International Comparison Of Regulation Of Minimum Wage Economics Essay


This survey will discourse the ordinance and application of minimal pay between Singapore and Taiwan from the international comparative position. Singapore and Taiwan have the same economic background, which have experienced modern industrialisation. However, these two countries adopt the different steps to protect workers from development. First, this survey will explicate minimal pay. Then, the subdivision of minimal pay policy between Singapore and Taiwan will present and construe the minimal pay policy and system. Finally, the decision will discourse the differences on minimal pay policy between Singapore and Taiwan.

The Understanding of Minimum Wage

From the position of economic theory, the pay is viewed as the monetary values of labor, which is determined by supply and demand in free market, like the finding of other trade goods ‘ monetary value ( Hogler, 2003 ) . Minimal pay describes the lowest degree of payment employees can obtain by jurisprudence and ordinance. It aims to forestall labour development and poorness. This means minimal pay should offer the sufficient buying power to protect the normal and basic criterion life of labor.

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Minimal Wage Policy between Singapore and Taiwan


Singapore is a city-state island state in Southeast Asia. It is the 4th taking fiscal Centre in the universe. Furthermore, its economic system is characterized by a relatively low unemployment and low rising prices rate. Singapore has set an illustration of transforming from a little state of simply 648 square kilometers into an economically powerful state within a short span of clip. Mentioning to the cause of this transmutation, Khan ( 2001 ) stated that it was the consequence of the interventionist function of the authorities in prosecuting assorted economic policies refering to industrialisation, foreign investing, and trade among others.

In order to avoid the puting dorsum of economic growing by uncontrolled pay addition and possible industrial differences and pay dialogue between workers and employers, the authorities set up the National Wages Council ( NWC ) in 1972 to supply a non-binding pay accommodations guideline, which is in line with Singapore ‘s long-run economic and societal development, for skilled workers and are widely followed by employers. This council advises the authorities in pay related personal businesss in: ( 1 ) assisting in the preparation of general guidelines on pay policies ; ( 2 ) urging necessary accommodations in the pay construction consistent with long-run economic development ; and ( 3 ) reding on desirable incentive systems to advance operational efficiency and productiveness in assorted endeavors ( Lim & A ; Chew, 1998 ) . Furthermore, in 1986, NWC set up a subcommittee to reform the bing pay system and a new pay system-Flexible Wage System was introduced ( Enterprise One, 2011 ) .

Although rewards are determined chiefly by market forces, in both the nonionized and non-unionized sectors, pay dialogues and pay colonies depend to a great extent on the recommendations of the NWC, peculiarly when NWC guidelines were quantitative in nature. The NWC provides a platform where employer, brotherhood and authorities representatives express their positions in a Frank and unfastened mode. It has besides instilled assurance in foreign investors by puting pay degrees at realistic degrees identified with the national involvement.

The successful experience in holding a flexible pay system in Singapore shows the advantage of implementing economic policies in a turning economic system. Though the pay system named flexible, in fact, it is besides a sort of ‘minimum pay system ‘ with the active engagement and influence of the Singapore authorities in the development of the labor market, existent rewards and on the growing of employment in Singapore ( Richard and Ho, 1990 ) . The labour market offered good on the job conditions and comparatively high rewards, which provided a nice criterion of life for the work force with a low unemployment rate ( US Department of State, 2003 ) . In measuring the overall prosperity, other than the factors contributed to the labor, of the flexible pay system, other facets such as unemployment, income disparity and poorness should be put into considerations.


Taiwan is an island located in East Asia, like Singapore. Taiwan has experienced the speedy industrialisation and considerable growing. Furthermore, Singapore and Taiwan are considered as the ‘Four Asiatic Tigers ‘ .

The Minimum Wage Act in Taiwan was enacted in 1955 and has become one of import proviso of the Basic Labour Standards Law since 1984. The purpose of puting the minimal pay is to keep the basic populating criterion of the working group and the construct behind it is to allow the whole society to portion the cost of keeping the basic life criterion but non merely covered by the employers in footings of paying higher market-clearing rewards ( Wu et al. 1994 ) . The degree of the minimal pay is determined by the one-year growing rate of labour productiveness and the alteration in the consumer monetary value index.

To keep a productive and qualified work force, the authorities has focused its legislative precedences on workers ‘ rights and public assistance, gender equalities, labour-management dealingss, and wellness and safety. The Taiwan ‘s authorities provides particular subsidies, aid, and both hard currency and non-cash benefits to low-income persons and households, such as occupation arrangement, educational assistance for kids, stipends during traditional festivals, and kid and maternal nutrition plans.

Taiwan is undergoing important alterations in lower limit pay and labour ordinance. Apart from the new work hr jurisprudence passed in 2000, several reforms are in the plants. The authorities ‘s focal point on bring forthing new occupations is due partially to the economic system ‘s decelerating growing, every bit good as the projected reaction to the new work hebdomad jurisprudence. In fact, the lower limit pay system in Taiwan has non brought any important negative consequence to the economic system and society in footings of unemployment, income disparity and poorness ( Wang, 2010 ; Ministry of Economic Affairs, Taiwan, 2001 ) .

The intent of implementing minimal pay policy in Taiwan is to avoid development from workers. In fact, the minimal pay policy in Taiwan has protected the workers from development but the workers lack commensurate bargaining power to contend for their existent demand sufficient for basic life ( Chen et al. 2003 ) . However, it besides strongly discourages the workers to better their accomplishments and to look for other occupations.


As the old mentioned, the ordinance of minimal pay is to protect labor from development and supply considerable buying power to guarantee the basic criterion of life of labor. However, Singapore and Taiwan employed distinguishable steps to guarantee minimal pay. After the edifice of National Wage Council, this council and authorities established a alone pay system and flexible pay system. Furthermore, flexible pay system is considered as one of the most important minimal pay policies in Singapore. Minimum pay policies non merely protect the involvement of labor, but besides are dedicated to low unemployment. The minimal pay policy of Taiwan concentrated on the devising and execution of Torahs on lower limit pay yet the constitution and development of effectual pay system.


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