Disturbing Truth about Taiwan's Wealth Gap
By Hsieh Chin-fang
The Storm Media, November 12, 2023
The Taiwan Semiconductor Manufacturing Company (TSMC), often dubbed Taiwan’s “sacred mountain,” has created many miracles, making Taiwan an indispensable part of the global semiconductor supply chain and Taiwan's pride. According to TSMC's annual report, the salary of TSMC's top executives exceeded NT$600 million (about US$19.1 million) last year, and its global employees spent an average of nine lifetimes of hard work to earn it. TSMC employee salaries are among the best in the industry. Such a huge gap highlights the cruel reality of the gap between rich and poor in Taiwan.
On November 11, Professor Liu Mei-chun, chair of the Graduate Institute of Labor Research at National Chengchi University, delivered a special speech on "Distributive Justice and Labor Equality" at the Tzu Chi Forum. She raised three points to explore the gap between rich and poor in Taiwan.
First, half of Taiwan's young people do not meet the threshold to pay income tax, which highlights the plight of Taiwan's young people--low wages. Statistics show that one-third of Taiwan's employed workers earn less than NT$28,800 (about US$916) per month, while more than half (51 percent) earn less than NT$36,300 (about US$1,155) per month.
Second, after the pandemic, there is a huge shortage of workers in the service sector, especially in the dining, tourism, and hospitality industries. Professor Liu indicated that according to media reports, many well-known five-star hotels lamented that they could not find staff. The monthly salary provided by these well-known five-star hotels was only NT$28,000 (about US$891).
Comparing salaries in various industries, the catering and hotel industry has the lowest average salary. Professor Liu expressed that with long working hours, difficult work, and low salaries, no wonder employers can't find workers.
Third, the salaries of the two top executives of TSMC each exceeded NT$630 million (about US$20 million) last year, the highest in Taiwan. According to Professor Liu, the median salary of TSMC’s global employees is NT$2.33 million (about US$74,187). The salary of TSMC’s top executive is 276 times the median salary of its employees. If a person works for 30 years, then it will take these employees at least nine lifetimes to catch up with the boss's salary level. This gap is becoming larger and larger, and the problem is quite serious.
The problem of youth poverty in Taiwan has always been ignored. Tai Po-fen, a professor in the Department of Sociology at Fu Jen Catholic University, indicated that on the first day of school, she received news that a student seemed to have the intention to kill herself due to pressures from poverty. She quickly called the student's family to express her concern. This poverty-stricken college student is not an isolated case.
A survey shows that more than 20 percent of young people aged 15 to 24 are in atypical employment, accounting for the highest proportion among all age groups; the average income of those under 25 years old is lower than that of those over 65 years old. She questioned why this is the case.
Ubiquitous Higher Education Degrees, Prevalence of Non-Traditional Employment, and High Housing Prices Have Contributed to Youth Poverty
According to Professor Tai, factors such as the universalization of university education, the devaluation of academic qualifications, the prevalence of atypical employment, and high housing prices will all lead to poverty among young people. According to statistics, the number of people in atypical employment in Taiwan with college and university degrees last year reached 5.28 million, accounting for 51 percent of labor employment. This is a very high ratio.
In terms of high housing prices, the housing price-to-income ratio in Taiwan's six major metropolitan areas is relatively high. Professor Tai bluntly said that defects in the government's urban planning and unfair fiscal and taxation systems have pushed up housing prices, causing the urban housing market to spin out of control.
Under the trend of negative population growth, she questioned that there are more than 2.09 million vacant houses in Taiwan. The government continues to use floor area ratio incentives to encourage builders to build more houses but has not considered how to launch policies to reuse idle houses. In the future, it may result in "ghost towns" like those in mainland China.
Professor Tai: Childcare in Taiwan More Costly than College Tuition
Taiwan's fertility rate is getting alarmingly worse. According to Professor Tai, when young people have low wages, if they have one child, they will have to bear between NT$2.02 million (about US$64,316) and NT$4.63 million (about US$147,419) in expenses from infancy to college; if they have two children, the burden will be even greater. She bluntly said that there is no country in the world like Taiwan, where the cost of childcare is even higher than college tuition.
Youth in Taiwan generally receive low wages, which is why Taiwan's fertility rate has plummeted, because even if they give birth to a child, they cannot afford to raise it. Professor Tai deems this problem very serious. Taiwan's fertility rate has been declining. Young people are not having children, and there will be no college students in the future. These problems are intertwined.
Scholars: Youth Poverty Should Be Addressed Seriously
How serious is the gap between rich and poor in Taiwan? If we look at income statistics released by the Directorate-General of Budget, Accounting and Statistics (DGBAS), Executive Yuan, when divided into 5 quintiles, the gap in disposable income between the top 20 percent of households and the bottom 20 percent of households has increased from 6.13 times in 2012 to 6.15 times in 2022, showing an expanding trend in the past 10 years. If calculated by the 20 quintiles, the gap in disposable income between the top 5 percent and the bottom 5 percent of households is more than a hundred times. The influence of this gap between rich and poor on people is far greater than this cold number.
On the other hand, in recent years, the proportion of employee salary to GDP has dropped from 45.77 percent in 2012 to 43.03 percent in 2021, a record low, while the proportion of operating surplus to GDP continues to rise, highlighting the fact that economic benefits cannot be evenly shared by those people.
Aside from Government, Businesses Have Social Responsibility to Reduce Wealth Gap
Under the wave of capitalism, the gap between rich and poor in various countries continues to widen. Low-wage and poverty faced by young people in Taiwan are particularly serious. The declining fertility rate is the result of interlocking problems. Narrowing the gap between the rich and the poor is the responsibility of the government, and companies should also shoulder their social responsibilities. While pursuing maximization of profits, they should create companies that make employees happy.