TAIPEI: The Executive Yuan has agreed to allocate NT$36.4 billion ($1.1 billion) to help workers with job placement in anticipation of the impact of a proposed economic pact it hopes to sign with the mainland, the Council of Labor Affairs (CLA) said yesterday.

The labor assistance fund, which will be part of NT$94.3 billion that will be allocated to help upgrade and transform industries that could be seriously affected in the wake of the signing of the economic cooperation framework agreement (ECFA), will be managed by the CLA, said CLA chief Wang Ju-hsuan at a legislative committee meeting.

The CLA will not use its employment insurance fund or employment security fund to assist workers with the ECFA impact, Wang said.

The NT$36.4 billion budget will be allocated over 10 years, he went on, adding that the subsidies offered to workers will be short-term and designed to enhance their job skills so that they can find stable jobs in the long term.

According to Wang, a widespread idea that signing the ECFA with the mainland will only benefit industry and not workers is "a misunderstanding." Industries and workers are all in the same boat, he said, adding that signing the ECFA will strengthen the competitiveness of industries, which can also increase job opportunities.

Based on the CLA's report, the signing of the ECFA will create 105,000 to 125,000 jobs - a far cry from a report from the economics authorities that predicts a net increase of 250,000 jobs.

Wang explained that the lower CLA figure is because it uses a static simulation that only considers jobs created while Taiwan's competitiveness increases, while the authorities' study applies a dynamic simulation that assumes that after the signing of the ECFA, more industries from overseas will invest in Taiwan, which will bring more jobs.

Wang said that overall, the signing of the ECFA will not increase the unemployment rate.

In another development, "Minister of Finance" Lee Sush-der said Wednesday that he expects most Taiwan investors on the mainland will choose to be taxed in Taiwan after the proposed cross-Straits agreement on avoidance of double taxation is signed.

He said he based his prediction on the fact that Taiwan levies only a 20 percent operating income tax, much lower than the 25 percent imposed by authorities on the mainland.

As a result, Lee told a press conference called to explain the proposed tax agreement, the government's tax revenues will grow significantly. Lee said he cannot assess the amount of the additional tax income until after the pact takes effect. He added, the government currently has no idea about the business situation of Taiwan investors on the mainland.

Taiwan and mainland negotiators will meet in the central Taiwan city of Taichung December 21-23 to sign four agreements, including the tax pact.

Lee said the tax agreement is aimed at protecting Taiwanese businessmen's rights and ensuring the government's power to levy taxes on its subjects on the mainland.

Without the pact, Taiwan investors on the mainland are not under any government protection since Taiwan does not have a say in the way they are treated there, he said.

Lee refuted news reports that many Taiwan investors on the mainland are worried that the proposed Taiwan-mainland tax agreement will enable the government to easily trace their business deals and incomes.

Lee gave the assurance that exchanges of tax information would not result in leakage of data on the incomes of any Taiwanese individual or company on the mainland.

Chian Daily/CNA

(HK Edition 12/18/2009 page2)