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Human Resources and Compensation Benchmark Analysis

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Economic Situation

The momentum in the world economy anticipated to be trimmed this year, together with the inventory adjustments in the semiconductor industry and worldwide weaker demand for mobile devices, would drag the export growth. However, the reshoring of major Taiwanese manufacturing companies will increase the domestic production capacity which may partially offset the drag. In aggregate with services exports, it is projected that the real exports goods and services will grow by 2.62%. Real private consumption will grow by 2.02%, supported by labor market improving, the individual income tax cuts, and the subsidy programs for domestic travels and energy-efficient appliances replacements, but continuously dampened by the declining demographic dividend, the economic uncertainties and volatile financial markets. Real private fixed capital formation is forecast to increase, mainly spurred by the continuing investment of semiconductor manufacturing, and the manufacturers’ relocation encouraged by the government’s “Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan”.

In the DGBAS's latest estimation in November 2021, the estimates of Taiwan's economic growth rates remained 6.09% for 2021, per capita GDP raised to US$32,787, per capita GNI raised to US$33,420, and the CPI is increased by 1.98 percent. In 2022, GDP is expected to rise by 4.15%, per capita GDP are expected to rise to US$34,880, per capita GNI are expected to rise to US$35,394, and the CPI will gently rise by 1.61%.

Economic Growth and Consumer Price Index in Taiwan

Key Economic Indicators and Forecast Summary

Year 2016 2017 2018 2019 2020 2021
(p)
2022
(f)
Economic Growth Rate (based on GDP) 2.17% 3.31% 2.79% 3.06% 3.36% 6.57% 3.91%
Per Capita GNI (US$) 23,684 25,704 26,421 26,561 29,202 33,708 34,482

Source:DGBAS

Unemployment Rate

The unemployment rate in May 3.68%.

Labor Market Trends

Overall, Taiwan's labor market is stable. In 2020, labor force participation and the unemployment rate were 59.14% and 3.85%, respectively. The labor force has shown long-term positive growth, with the number of workers increasing from 11.2 million in 2011 to 11.96 million in 2020. Greater focus on higher education in the last decade has paid off in terms of the percentage of the labor force with at least a college degree. Additionally, authorities have instituted policies to foster practical education, cooperation between academia and industry, and lifelong learning. These factors have led to improvements in the quality of manpower and Taiwan's competitiveness in the global labor market.

More than 300,000 graduating students with college-level degrees or above enter the workforce each year, including over 60,000 graduates with a Ph.D., master's or other advanced degree. Approximately half of the workforce has a higher-education degree and there are 12.9 researchers for every 1,000 employed workers. In addition, Taiwan benefits from technicians and supervisors in the manufacturing and service industries who have accumulated a high degree of skill over years of work. Whether technicians or supervisors are needed, Taiwan can supply excellent human resources to satisfy the needs of foreign investors.

Rising Labor Productivity

Over the past decade, the consumer price index rose an average of 1.1% annually and the average salary for industrial and service workers increased an average of 1.2% annually. While prices and wages have shown long-term stability, labor productivity has increased an average of 2.6% annually and continues to rise.

Industry

Average Regular Monthly Wages in the Five Major Industries for Foreign Investment in 2020         (Units: NT$)
  Electronic Components Manufacturing Wholesale and retail Information and telecommuni -cations Finance and insurance Real Estate
Executives and Supervisors 97,905 74,665 93,918 115,705 87,079
Professionals 65,026 53,011 65,263 68,966 60,613
Technicians and Associate Professionals 42,824 41,656 53,419 59,024 40,787
Clerical Support 40,791 33,231 40,614 49,251 33,509
Service and Sales 31,842 30,103 37,517 47,421 29,904
Artisans, Machinery Operators, and Assemblers 34,856 34,011 58,799 45,731 34,661
Basic Laborers 27,686 28,428 21,078 35,341 22,167

Source: Ministry of Labor (https://english.mol.gov.tw/) occupational category salary survey

Salary Increase Trends

Public servants, teachers, and military personnel had salary increased by 4% in 2022.

According to the latest Salary Trends Survey from ECA International, the world's leader in the development and provision of solutions for the management and assignment of employees around the world, the report points out in terms of real salary increases, Taiwan's average is forecasted to be 3.2 percent. Therefore, the projected salary adjustment rate will be expected to stay at the same level to reflect the steady economic situation in Taiwan with the trend of global slow economics.

Guaranteed Salary

In Taiwan, total guaranteed salary consists of basic guaranteed salary plus any fixed allowances, such as job allowance or shift allowance, etc, excluding overtime. The annual guaranteed salary can be 13 or 14 months, and the 13th or 14th months of salaries are usually paid before the Chinese New Year Holiday.

Average Earnings for Workers in Major Industry
Sector/Year 2016 2017 2018 2019 2020
Average Salary (NT Dollar) Average Salary (NT Dollar) Average Salary (NT Dollar) Average Salary (NT Dollar) Average Salary (NT Dollar)
Manufacturing 49,162 50,678 52,948 53,776 54,004
Manufacture of food products & prepared animal feeds 38,437 39,839 41,744 43,332 43,441
Manufacture of beverages & tobacco products 57,761 57,265 60,035 60,798 58,925
Manufacture of textiles 38,267 39,591 40,766 41,529 39,841
Manufacture of wearing apparel & clothing accessories 33,031 34,181 37,734 36,763 38,021
Manufacture of leather, fur & related products 41,471 43,022 44,537 45,863 47,165
Manufacture of wood & of products of wood & bamboo 34,425 35,153 35,460 35,579 36,248
Manufacture of paper & paper products 37,153 37,110 39,653 39,484 40,589

Source: Directorate-General of Budget, Accounting and Statistics, Executive Yuan, R.O.C. (Taiwan),
website: https://earnings.dgbas.gov.tw/query_payroll.aspx

Variable Payments

It is increasingly popular for companies to adopt performance-based variable bonus programs in Taiwan. The practice of adopting variable bonus programs increases bonus pay as a percentage of the total cash rewards package and applies to all levels of jobs. Typically, the ratio of variable payment as a percentage of total cash increases with the level of job grade and performance of employees in a company.

In Taiwan, variable payment may also be separated into short-term incentives, such as sales incentives and sales commissions, and long-term incentives, such as stock reward programs. Stock reward programs can also include profit-sharing stock grants and stock options.

Profit-sharing stock grants are a unique reward tool in Taiwan. For accounting purposes, these are regarded as retained earnings distributions and thus do not occur as an expense in a company’s books. For employees, it is taxed at par value but has the actual pay power at market value. The combination of these favorable accounting and tax treatments has made profit-sharing stock grants a main component of payment for high-growth local High Technology companies.

In early 2007, however, the Ministry of Economic Affairs announced that accounting for employee profit sharing should follow the concept of International Accounting Standards to be recognized as expenses, and the effective date for the change would be January 1, 2008. The cost of employee profit sharing should be accounted for by the “fair value” method in order to appropriately reflect the true operation cost of employee compensation in the income statement. In response to this trend, Taiwanese companies are reviewing their reward strategy and making necessary changes to the current reward programs in order to attract and retain talent.

Employee Benefits

Taiwan’s labor law requires that employers provide benefits to their employees. One of the benefits considered most important is that employers are required to help their employees enroll in Taiwan’s social security system and to pay for LI, employment insurance, and health insurance. The LI rate is 8% of the current monthly wages; the rate is 1% for employment insurance; and 4.91% for health insurance, giving rise to a total of 13.91% of the current monthly wages of the insured. Employers also must not pay less than 6% of an employee’s monthly wage for the pension plan and must deposit the money in an “Individual Pension Account” established by the Bureau of Labor Insurance. For employees who elected the old pension scheme under the Labor Standards Act (LSA), the employer must make deposits into the fund according to the employee’s seniority, wages, and the company’s turnover rate for the past five years, as well as the number of employees who will retire in the next five years and deposit the pension fund into the designated bank account in the Bank of Taiwan in the name of the company.

While multinational companies tend to provide enhanced benefits to attract and retain talent, most domestic companies only provide benefits based on the minimum legal requirements. Common employee benefits include leaving service benefits (LSB), life, medical, accident and business travel insurance, physical examinations, festival bonuses, housing allowances, etc.

It is a common practice for companies to purchase life and/or accidental insurance as a means to care for survivors if an employee dies of non-occupational injury or disease, or is disabled by an accident. Group insurance is usually arranged as a one-year term life policy and/or accidental death and dismemberment policy with a typical target benefit of 2 to 3 times the employee’s annual salary. In addition to the life insurance coverage, 47% of the surveyed companies would deem those deceased employees as having retired or resigned from the company, so their spouse or dependents may also receive retirement benefits or leaving service benefits. To shift the potential business operation risk associated with occupational hazards, companies may purchase insurance to fund such statutory obligations.

Most companies in Taiwan also offer group medical insurance coverage which is supplementary to their group life insurance. Benefits provided include hospital room and board, special services and medicine, doctor’s daily consultation and surgical expense reimbursements. An employee can use the plan together with NHI benefits to obtain better treatment and services. Medical benefits are normally extended to employees’ spouses and dependent children free of charge or at a nominal fee.

In addition to group insurance programs, business travel insurance is also common in Taiwan. Seventy-three percent of surveyed companies indicate that they provide travel insurance, which usually covers accidental and medical reimbursement.

Due to increasing awareness regarding the importance of employee health as it relates to profitability, most companies are required by the Labor Safety and Health Act to provide basic medical checkups. Companies may also provide comprehensive physical examinations. About 92% of surveyed companies provide medical checkups. The comprehensiveness of the checkup can vary between management and non-management levels; some can differ by age.

Employee Assistance Programs (EAP) have gained popularity in Taiwan as more companies become aware of the importance of the mental and physical health of their employees. Many corporations offer various types of EAP services to their employees to assist them in improving their work environment and in carrying out their responsibilities more efficiently.

It is a Chinese tradition to reward employees on festival occasions. In practice, about 93% of surveyed companies provide festival bonuses to employees for Chinese New Year, the Dragon Boat Festival, the Mid Autumn Festival, or Labor Day. The average cash bonus for each festival is in the range of NT$500 to NT$5,000, depending on the festival occasion, the industry and the size of the company.

Housing allowances are mainly provided to expatriates and some executives in Taiwan. About 37% of the companies provide this benefit to high level executives and expatriates.

Starting Salaries for New Graduates

Except in the Consumer Products Industry, the starting salary for new graduates has been declining for the past few years. The salary for sales, R&D and technical support engineers in High Technology industry are higher than for other positions. This is because of limited manpower supply for certain academic backgrounds.

Employment of Foreign and Mainland-Area Professionals

The Employment Services Act governs the employment of foreigners (including Mainland-area residents, unless otherwise provided for in the applicable laws and regulations) and native employees hired by Taiwan enterprises. In addition, there are two laws further regulating the hiring of foreign professional workers, which are “Regulations on the Permission and Administration of the Employment of Foreign Workers” and “Qualification and Criteria Standards for Foreigners Undertaking Jobs Specified in the Employment Services Act”. Due to the nature of cross-strait relations, the application for Mainland Chinese professionals’ activities in Taiwan is regulated by "Permit Regulations Governing the Entry of Professionals of the Mainland Area into Taiwan for Professional Activities". An amendment to the “Regulations Governing Permission for Intra-company Transfers of Mainland Chinese Employees of Multinational Enterprises to Work in Taiwan” allows Taiwanese-invested multinationals with parent companies or headquarters in Taiwan and their branches or subsidiaries located in at least two other countries to transfer Mainland Chinese staff to work in Taiwan. The amendment is expected to provide more flexibility for multinational enterprises headquartered in Taiwan.

For foreign professionals, the prerequisites for a work permit depend on the education level and the working experience of the applicant. For example, a foreigner with a college/university diploma must have 2 years of prior working experience in order to apply for the work permit in Taiwan, but for a foreigner with a Ph.D./Master degree, there is no prior working experience requirement. The duration of a work permit shall not exceed 3 years and applications for extension can be submitted based on business needs. The application process takes about 10 working days to be approved by the Ministry of Labor (MOL) if all required documents are submitted and both the employer and foreign workers meet regulatory requirements. Before arriving in Taiwan, the foreign individual must apply for a residence visa, and once in Taiwan, he/she must apply for an ARC within 15 days of arrival or within 15 days before the expiration of a “visitor visa” that does not state that “no extension will be granted and the visa holder is prohibited from staying in Taiwan for 60 days or more”. The application process for a resident visa is about 7 working days, and application is handled by the Ministry of Foreign Affairs. The ARC application is processed in approximately 5 working days by the National Immigration Agency, part of the Ministry of Interior. Upon the expiration of the ARC, the extension application can be submitted to the National Immigration Agency for processing. Furthermore, the Immigration Act is under review that, in the future, would allow foreign nationals to apply for permanent residence as long as they meet the specific requirements. Work permit applications from South Eastern and Western Asian Countries such as Afghanistan, Iran, Malaysia or Vietnam, etc. require notarization from the Taiwan Consulate Office in those countries.

In order to better utilize mainland China’s specific industry knowledge and technology, currently visa applications are open to mainland-area professionals with requisite skills or knowledge. However, the total period of stay is limited to 6 years. Professionals from China may also obtain a visa to Taiwan under the condition that it is an internal employment transfer within a multinational company. The initial stay may not exceed 3 years; at the end of this initial period, however, subsequent stays can be extended with no fixed limit on the number of extensions. The visa application process takes about 5 working days, and requires authorization by the National Immigration Agency under the Ministry of Interior and the Investment Commission under the Ministry of Economic Affairs.

For more information, please check the “Workforce Development Agency” website (http://www.wda.gov.tw/en/index.jsp), the website of the National Immigration Agency (https://www.immigration.gov.tw/) or the website of the Investment Commission (http://www.moeaic.gov.tw/english/index.jsp).

Market Manpower Demands

As mentioned previously, the Financial, IT and Telecom Industries are expected to have the greatest number of job openings. Below are the estimated market manpower demands:

Industry Highest Turnover Job Job Needed Most Job Most Challenging to Recruit for
Chemical/Petrochemical Sales Engineer Field Service Engineer Sales Engineer
Sales Representative Sales Representative  
Consumer Products Account Executive Account Executive Product Manager
Sales Representative Sales Representative  
Bio-tech/Pharmaceutical Sales Representative Sales Representative Product Manager
High Technology Field Service Engineer Field Service Engineer Field Service Engineer
R&D Engineer R&D Engineer R&D Engineer
Financial Direct Sales Direct Sales Direct Sales
Consumer Banking Sales Consumer Banking Sales Consumer Banking Sales
Telemarketer Actuarial Staff Actuarial Staff
Brokerage Sales Brokerage Sales Brokerage Sales

Source: Watson Wyatt Total Rewards Survey (Taiwan Area)

Note: 80% of the survey participants were subsidiaries or branches of foreign companies.

Other Supplementary Information

Government and Private Employment Services Center

To improve competitiveness and boost employment, the Workforce Development Agency, MOL has set up five employment services centers, 33 employment services offices, and 256 employment services stations. These facilities assist with recruitment and job opportunities, process unemployment applications, analyze and investigate employment market data, and provide employment consulting services.

Private employment agencies and human resource companies, such as headhunters and management consultant companies, are on the rise in Taiwan. These companies provide recruitment, training, wage calculation, talent dispatch, and human resource management consulting services. To set up a private employment agency/human resource company, approval must be obtained from the competent authorities under the Employment Services Act and its accompanying regulations. Once established, such a company will be supervised by the competent authority.

Cooperative Occupational Education Program

The government of Taiwan has been implementing a cooperative occupational education program, which encourages corporations to sponsor educational training programs or courses for students. This effort focuses on key content areas of entrepreneurship and work readiness. Corporations may submit program applications to the Department of Education for approval. Depending on the nature of the program, the training can take the form of courses, part-time jobs, research positions, internships, or scholarships.

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