Politics

ECFA will not bring local salaries down

• Publication Date：11/26/2009
• Source： China Times

Signing an economic cooperation framework agreement with mainland China will not cause salaries in Taiwan to drop, according to Kao Koong-lian, vice chairman of the Straits Exchange Foundation.

Recently some local academics have claimed the closer Taiwan’s economic ties are with mainland China, the lower the island’s salaries will be, to parallel those on the mainland, thus inking an ECFA with the mainland would be disadvantageous to Taiwan.

In response, Kao said this theory is based on a nonexistent assumption that personnel can freely travel between the two areas and obtain employment.

“Take Hong Kong, now a special administrative region within China, for example. It signed a closer economic partnership arrangement with the mainland, but mainlanders still do not have free access to jobs in Hong Kong, and the average salary there is much higher than on the mainland,” Kao pointed out in a recent symposium.

Some scholars claimed that the average monthly salary in Taiwan for the first nine months of 2009 dropped 6.23 percent year on year to NT$43,059 (US$1,335) as “a result of close trade ties between Taiwan and mainland China.” Experts pointed out, however, that this view is absurd, as the main reason for the drop in pay is the global financial crisis. This year’s lower average salary has nothing to do with an ECFA, and to claim that it does is to mislead the public.

Fu Feng-cheng, associate professor in the Department of International Business, Yu Da University, said such a theory is based on several assumptions, including that both sides are large nations, produce similar products and utilize similar production technologies. “In the current economic environment, these premises are bold and unrealistic,” he added.

With annual trade of US$300 billion between the United States and mainland China, according to this theory, the average U.S. salary should be greatly reduced, and prices of exports from the weaker side should rise. But a look at the discrepancy between the average worker’s wages in the two countries reveals a clear increase in American pay: in the 1980s the difference was US$11,976; in 1990, US$22,885; and in 2000 it reached US$34,166.

The Ministry of Economic Affairs said production technologies and consumption trends on the two sides of the strait are different. The quality of Taiwan’s workers is better than that of those in the mainland, and differences in labor productivity are quite large. At the same time, while mainland technologies are rapidly improving, Taiwan’s are also advancing, so the technology gap is still very significant.

To maintain this gap, the MOEA has mapped out a new orientation for Taiwan’s economic and trade development, to lead the island from a high-tech supply chain and manufacturing center to a global center of innovation. To improve the nation’s productive innovation and competitiveness, the three main axes for this development include the upgrading of traditional industries, the accelerated development of new industries and the transition of manufacturing to service. (THN)