Trade group wants to limit wage hike to 3 percent

COST PRESSURES: Lin Por-fong urged the government to continue offering incentives and subsidies to companies that increase wages and share profits with employees

• By Crystal Hsu / Staff reporter

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Taiwan’s minimum wage should not rise more than 3 percent next year to limit the impact of the increase on businesses, particularly traditional industries facing mounting cost pressures, a major business group said yesterday.

Profitable companies should raise employee compensation, but industries struggling with weaker business conditions should receive tax relief and other government support to help offset higher labor costs, Third Wednesday Club chairman Lin Por-fong (林伯豐) said.

Lin’s remarks came ahead of the minimum wage review committee meeting on Thursday next week, when the government is expected to decide on the increase for next year.

A man pulls a trolley stacked with boxes of goods in New Taipei City’s Lujhou District on Tuesday.

Photo: CNA

“A 3 percent increase would be more reasonable considering the impact of inflation,” Lin told reporters on the sidelines of the trade group’s monthly meeting in Taipei.

The government has raised the minimum wage for 10 consecutive years, increasing the monthly rate by a cumulative 47.4 percent and the hourly rate by 63.3 percent, Lin said.

The increases have also pushed up mandatory labor costs, including contributions to the national labor and health insurance programs, Lin said, adding that they account for about 20 percent of personnel expenses.

Higher labor costs are adding to pressure on businesses, particularly traditional industries, even as Taiwan’s economy is forecast to expand 11.05 percent this year on the back of a powerful artificial intelligence (AI) boom, said Lin, who is also chairman of Taiwan Glass Industry Corp (台玻).

The uneven impact of the expansion underscores the challenge for policymakers as AI-related industries benefit from strong global demand, while traditional sectors face higher energy, labor and other costs.

Lin urged the government to continue offering incentives and subsidies to companies that raise wages and share profits with employees, rather than relying solely on across-the-board increases in the minimum wage.

He also called for a cautious approach to monetary policy, saying that Taiwan should take global interest-rate trends into account while avoiding unnecessary changes in borrowing costs.

The central bank’s policy stance has broadly met the expectations of the business community, and it would be better to keep interest rates unchanged for businesses across industries, Lin said.

The central bank is holding its quarterly board meeting today, with investors watching US inflation and the US Federal Reserve’s decision for clues about the outlook for Taiwan’s interest rates.

Lin urged the government to improve energy and talent policies, saying that rapid expansion in AI data centers, advanced semiconductor manufacturing and high-performance computing is driving demand for electricity and skilled workers.

Taiwan also needs to compete more aggressively for international talent rather than focusing on retaining professionals, he said.

Measures could include easing qualification requirements for foreign professionals, streamlining visa and work-permit procedures, and offering tax incentives and better housing support, he added.