Wages Account for Reduced Share of Taiwan's Growing GDP

Over the past two decades, corporate earnings have increasingly accounted for bigger shares of Taiwan's growing gross domestic product (GDP), contrasting the reverse of labor wages, suggesting that most of the island's enterprises are reluctant to raise salary despite making  more money, according to Directorate General of Budget, Accounting and Statistics (DGBAS).

In real terms, or absolute price terms, Taiwan's real GDP has grown 2.55 folds to NT$14 trillion (US$466.6 billion) from NT$5.5 trillion (US$183.3 billion) over the last 20 years.

Taiwan's GDP mainly consists of net indirect tax, consumption of fixed capital, staff compensation, and business operating surplus.

Over the past 20 years, employee compensation has increased only 2.27 folds as part of Taiwan's GDP while business operating surplus has surged 2.86 folds to NT$4.6 trillion (US$153.3 billion) from NT$1.6 trillion (US$53.3 billion).

In the early 1990s, employee wages  constituted over half of the island's GDP, meaning workers benefited from at least half of the GDP. However, since 1996 wages have decreased all the way to constitute only 46.1% of GDP by 2012. Business operating surplus, in contrast, has risen to 32.98% in 2012 from the all-time low of 29.3% in 1992.

Over the past 20 years, wages have decreased 5.5% of Taiwan's GDP versus business operating surplus having gained 3.7%, suggesting increasingly more of Taiwan's GDP growth has gone to big shareholders of enterprises instead of employee paycheck.

DGBAS defines employee compensation as workers' total pay while business operating surplus as the combination of rental, interest, stock dividend, and retained earnings.

DGBAS officials ascribe the decreasing share of wages in Taiwan's GDP mostly to massive exodus of Taiwan's industries, which have relocated jobs overseas.

They concede that the proportional reversal between wages and business operating surplus in Taiwan's GDP has deteriorated in the last 10 years and needs to be urgently addressed. (KL)