Taiwan and Vietnam share a notable coincidence: both entered 2026 with a fresh minimum wage hike — Taiwan raised the monthly floor to NT$29,500 from 1 January 2026, Vietnam raised it by VND 250,000–350,000 per worker per month from the same date. But how the two places “calculate” the increase differs: Taiwan legislates a CPI-referenced formula, while Vietnam relies on tripartite council bargaining. For investors, these are two very different cost-forecasting models.
Taiwan: the Minimum Wage Act and the CPI formula
Since 2024, Taiwan applies the Minimum Wage Act, replacing the old basic-wage review system. By law, the reference indicator is the annual consumer price index (CPI) growth rate — safeguarding workers’ essential purchasing power — plus ten other indicators that may be considered, including GDP growth.
The Minimum Wage Deliberation Committee (government, employers, labour and academics) met on 26 September 2025 and agreed: from 1 January 2026, the monthly floor rises from NT$28,590 to NT$29,500 (up NT$910, or 3.18%), and the hourly floor from NT$190 to NT$196. The Ministry of Labor submits the decision to the Executive Yuan for approval. This is the 10th consecutive year of increases — from NT$20,008 (2016) to NT$29,500 (2026), a cumulative +47.4%; hourly from NT$120 to NT$196 (+63.3%). The 2026 round is expected to benefit about 2.47 million workers, including 2.08 million local workers and the rest including migrant workers — Taiwan’s floor applies equally to foreign labour.
Notably, the deliberation record shows employers citing international trade pressures (currency swings, US reciprocal tariffs) while labour stressed inflation’s heaviest hit on low earners. The 3.18% outcome is the balance point — below the 4% unions proposed (NT$29,734).
Vietnam: modelling the cost impact of the 2026 hike
For Vietnam, the investor’s most practical question is not “what is the mechanism” but “how much does this hike cost”. Model it with Decree 293/2025/ND-CP (effective 1 January 2026):
- A 1,000-worker plant in Region I: the floor rises VND 350,000 per worker per month → an extra VND 350 million per month in payroll, or VND 4.2 billion a year. Add the employer’s wage-linked mandatory insurance (social, health, unemployment insurance, trade union fee), and the real extra cost runs about 20–23% above the pure wage figure;
- A 1,000-worker plant in Region IV: the floor rises VND 250,000 per worker per month → an extra VND 250 million a month, or VND 3 billion a year (before insurance);
- Pay-scale ripple: firms paying above the floor usually adjust too, to preserve grade gaps — so the real cost spreads across the entire payroll, not just floor earners.
On mechanism, the National Wage Council (Article 92, Labour Code 2019) recommends and the Government issues the decree. The three-year rhythm: a 2024 hike, a frozen 2025, a catch-up 2026 averaging +7.2% — no fixed mathematical formula like Taiwan’s CPI.
Side by side: formula versus bargaining
How the increase is set: Taiwan legislates CPI as the reference — companies can estimate the margin from published inflation data. Vietnam has no formula — the increase results from tripartite bargaining (workers, employers, the State) in the National Wage Council, depending on the balance of forces each year. For quantitatively minded investors, Taiwan’s CPI formula fits a spreadsheet better; for Vietnam, one must read the “signals” from Q3 bargaining.
Continuity: Taiwan’s 10 straight years of increases — a smooth cost curve, easy to extrapolate. Vietnam has frozen years interspersed (2025) — a bumpier curve demanding wider scenario bands in forecasts.
Coverage: both apply equally to foreign workers — Taiwan counts migrant workers among the 2.47 million beneficiaries; Vietnam covers every employee under a labour contract regardless of nationality.
Latest pace: Taiwan +3.18% (2026), Vietnam +7.2% on average (2026). In absolute terms Taiwan’s floor (NT$29,500 ≈ over VND 20 million) is far higher; but Vietnam’s growth rate is faster — the gap keeps narrowing.
Practical recommendations
For Taiwan, feed annual CPI into the forecast model — increases usually orbit CPI plus a share of GDP growth. For Vietnam, build cost models on three scenarios (low hike / freeze like 2025 / catch-up like 2026) and always add ~20–23% insurance cost on top of the wage increment. When comparing the two destinations, do not compare absolute floor figures — compare total employment cost per unit of output over five years, where differing productivity and automation give very different answers. Taiwan-law details should be confirmed by local counsel before any investment decision.
Frequently asked questions
What formula does Taiwan use for the minimum wage increase?
Under the Minimum Wage Act (from 2024), the reference is the annual CPI growth rate to safeguard purchasing power, plus ten other indicators that may be considered (including GDP growth). The actual increase is bargained by the Minimum Wage Deliberation Committee — 3.18% for 2026, below the 4% unions proposed.
What is Taiwan’s 2026 minimum wage?
From 1 January 2026: NT$29,500 per month (up from NT$28,590) and NT$196 per hour (up from NT$190). The 10th consecutive increase, benefiting about 2.47 million workers.
How much extra does a 1,000-worker Region I plant pay from 2026?
Pure wages rise by VND 350 million a month (VND 4.2 billion a year). Adding wage-linked mandatory insurance and the trade union fee (about 20–23% on the employer side), the real extra cost is roughly VND 5–5.2 billion a year.
Do foreign workers get Taiwan’s minimum wage?
Yes. The floor applies equally to all workers, including migrant workers — who are counted among the roughly 2.47 million beneficiaries of the 2026 round.
Why doesn’t Vietnam use a CPI formula like Taiwan?
An institutional choice: Vietnam tasks the tripartite National Wage Council with bargaining a recommendation on actual conditions each year, allowing flexibility to “freeze” in hard times (as in 2025). The trade-off is harder pure-math forecasting than with a CPI formula.
For detailed advice on labour costs and compliance in Taiwan or Vietnam, companies may contact FLAT Law Firm.
This article has been quality-reviewed by the FLAW AI Legal Council