The gloom in the air is almost palatable. For years now, most Taiwanese people I’ve known have not just been glum, but been down right pessimistic about the economy.
In one sense, it seems irrational. While Taiwan’s GDP growth since 2000 has been very poor, much of that can be attributed to currency fluxuations. If one looks only at PPP-adjusted 2006 data, Taiwan managed a very respectable 4.6% growth. So, why are people so gloomy? The answer is wage stagnation. Reuters reported on this:
“If salaries in Taiwan continue to stay at current levels, it will encourage white collar workers, such as managers, to go to China,” said Chou Ji, an economics professor at Shih Hsin University.
In the first eight months of the year, Taiwan’s average monthly salary rose 1.84 percent from a year earlier to T$46,646 (US$1,431), just a tad higher than inflation of 0.62 percent during the same period, statistics agency data showed.
During the same period, the average wage in South Korea rose 5.6 percent to 2.6 million won (US$2,830), Korea’s Labour Ministry said.
“What you see is that wage growth in Taiwan is very weak,” said Peter Sutton, Taiwan’s head of research at CLSA, adding that the island’s strong exports were not translating into a rise in wages. “There is much more optimism in the other countries.”
“The Taiwan exports sector is really strong, but the domestic sector is protected and … has very little foreign participation. So domestic consumers face much higher costs.”
CLSA said in a survey of income earners that 29 percent of respondents in Taiwan saw their income fall and 42 percent saw no increase in the past 12 months, with 32 percent saying that they were worse off than 10 years ago.
The average Taiwanese wage is about half that of the average Korean wage. Just a few years ago, Taiwan was ahead and now it’s fallen so far behind. Worse still, 32 percent of Taiwanese people report that they are worse off than they were 10 years ago. No wonder the average guy on the street is gloomy.