Cabinet rebuts business leaders’ costs assertions

LOSE-LOSE SITUATIONMild inflation is expected this year, but regulatory measures would not be activated until inflation reaches 2 percent, the central bank said

By Chen Wei-han  /  Staff reporter

Cabinet spokesman Hsu Kuo-yung, third right, and other officials yesterday participate in a press conference at the Executive Yuan to address the issue of commodity price hikes.

Photo: CNA

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The labor law amendments could improve working conditions, with only limited impact on consumer prices, the Cabinet said yesterday, rebutting what business leaders said were the side effects of the “lose-lose legislation.”

Defending amendments to the Labor Standards Act (勞動基準法), which stipulates a five-day workweek and higher overtime pay, the Executive Yuan said the legislation is a major improvement in general working conditions, while the impact on businesses is acceptable to labor-intensive industries.

Chinese National Federation of Industries secretary-general Tsai Lien-sheng (蔡練生) on Tuesday said the amendments were a “lose-lose” legislation that hurt employers, workers and consumers with increased personnel costs, lower salaries due to fewer working hours and rising consumer prices.

“That employers quibble with employees [over overtime pay] is what makes it a lose-lose situation,” Vice Premier Lin Hsi-yao (林錫耀) said, calling on businesses to take care of their employees.

Two major goals of the amendments — to reduce working hours and unify the nation’s leave schemes — have been achieved, although there are side effects, such as a rise in operating costs for labor-intensive businesses.

The legislation hardly affects companies that have already adopted a five-day workweek, which accounts for about 65 percent of the workforce, Lin said.

For employers of the other 35 percent of workers, they are likely to see a tolerable increase in personnel costs.

“The public has misunderstood the legislation and believed that businesses would have to pay considerably more in overtime pay, but that is not the case,” Lin said.

The amendments would increase the personnel and operational costs of the manufacturing industry by 1.5 percent and 0.1 percent respectively, National Development Council Deputy Minister Kung Ming-hsin (龔明鑫) said.

As for the service industry, a labor-intensive industry that is more susceptible to the new overtime pay requirements, personnel and operational costs would only increase by 2.1 percent and 0.22 percent respectively, Kung added.

The nation will experience “very mild inflation,” with this year’s inflation estimated at 1.26 percent to 1.46 percent, which is “fairly acceptable,” central bank Governor Perng Fai-nan (彭淮南) said, adding that the central bank would not activate regulatory measures until inflation reaches 2 percent.

The consumer price index is estimated to rise by between 0.2 percent to 0.4 percent this year with the implementation of the legislation and the nation is likely to see a low and stable rise in consumer prices, Perng added.

The Fair Trade Commission is to monitor whether businesses are making coordinated price adjustments to manipulate the market. No such activity has been evident in restaurant prices, it said.