Comparing Minimum Wage Policies in East Asia: Political Competition and Labor Incorporation

Abstract

This article attempts to explain the evolution of minimum wage levels in three East Asian economies: Japan, South Korea, and Taiwan. A political-economic framework incorporating the levels of political competition and labor incorporation is suggested. With strong political competition and a lack of labor incorporation, South Korea exhibits the strongest minimum wage increase, followed by Taiwan with incorporated labor. Japan has the weakest minimum wage with uncompetitive politics and labor incorporation. The framework is supported by descriptive accounts of the three cases and supplemented by quantitative analysis. As a factor commonly viewed as less relevant for welfare development in the region, the impact of leftist governments is found to be conditional upon the level of political competition. This article contributes to the literature by providing a political-economic explanation of the minimum wage, as well as linking East Asia with the mainstream welfare state literature.

Keywords:

• comparative
• Japan
• Taiwan
• South Korea
• minimum wage
• mixed methods

Disclosure Statement

No potential conflict of interest was reported by the author.

Notes

1. The News Lens, 16 August 2018.

2. While labor incorporation overlaps conceptually with corporatism, it is narrower due to focusing on the role of workers. Despite being a more established concept, this study refrains from using the corporatism framework given the lack of consensus on its application in the cases here. For example, among industrialized economies Japan is regarded as a special case where scholars have difficulty agreeing on its level of corporatism (for a detailed discussion, see Siaroff 1999). Similarly, among regional researchers, some regard the corporatist model in Japan and South Korea as similar (Lee 2016) whereas others see a difference in their treatment towards labor (Kim 2008).

3. This dimension does not refer to the apparent strength of unions (e.g. unionization rate), as labor can opt to work with the state or not regardless of its mobilization power (although a weaker labor movement makes co-optation easier/cheaper). Labor unions might also oppose a minimum wage since it would reduce the incentive for union membership (Meyer 2016). Labor incorporation is also not (directly) related to the formal right to strike. For example, Caraway (2009) rates Taiwan as having one of the strongest protections of the right to strike in Asia, and Korea one of the weakest. Strikes are nonetheless rare in the former but frequent in the latter.

4. For example, the JAW has traditionally sponsored a candidate from the Toyota Union, and has maintained a seat since 1992.

5. Unemployment surged from around 2 per cent to 8.7 per cent in 1999.

6. This cooperation persisted even after the KMT regained power as labor activists and the KMT formed a new alliance committed to job security and growth (Ho 2005); the latter also approved new collective labor laws upon winning the presidential election in 2008.

7. At the national and prefecture level, respectively.

8. Although regional councils are under no obligation to follow the guidelines.

9. In 2018, the Taiwanese government announced that the basic wage will be formally replaced by a minimum wage with similar design and policy details.

10. I thank an anonymous reviewer for raising this point.

11. While many important details of a minimum wage policy lie in other areas, such as coverage, calculation of rest period, exemptions, and penalties for non-compliance, these aspects are seldom directly comparable.

12. The share of opposition seats can be above 50 per cent in the case of a minority government (parliamentary system) or when the president’s party does not control the legislature (presidential system).

13. The News Lens, 16 August 2018.

Additional information

Funding

I would like to acknowledge the funding provided by the International Mobility Fund of the Education University of Hong Kong.

Notes on contributors

Mathew Y. H. Wong

Mathew Y. H. Wong is Assistant Professor at the Department of Social Sciences, Education University of Hong Kong. His research focuses on redistributive policies, income inequality, and democracy. He has published in journals such as World Development, Social Indicators Research, Government and Opposition, among others.