Stabilize prices, protect livelihoods

Escalating tensions in the Middle East have led to a rise in international oil prices, causing inflationary pressures to resurface. The Executive Yuan’s price stabilization task force has decided to extend tax reduction measures for key raw materials through the end of March next year and continue stabilizing oil, natural gas and petroleum prices. The government is right to intervene and stabilize prices at this time, because for ordinary households, the most immediate economic indicator is not GDP growth, but how much their money can buy.

The Directorate-General of Budget, Accounting and Statistics reported that the consumer price index last month rose 2.04 percent from a year earlier. While that figure might not seem alarming, the producer price index — a measure of prices received by producers — surged 16.75 percent, while import prices denominated in US dollars increased by an even steeper 20.45 percent. Rising upstream costs would eventually filter down to consumers, so stabilizing prices of energy and raw materials is building a firewall against higher living costs in the future.

As the saying goes, “first fill your belly, then worship Buddha” (先顧腹肚，再顧佛祖). Rice, cooking oil, salt, rent and utility bills are everyday realities faced by ordinary people. When wages fail to keep up with prices, real purchasing power shrinks. For low-income families, increases in the cost of a bento box, cooking gas and transportation fees can add up to a heavy financial burden.

Taiwan is simultaneously facing low birthrates, an aging population and high housing prices. Many young people worry that little would be left of their salaries after paying rent and living expenses. When even making ends meet requires careful budgeting, how can they be expected to plan for marriage and children? Stabilizing prices might look like economic policy, but it is also population and social policy.

Stabilizing prices also requires addressing wages. This year, the minimum monthly salary was NT$29,500, while the minimum hourly wage was NT$196. The review of next year’s minimum wage is also set to begin soon, with the monthly rate expected to surpass the NT$30,000 mark for the first time. Increasing the minimum wage is a necessary step, but the ability of small and medium-sized enterprises to absorb higher labor costs should also be taken into account. The government, employers and workers should engage in thorough dialogue to ensure that economic gains are fairly reflected in workers’ incomes while preventing the costs from immediately being passed on to consumers.

For vulnerable households hit hardest by rising prices, the government should provide targeted support through social welfare assistance and housing subsidies. Focusing resources on those who genuinely need them is the best way to ensure that every dollar of public spending is used to its maximum effect.

We might not be able to control international conflicts or fluctuating oil prices, but the government can strive to mitigate external shocks, stabilize domestic prices and safeguard the public’s purchasing power.

Maintaining stable prices means maintaining people’s livelihoods, and protecting people’s livelihoods is essential for social stability. Ensuring that people can live better and hold on to every dollar of their hard-earned money is the government’s most basic — and most important — task.

Chen Ching-yun is a former director of the Legislative Yuan’s Bureau of Legal Affairs.