Family-owned business

The issue of low wages for domestic workers has recently sparked considerable discussion. The causes identified in these discussions include the ineffective transformation of Taiwan’s industrial structure, companies operating through price-cutting competition by suppressing labor costs, generally low salaries in the service industry, the devaluation of academic credentials due to an oversupply of graduates, employees’ insufficient bargaining power over wages, and the anchoring effect of the NT$22,000 wage level.

While most discussions focus on industrial structure and labor-market factors, some market observers examine the causes of Taiwan’s low wages from the perspective of popular sentiment and culture. Many Taiwanese businesses are family-owned. As a result, they may lack sufficient capital to pay high salaries; moreover, when designing compensation plans, some family businesses may be more inclined to consider the interests of family members, leading to relatively lower salaries for other employees. Public opinion has also criticized Taiwanese business owners for being stingy with pay, treating employees more as “hired hands” than “partners,” being less willing to provide sufficient training or help employees grow, and feeling even less need to offer higher salaries. These values mainly stem from Taiwan’s long-standing culture of careful budgeting, particularly among family-run businesses.

For example, market observer Chen Zhendong noted that in Taiwanese family businesses, family members often occupy senior management positions. In particular, executives at Taiwan-listed companies are frequently major shareholders: they pay themselves high salaries and arrange for family members and relatives to serve as executives and receive high pay. To remain accountable to shareholders, however, they must suppress entry-level wages to maintain profit levels. He therefore believes that executives’ self-interest causes an unequal distribution of wages and is one reason why wages for Taiwan’s grassroots workers are low.

For another example, according to the “Table of Economic Growth Rates and Factor Income Shares of Gross Domestic Product over the Years” published by the Directorate-General of Budget, Accounting and Statistics, the share of GDP accounted for by compensation of employees in Taiwan fell from over 50% in 1992 to 44.9% in 2020 over the past 25 years. During the same period, the share of GDP accounted for by operating surplus rose from 30% to 34%, indicating that corporate profits have not flowed into employee wages. In response, media worker Peng Xingzhu pointed out that business owners profit but are unwilling to share generously; the money all ends up in the pockets of business owners and major shareholders, making Taiwan’s wealth distribution even more unequal!