Tuesday, December 05, 2006

M-Shaped Taiwan Income

I've talked a couple times before about rising income inequality on the Beautiful Island. While politicians talk about economic growth, the population at large is experiencing stagnant, even falling, incomes, and greater appropriation of the national wealth to the nation's elites. ESWN today has a report from UDN on this pressing social issue:

According to the Directorate-General of Budget, Accounting and Statistics, Executive Yuan, over the past six years, the mean income of the 700,000 households with the lowest income just fell from NT$52,820 to NT$34,866 from year 2000 to year 2006. Thus, their mean current income is less than NT$3,000 per month.

Meanwhile the mean income of the 700,000 households with the highest income went from NT$1,621,747 to NT$1,741660 from year 2000 to year 2006. Thus, their mean current income is over NT$145,000 per month.

Meanwhile, the GDP is expected to grow by 4.14% per annum.

The M-shaped society is a reference to a society where the income curve has two peaks, one in the lower middle class, and one at the top, a trend noticeable in many industrial societies. Note that the DGBAS (stats page) data show that Taiwan's poorest households actually lost roughly 40% of their income since 2000.

A number of things contribute to this trend, including factories moving to China, but weak labor unions in Taiwan are a major problem for the working class, as Kerim at Keywords has pointed out. The implications for the island's politics of falling relative incomes in the middle and lower classes are obvious.

7 comments:

Levitator ﹝浮客﹞ said...

That UDN report is no longer , but I think something is seriously wrong with the NT$ 3000 monthly income figure for the poorest. Taiwan's income inequality may be growing, but it's nowhere near that level. Charts from your DGBAS link show NT$ 230,000 annual income for the poorest 20 % of individual earners, and NT$ 350,000 for the poorest 20 % of households.

These figures are from 2005.

The NT$ 34000 annual income figure looks like bad math or fantasy.

Levitator

Anonymous said...

$3000 a month in Taiwan is really hard to believe. Really hard. I think it's possible, at least at the very low end, that it's not being measured correctly.

Do agree that low wages are a problem. What can be done about it, I don't know. Unions aren't necessarily a good idea. If you look at how urgently Taiwan's banks need to merge compared with how good the labor unions are blocking mergers, I would say that even stronger unions in at least some cases are a very bad idea.

Levitator ﹝浮客﹞ said...

Hi Michael

Please ignore my previous comment. I think I figured out the curve.

Levitator

Antonio said...

3000? I eat more than 3000 per month!

M-shaped income might have a lot of crime problems ! They're easy to get money from near by.

Anonymous said...

Look at it like this. Those "temp" type jobs (7-11, McDonald's, etc.) are about $80 an hour. I don't know if there are any other benefits. At $80 an hour, you have $80 * 8 * 5 * 4 = $12800 a month. That seems much more realistic to me.

Scott Sommers said...

In my experience, Anglo-american workers including English teachers, associate with only the most well educated, cosmopolitan and subsequently highly paid Taiwanese. Their impression of Taiwan is highly squewed toward urban affluence.

The bulk of these 700,000 households would be rural aborigines. Although 700,000 houseolds is a large number and must include many Chinese Taiwanese.

Scott Sommers said...

An article in today's TT
http://www.taipeitimes.com/News/taiwan/archives/2007/01/10/2003344114
cited different numbers for household poverty in Taiwan. The numbers here are "86,700 low-income households nationwide". This makes me wonder if the origincal article you quoted from wasn't a decimal place out.

Even with these different numbers, the points that Michael makes are still relevant.