Taiwan’s talent drought may raise salaries
Mar 07, 2022

Dr. Lee-feng Chien (簡立峰), board member of Taiwanese tech startups Appier and iKala, has received startling news. A number of graduates from the Department of Computer Science and Information Engineering (CSIE) at National Taiwan University (NTU) have been poached by Shopee Pte. Ltd. and ByteDance Ltd. They will begin their new careers in Singapore as research and development engineers. Their annual salary? As high as NT$3 million.

Professor Shou-de Lin (林守德) of CSIE can attest to this. He reports that three students from this year’s graduating class have received job offers from Singapore. He reveals that Singaporean companies are offering 150% of what Taiwanese employers give—an insurmountable gap.

For years, Taiwan’s labor market has been closed off from the world. Now, with the influx of international conglomerates and the normalization of cross-border remote working, it has become a seller’s market for eager Taiwanese workers. All of a sudden, Taiwanese companies find themselves in the unfamiliar position of having to compete for talent in the international arena.

According to 104, the popular Taiwanese job hunting platform, the number of new job vacancies rose to a historical high of nearly 900,000 this February.

The most vacancies are found in the electronics and computer science sectors; the second most are in the catering and manufacturing sectors.

“Taiwanese startups may be forced to merge if they cannot find enough workers,” predicts Sega Cheng (程世嘉), CEO of iKala.

For jobseekers with the right skill sets, this is a good time to be job hunting.

“Working from home is all the rage. You don’t need to have studied in the U.S. to be hired by an American firm,” says Shu-yu Liu (劉書彧), an alumnus of the Department of Economics at NTU. He signed up with Silicon Valley-based AI EduTech startup MobLab in 2020 and is now their Lead Data Scientist.

Liu elaborates: In the past, if you wanted an American job, you had to study in the States to have a chance to get a work visa. But now, remote working is the norm. MobLab has even gone so far as to set up a Taiwanese branch office just for the 34-year-old Liu.

Liu is now in charge of two offices full of data scientists. Everyone is working remotely.

“International tech companies based in Silicon Valley have begun poaching Taiwanese talent. This means the Taiwanese labor market will start to catch up with international standards,” says IC Jan (詹益鑑), Chief Strategy Officer of the biomedical startup HuKui Bio.

According to a report by Willis Towers Watson, a global advisory company, Taiwan’s low birth rate is the fundamental factor behind the labor shortage. Back in 2018, Jan predicted that beginning in 2020, the Taiwanese job market would experience a shortage of workers, and the average wage would begin a steady decade-long ascent.

Taiwanese companies are also feeling the squeeze from global tech giants. For the last couple of years, industry leaders such as Google, Amazon, Microsoft, Qualcomm, Micron, and ASML have come to invest in Taiwan and hire Taiwanese workers.

“Our workforce has grown tenfold in the last five years; in the last year alone, we expanded by 20%,” says Vanessa Lu (呂亞樵), Google’s Market HR Lead in Taiwan.

It is her observation that the growth of Taiwanese talent will be a long-term trend. “Taiwan’s strong points include research and development capabilities, industry chain connectivity, and the overall ecosystem,” says Lu.

Survey-first: Pay raises are coming across the board
May Wei (魏美蓉), Leader of Talent & Rewards Consulting at Willis Towers Watson, made this prediction last year when she saw reports that semiconductor giant TSMC was making structural salary adjustments of up to 20%: “This is the beginning of substantial pay raises all over Taiwan.”

Her prediction turned out to be correct. According to the organizational and human resources forecasts published by Willis Towers Watson, 20% of Taiwanese companies said they had no plans of raising pay in 2020. The ratio dropped sharply to 6% in 2021. In 2022, not a single company dared say that they had no intention of raising pay. The average proposed increase hovered between 3% and 4%.

“Raising pay is an irreversible trend,” says Yihsin Lee (李儀欣), VP of Talent & Rewards Consulting at Willis Towers Watson.

What is remarkable is that over 60% of surveyed companies plan to increase their fixed salary, especially for entry-level employees; or, they will enact structural salary adjustments to increase the salary of workers with critical skill sets, which are in high demand. Close to 40% of companies plan to hand out more bonuses or provide stock options.

Lee stresses that it is rare for Taiwanese companies to increase the fixed salary on such a large scale, especially for entry-level newcomers.

The issue of low wages, which has plagued the Taiwanese economy for the past two decades, may finally change for the better.

Wei points out that in the beginning, it was the tech industry’s propensity for handing out stocks instead of adjusting pay that distorted Taiwan’s salary structure for so many years.

Because a stock option was literally a golden ticket, it became the norm in the tech industry to pay employees less in exchange for giving them stocks. Early last year, TSMC became the first tech company to decrease the ratio of stocks it handed out, but it also raised its fixed salary by 20%. Associate Professor Wen-jeng Lin (林文政) of the Graduate Institute of Human Resource Management at National Central University agrees with Wei’s assessment that this signaled “an understanding that the pay for entry-level workers was just too low.”

The relatively low fixed salary is a big reason why Taiwanese companies are having trouble attracting talent.

In 2021, Willis Towers Watson compared the difference in compensation and benefits between domestic and foreign companies. The study covered all forms of pay, including bonuses and stock options. They found that foreign companies had an advantage of 8% to 27% over Taiwanese companies. But if you compared only the fixed salaries, the difference widened to an insurmountable gap of 15% to 63%.

Out of the 15 countries surveyed in the Asia-Pacific region, the fixed salary for specialists, middle managers, and senior managers in Taiwan ranked from number 8 to 10. The higher the position, the worse the pay; Taiwan’s senior managers are making less than their Vietnamese compatriots on average.

How serious is the labor shortage? Tech university professor: Even I couldn’t help
A human resources manager who works for a domestic equipment manufacturer in the Southern Taiwan Science Park shares this revelation: Due to the rapid expansions made by TSMC and the ASE Group in recent years, equipment manufacturers need to hire new workers to design the machines. However, they often find that software designers and mechatronics experts have all been snatched up—by their own clients. He visited electrical engineering departments in southern universities on a headhunting quest, but was too late; the professors there told him, “Graduates who have master’s degrees have all gone to interview with TSMC.”

In the past, when TSMC put out feelers for new engineers, they only accepted resumes from Taiwan’s top universities, such as NTU, NCKU, NYCU, and NTHU. “In recent years, TSMC has turned its sights toward tech university students with master’s degrees, especially equipment and manufacturing process engineers,” says Kun Shan University College of Engineering Dean Huann-ming Chou (周煥銘). “This degree of competition for new talent is unprecedented.”

In the face of low birth rates and a global scramble for talented workers, May Wei stresses that Taiwanese companies need to change their way of thinking. Employers must learn to see the whole world as a pool of potential employees. They should look beyond Taiwan and headhunt on the world stage.

Enterprises must change mindsets and adopt the “ABC Strategy” to find talent
Wei proposes the “ABC Strategy” to help companies find the workers they need. The three letters stand for “acquire, build, collaborate”.

To use ESG (environmental, social, and corporate governance) professionals as an example, as the world focuses more and more on reducing carbon emissions, workers with a background in environmental engineering are becoming very popular.

The Taiwanese paper manufacturer Cheng Loong Corporation (CLC) established its Sustainability Department in 2019. However, it did not choose to headhunt in the competitive market for ESG experts. “We decided to train our employees who have shown a penchant for active learning, rather than hire new workers,” explains CLC Spokesperson Lin Hsiang-chu (林祥註).

He points out that, because ESG is connected with every department within the company, the complicated interdepartmental communication may be unsuited for a newcomer unfamiliar with CLC’s culture. Therefore, CLC elected Maggie Chen (陳靜宜), former secretary to the chairman and marketing supervisor, to head the ESG department. Chen was able to master ESG and all the myriad legal details in just two years. She helped CLC become a role model in the paper manufacturing industry. For this reason, CLC increased her package by 10.7% during these two years.

As for Taiwan’s famous bicycle manufacturer Giant, it has remained cool and steady in the face of intense competition for talented workers.

“Workers need a platform on which to perform; it is the source of their sense of fulfillment,” says Chang Tzu-chuan (張慈娟), head of HR at Giant. At Giant, every employee has the opportunity to apply to work abroad. The company will even help pay the tuition for the employee’s children while they are abroad.

Besides raising pay, Taiwanese companies need to adapt to global change
Take Microsoft as an example: Toward the end of 2020, it announced its approach to the hybrid work policy. If over 50% of the employee’s assignments could be completed online, the employee would not be required to come to the office. Microsoft also listened to its employees and responded to their needs. For example, five extra days of leave were provided during the worst of the pandemic. Employees with children under twelve years of age were allowed to take twelve weeks of leave.

“Not only do we focus on the overall compensation and benefits, we also ensure that our employees can find a perfect balance between their work and their family life,” says Linda Wang (王有蘋), Microsoft’s Human Resources Director in Taiwan.

“Enterprises must adapt to change to retain talent,” observes Wang. The COVID-19 pandemic has resulted in the fragmentation of conventional work schedules. Employees now have a greater say and more room for flexibility when they choose their employers.

Even as companies adapt to change, the nation must take steps to evolve as well. “Taiwan must move past its habit of regulatory control and adjust to become a more flexible country,” says Keh-her Shih (施克和), Deputy Minister of the National Development Council.

Ministers from the National Development Council, the Ministry of Economic Affairs, the Ministry of Education, the Ministry of Labor, and the Overseas Community Affairs Council met last July to begin deliberations on how to update Taiwan’s population and immigration policies so as to get to the root of the problem of labor shortage.

The establishment of a College of Semiconductor Technology and an International School of Business Finance may be the important first steps toward nurturing much-needed talent. In addition, regulations on how long blue-collar migrant workers may remain in Taiwan have also been loosened. However, all this may still not be enough to compensate for the greatest labor shortage in recent memory.

Taiwan’s labor market must adjust to the world’s new rules. As workers claim greater autonomy and freedom of choice, enterprises and countries must adapt accordingly if they wish to survive and thrive.

By Linden Chen, Elaine Huang