Family-owned business

The issue of low wages for domestic workers has recently sparked considerable discussion. The causes identified in these discussions include Taiwan’s ineffective industrial restructuring, companies operating through price-cutting competition by suppressing labor costs, generally low wages in the service industry, the devaluation of educational credentials due to an oversupply of graduates, workers’ insufficient bargaining power over wages, and the anchoring effect of the 22K 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 social sentiment and culture. Many Taiwanese businesses are family-owned. On the one hand, they may lack sufficient capital to pay high salaries; on the other hand, when designing compensation plans, some family businesses may be more inclined to consider the interests of family members, resulting in relatively lower salaries for other employees. Public opinion has also criticized Taiwanese business owners for being stingy with money, often treating employees as “workers” rather than “partners,” being less willing to provide sufficient training or help employees grow, and feeling even less need to pay higher wages. These values mainly stem from Taiwan’s long-standing culture of careful cost calculation, 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 salaries. To remain accountable to shareholders, they then have to suppress entry-level wages to maintain profit levels. He therefore believes that executives’ self-interest leading to unequal wage distribution is one of the reasons for Taiwan’s low entry-level wages.

Another example is the “Table of Economic Growth Rates over the Years and the Share of Factor Income in Gross Domestic Product” published by the Directorate-General of Budget, Accounting and Statistics. It shows that over the past 25 years, the share of employee compensation in Taiwan’s GDP fell from more than 50% in 1992 to 44.9% in 2020, while during the same period the share of operating surplus in GDP rose from 30% to 34%. This indicates 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 distribution of wealth even more unequal!