Wednesday, December 26, 2007

Income growth remains stagnant

Income continues to stagnate, says the DGBAS:

Taiwan's average basic pay and substantive regular monthly pay witnessed an annual growth of 2.17% and 1.78%, respectively, in the first 10 months of this year, both were the highest of their kinds in seven years and, according to the statistics released by the Cabinet-level Directorate General of Budget, Accounting & Statistics (DGBAS).

However, if deducting the inflation of 1.35% in the same period, the annual increase in real regular monthly pay was merely 0.43%, even lower than that posted last year to show stagnant employee salaries over the year.

Economic growth and unemployment are doing well, but the income issue makes KMT complaints about the economy credible to voters, since they jibe with everyday experience.


10 comments:

Raj said...

Which is why the DPP don't deserve to automatically stay in power. Problems with wage increases are key to the public. Whether or not the KMT could change that is irrelevant, because in a democracy an administration that can't sort things out has to be willing to give the Opposition a chance to rectify it.

In many ways a change to a KMT government next year would be a sign of Taiwanese democracy in action. Indeed I would be worried if the DPP won the next two presidential elections, as there needs to be a handover of power to stop complacency.

I still believe that even if the KMT win next year it will be good for the DPP in the long-run. They're still too fixated with things like independence - they need to accept in private that unification of some form is something they may need to accept. Banish the idea of the "Republic of Taiwan" for the foreseeable future and focus on domestic issues that affect people today. If they win the presidency again they need to treat it as a special gift to be used carefully, not a God-given right to be used as they please.

Anonymous said...

Considering that much of the economy in Taiwan is dependent upon business conducted in China it would seem these figures need to be calculated differently to reflect the 'real' economy of the island.

Having said that, much of the island workforce is younger people who live at home and this traditional Chinese family life allows for local businesses to get away with lower wages.

Anonymous said...

I still believe that even if the KMT win next year it will be good for the DPP in the long-run. They're still too fixated with things like independence - they need to accept in private that unification of some form is something they may need to accept.

And you need to accept unification with my ass. Screw China, some people would rather starve to death than be a part of that shit-house of a country. So don't tell me what to think, freedom and independence are the only thing that matters.

Anonymous said...

Raj, the DPP has never controlled the legislature. Ever. If the DPP could control the legislature and the KMT could control the presidency, that would be healthy. But it's not going to happen, so I think a better balance is the DPP winning the presidency.

Did 8 years out of power do anything for the KMT? Why do they still talk about unification when 70-90% of Taiwan doesn't want to hear anything about that? If you're interested in a healthy democratic process, the KMT has to give up its billion dollar (USD) war chest and start financing elections on the same level as everyone else.

Corruption was a problem in the DPP administration, but I would point out that it was a huge improvement over the previous administrations. Right now, the most corrupt branch of government is really the legislative yuan. No one seems to really care.

TicoExpat said...

A few days ago, I was watching DW and they were talking about the economic situation in Germany and the forecast for the year to come. Funny indeed, that their graphs mirror ours in general terms and they also have a problem with lack of consumer confidence and the threat of inflation looming ahead.

Higher wages are necessary to push ahead of the pack. Better production, more competitiveness, more creativity. I hear KMT pusihing the same business formulas of 30 years ago -investing in infraeesructure and building?-, when things have changed a lot since then. At least, DPP supports getting out of the mold -even if sometimes comes out weak.

The effect of the mortage crisis in the US, one of the main markets -in spite of teh growing role of China- has affected all, and while we can accuse the DPP of many things, it has not been criminally negligent. Actually, they do have one bright point that has not been given the necessary consideration: raising the bar when it comes to production, instead of lowering it to compete with China.

With this I mean that manufacturers here want to pay less and less to their workers, and lower the quality in order to have lower prices to compete directly with China, or even moeve there to keep on having cheaper and cheaper stuff. If this meant more efective manufacturing, OK, but it isn't.

Think NIKE. Who makes more money, the disegners and inventors in Germany or the OEM manufacturers in China? Why Taiwan keeps seeing itself as the lowest rung of the ladder, when it should already be on top?

Anonymous said...

Could stagnant wages have anything to do with the 6 percent of workers' monthly salaries that employers must pay for their employees' pension funds, as now required by law?

Unknown said...

This is a very valid post. Many foreign teachers have also complained that their teaching wages have actually stayed the same or even gone down over the years as more foreigners have moved to the island.

Anonymous said...

I am slight getting sick of all the nominal GDP growth, real GDP growth, PPP GDP, etc. Let's say all the data is real. However, people do not feel or even perceive economic growth. It really doesn't matter that if it is real or not.

That been said: I still don't know why when you adjust GDP with PPP, all the sudden Taiwan jump from ~17,000 to above 35,000. Does gas really cost half as much in Taiwan than in let's say US? How about housing? How about buying a car? I know overall is cheaper to live in Taiwan but I don't think it is twice as cheap.

Anonymous said...

raj said, "[The DPP are]still too fixated with things like independence - they need to accept in private that unification of some form is something they may need to accept."

This is oversimplistic reasoning to say the least. We hear it echoed in the media: If only Taiwan would comply (with China, with the US, with the EU, with the UN, with world opinion, ad nauseam). It would be so much "easier" if Taiwan would just unify and stop causing problems.

And what does "unification in some form" mean?

I think it safe to say that unification in ANY form would not be a tidy transaction. It has been said before that Taiwan is not Hong Kong. There can be no simple rolling up of the flag and handing over of the territory while brushing away a tear.

Taiwan is an island long populated by activists interested in NOT being part of the Mainland under any circumstances. As many of my friends here have told me, they will fight the Chinese if they come to the death. I believe they will, too.

Thus, if unification occurred peacefully or otherwise, China would inherit this activist population, who would be engaged in resisting them. China would have to respond to that. You can imagine whatever scenario you like...

Taiwan has a right to exist. I think you can't turn back the tide.

Anonymous said...

To the anonmymous crowd (you know if helps if you post under a name).

Yeah, of course Taiwan has a right to exist - no one here is proposing the problem be solved with a nuclear strike. But I think some of the reactions

If the DPP can't learn to improve its behaviour in Opposition it will never do so in government. If Taiwan's only options in the future are the DPP and KMT in their current forms then I would say the island has a poor future. Despite some differences, both parties are as bad as the other in too many ways. I would much prefer to see the KMT win the presidency, the DPP rethink its position and then win control of the legislative and presidency, than it keep control of the presidency without the legislative and carry on as it currently does.

The reason the KMT still talks about unification is the same reason the DPP keeps talking about independence - they have core voters to appeal to. In the end both would probably agree to the same solution for Taiwan - indeed they'd have to because of the requirements to change the Constitution.

Taiwan clearly won't accept the one country-two systems solution because it doesn't like what it sees in Hong Kong. But neither will it ever get international recognition for declaring itself the "Republic of Taiwan". It probably wouldn't even be able to change the Constitution accordingly. China might not attack, but if it did Taiwan would lose (the US wouldn't help if Taiwan declared independence).

Clearly the only solution is something between declaring independence (and thus daring China to attack) and surrendering control of the island to China. China may accept a situation where constitutionally Taiwan is part of China but has no actual power over it. Controlling a city like Hong Kong is difficult enough - I doubt Beijing would want to upset a much larger population by directly controlling it. Hell the Chinese cause enough problems for the CCP. They'd much prefer for Taiwan to stop being a problem and keep to itself.

So, as I suggested earlier, the terms "independence" and "unification" are subjective. China doesn't want to run Taiwan like a province (or even necessarily like HK) because it would be too much effort and too problematic. Similarly Taiwan doesn't need to call itself "the extremely independent and certainly not-part-of-China Republic of Taiwan" to be independent. Japan is referred to as "Japan" in the international community. If Taiwan were simply called "Taiwan" then that would probably satisfy both sides. There'd be more to sort out, but it's an example of how compromise can work out for everyone.