◎ Wu Guodong
Former central bank president Peng Huainan recently published his memoir "Forever Banker", revealing the background of the decision-making of major policies during his tenure. Among them, the most talked about is his extraordinary courage and decisiveness to close the "Non-Deliverable Forward (NDF)" during the Asian financial crisis, successfully repelling international hot money and speculative vultures, and is known as a defense model for emerging economies.
Peng Huainan published his memoir "Forever Banker", looking back on his 51 years of public service and revealing the decision-making background of major policies during his tenure. (File photo) Although President Peng is in charge of US$600 billion in foreign exchange savings and is known as "Taiwan's richest man," his personal property declaration is extremely simple and simple. What is even more admirable is that he decided to donate all the royalties from his memoirs to charity groups, once again practicing his honest and public-spirited attitude.
Looking back at the issue of low wages in Taiwan, in the past, some financial bosses publicly blamed low wages on the central bank's "weak exchange rate" and "low interest" policies, believing that this indirectly reduced people's purchasing power. In response to this, Peng Huainan responded firmly before leaving office: "What virtues and abilities do I have? Do I have the ability (to keep wages low across Taiwan)?" Peng Huainan put it bluntly: The essence of low wages is "the unequal bargaining space between labor and capital", not the exchange rate issue. He used detailed data to point out that the proportion of "remuneration allocated to labor" in Taiwan's GDP has shrunk from 51% in the 1990s to 43% now; on the contrary, the proportion of "operating surplus" that represents corporate profits has continued to rise. This is stark proof: It’s not that Taiwanese companies are not making money, but that most of the dividends from economic growth are flowing into the company’s accounts, while grassroots employees are getting less and less.
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In the past, some opinions often shouted that "if the Taiwan dollar does not depreciate, companies will have no money to raise wages." Peng Huainan counterattacked: "Not to raise wages is a choice." Historical experience shows that when the Taiwan dollar depreciated and companies made a lot of money from exports, Taiwan's real wages did not increase significantly. From a macroeconomic perspective, if the central bank allows the Taiwan dollar to depreciate for short-term interests, it will essentially subsidize exporters in disguise through "a decrease in the purchasing power of the entire population (imports becoming more expensive)." If companies receive subsidies but do not give back to their employees, the policy is tantamount to "robbing the poor and giving to the rich."
Peng Huainan put it bluntly: The essence of low wages is "the unequal bargaining space between labor and capital", not the exchange rate issue. The antidote to Taiwan's low wages lies in whether business owners can put aside their reliance on "exchange rate subsidies" and bravely move toward a path of transformation with high added value. The picture shows the export containers at Keelung Port. (Reuters file photo) It is undeniable that due to the lack of natural resources, Taiwan had to go through the humble OEM stage of "3 to 4% gross profit" in the early days. Those "Maoshan Taoist" years were the historical fate of enterprises having to "squeeze" their human potential in order to survive in the cracks of the international supply chain. Today, with the rise of the AI wave, Taiwan's information and communications industry has successfully transformed from labor-intensive to technology-intensive. The fittest will prevail and the fittest will survive. This wage revolution driven by "transformation" is taking place. The antidote to Taiwan's low wages has never been in the central bank's exchange rate policy. Rather, it lies in whether business owners can let go of their reliance on "exchange rate subsidies" and bravely move toward a path of transformation with high added value.
Peng Huainan publishes memoir "Forever Banker" to review 51 years of public service career
(The author is a retired trade promoter)
