Taiwan’s economy is doing well, but many of its workers are not

TAIPEI – After working full-time for four years, Taiwanese marketing specialist Sandy Chien decided to go freelance so that she can take on side gigs. 

The 28-year-old wanted to supplement her income in other ways, as her salary at a local restaurant group had “barely moved”. 

“I did not feel like there would be good development opportunities for me if I stayed in that job for much longer,” she told The Straits Times. 

“Is Taiwan’s economy really doing so well? I cannot tell.” 

Taiwan’s

technology-driven economy is booming,

even amid global economic headwinds, as roaring demand for the island’s artificial intelligence (AI) products has driven record export growth and sharp upward revisions of gross domestic product (GDP) forecasts.

But the effects are not being felt broadly by Taiwanese working in non-tech sectors, as income gaps widen and wages remain stagnant.

“The proceeds of the export boom have largely flowed to firms in the tech sector, with few spillovers to the rest of the economy,” said Mr Jason Tuvey, deputy chief emerging markets economist at London-headquartered Capital Economics. 

“Only a small proportion of workers that were already on relatively high incomes have benefited from faster wage increases on the back of the boom in AI-related exports,” he added. 

While chip engineers have long earned salaries significantly higher than average in an industry where profit margins are high, they are now making even more through huge bonuses, thanks to record-breaking profits. 

According to Capital Economics, wages in Taiwan’s electronics sector were already 35 per cent above the economywide average in 2021. Now, they are more than 70 per cent higher. 

This comes as the global semiconductor sector experiences robust growth, driven by strong demand for Taiwan’s cutting-edge chips and related IT products. 

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chip manufacturer, produces more than 90 per cent of the world’s most advanced chips necessary for complex AI workloads. Taiwanese companies also dominate many electronics sectors beyond cutting-edge chips, playing crucial roles in manufacturing laptops, smartphones and the server infrastructure supporting AI. 

In October, outbound shipments surged at the quickest pace in nearly 16 years, with exports jumping 49.7 per cent year on year to a record US$61.8 billion (S$79.8 billion). The strong export performance was driven by the demand for electronic parts and information and communication technology products, which together helped outbound shipments grow 48.4 per cent year on year in the first 10 months of 2025.

This led Taipei to sharply lift its economic growth forecast for 2025 to 7.37 per cent, the fastest rate in 15 years. 

But the remarkable economic performance has benefited only a small segment of the island’s workers.

According to official data, electronics manufacturing accounts for more than 15 per cent of Taiwan’s GDP, but it employs only around 6.5 per cent of the total workforce.

“Of those, only around half are employed in more technically demanding, and presumably higher-paid, roles,” said Mr Tuvey. 

While the tech sector continues to boom, Taiwan’s services sector, as well as traditional industries such as machinery and textiles, has lagged.

For instance, the value of Taiwan’s machinery exports, which face stiff competition from manufacturing powerhouses such as China where costs are lower, dropped to US$24.1 billion in 2024 – the lowest in four years.

The share of machinery exports in total exports that year also dropped from 8.5 per cent in the 2000s to a record low of 5.1 per cent, according to the island’s statistics agency. 

Traditional industries, which employ nearly a quarter of the total workforce, have also been hit hard by US President Donald Trump’s hefty 20 per cent tariffs, whereas Taiwanese exports of semiconductors and associated hardware are exempt from the levy. 

Meanwhile, salaries for most workers outside of the chip sector have stagnated for years, with real wages growing by an annual average of just around 1 per cent over the past decade.

A February 2025 survey by popular jobs portal Yes123 found that 60 per cent of workers had not received a raise in three years, while 12 per cent had gone for a decade without a salary adjustment. 

Ms Chien, the restaurant marketer, said she is not the only one in her industry who has taken the part-time route. “Taking on multiple jobs is the only way I can save more money, especially when things keep getting more expensive,” she added.

Highly paid workers in the chip sector, on the other hand, can afford to invest in appreciating assets

such as property

, allowing their wealth to multiply, which further widens the wealth gap. 

Mr Tuvey said: “The city of Hsinchu, which is home to a large concentration of Taiwan’s tech companies, has recorded a sharp run-up in property prices at the same time that wages in the electronics sector have accelerated.”

Government data shows that Taiwan’s household wealth gap has nearly quadrupled in 30 years, with the richest 20 per cent of households holding 66.9 times more wealth than those in the bottom 20 per cent in 2021.

The results, released by the Directorate-General of Budget, Accounting and Statistics in 2024, were the first such government report since 1991, when the richest 20 per cent of households had 16.8 times more wealth than the bottom 20 per cent.

Professor Wu Jieh-min, a political sociologist at Academia Sinica, warned that there will be implications for the ruling independence-leaning Democratic Progressive Party (DPP) in the 2028 presidential election if it does not urgently address the wealth gap. 

Economic inequality was a key issue during the last election in 2024, prompting many unhappy voters, especially the younger ones, to shift their support from the traditional major parties to the smaller Taiwan People’s Party. 

Worker surveys have also shown consistently high levels of dissatisfaction with wages. In the February poll by Yes123, for instance, 92 per cent of those surveyed said they were unhappy with how much they earn. 

“We should not forget that the better TSMC and the chip sector perform, the more there would be a relatively poorer group of people who may hate the DPP,” said Prof Wu.

“Voters want to oppose China... but they also need to have their basic needs met.”