language school for 5 hours a week.
I run my own classes and am a tutor for about 7 hours a week.
I work at another buxiban for 12 hours a week.
Those have been the numbers for the last few months.
By far, I make the most money of my private teaching.
February 7th, 2007 at 9:34 pm
Oh, that makes a lot more sense. Don’t you think you could earn and save even more if you worked 70 hours a week in Canada, though?
February 7th, 2007 at 10:26 pm
Apart from the money/savings issue, kudos to Range for being able to teach 54 in-class hours per week.
February 11th, 2007 at 2:57 pm
Mark: Nope because I have worked 70 hours a week in Canada and what kills us Canadians is income tax, between 43-50%. SO half your pay is lost. Think about it, just with our main jobs, my wife is making the same salary as she was getting in Canada as a full time teacher, after paying her taxes on each paycheck. On top of that, we had 15% provincial and federal tax on all purchases, except some books and groceries.
Maybe for Americans, the deal isn’t as sweet anymore, I don’t know. I can only relate about things that I know. In my eyes, Taiwan is still the land of opportunity.
Elliot: thanks a bunch. However, I will be probably teaching a lot less when I get to Taipei. I was working for a purpose. I definitely enjoy the mix of private students and schools, it is a nice way of making a living and teaching a bunch of kids. Right now I have about 20 teaching hours scheduled for my first week in March. I will try and double that that but in the end, I will like having a bit more time to write and do other things.