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April 25, 2017

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Gov't needs to reassess the impacts of the 22K Program

The government last year introduced an employment-boosting program, subsidizing companies that employed fresh college graduates when Taiwan also fell victim to the global recession.

The program, greeted with skepticism and the criticism from labor activists when it was launched, has again sparked controversies after the country's top labor official renewed her attempt to defend it recently.

But what's really wrong with the program?

Under the program, employees would receive NT$22,000 per month for their "internships — rather than permanent employment. Their employers did not have to pay anything, as the salaries would be fully covered by government subsidies.

Their employers were not obliged to continue hiring them after their internships were over.

The program, dubbed the "22K Program" after the sum of the monthly salary, sounds good for those graduates who had been unable to find a job.

But how much is NT$22,000? It is a few thousand more than the minimum wage, and a few thousand less than the average salary for college graduates before the launch of 22K.

Labor activists say it is too low. They argue that the Council of Labor Affairs (CLA), by setting a wage standard below the market average, has in fact given employers excuses to lower their pays for any new recruits.

Now starting salaries have generally decreased because of the 22K Program, they claim.

CLA Chairwoman Jennifer Wang, in a recent interview by a magazine, defended the policy, dismissing there a cause-and-effect relation between the 22K Program and the low starting salary levels currently seen in the market.

Taiwan's salary levels have not increased over the past 10 years because of the industries' structural problem, Wang claims.

She argues that starting salaries have come down in line with the free market mechanism of supply and demand.

According to the labor chief, the salaries hit even lower levels last year because there was over-supply in the labor market.

Even without the 22K Program, salary levels would still drop, and the government was not in a position to interfere with the job market, she says.

She says these college graduates failed to find a job, and they should not be complaining because without the program, "these people would not have received a single dime."

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