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Pay raise or tax hike scheme won't work: CNFI

TAIPEI, Taiwan -- The association representing Taiwan's major manufacturing businesses has voiced objections to the newly appointed Labor Minister Chen Hsiung-wen's bid to raise the salary levels for the country's workers.

Chen, appointed to the post earlier this week, has vowed that employers who fail to share their profits with their employees in the form of a pay rise could face increased taxation.

But Tsai Lien-sheng, secretary general of the Chinese National Federation of Industries (CNFI), said tax increases and pay rises are to different things, and tax money going into the national coffers would not necessarily translate into more income for workers.

Tsai said the salary levels should be determined by market mechanisms.

Taiwan's salary levels are low compared to many other major economies in the region. Its current level has actually dropped compared to that recorded 16 years ago, according to government statistics.

It is not the first time the idea of letting employers choose between a pay rise for employees and a tax increase has been floated to solve the problem.

The idea has been proposed by some others in the government before, but it has remained a suggestion so far.

It remains uncertain whether Chen would actually take such a decision, but he said firms that are making money must share their profits with the workers to create a more pleasant working environment and boost efficiency.

But resistance to a forced pay rise from employers has been as strong as ever.

The CNFI secretary general said that over the past two years, companies have been reluctant to respond to the government's call for a pay rise for workers because of the weak economy.

Now that the economy has improved, companies are eager to recruit competent workers, he said. Under such circumstances, companies are eager to pay more to their workers without the government telling them to do so.

He noted that companies have been most discontent with the present labor and health insurance programs: increasing insurance premiums have been adding burdens to companies although salaries for workers have not increased as fast.

He argued that increased tax payments will only go to the government, not the workers. The workers would not thank the government for raising taxes that do not directly benefit them, he said.

He asked the labor minister to study more economics to see how the free market works.

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