Taiwan Today

Taiwan owes much of its economic success of past decades to its labor force. Low labor costs, high productivity, and rare incidents of labor unrest speeded the island's pace of industrialization. Some critics claim that the government's focus on increased production resulted in limited attention to workers' rights, and sanctioned management's restric­tions on organized labor. Whatever the case social and political reforms, especially since the lifting of martial law in June 1987, and shifts in the economic structure are redefining labor-management relations. Through their unions, the laborers are demanding better wages and benefits, and more recognition of their rights.

In the early stages of development, when Taiwan was still primarily an agricultural society, laborers generally demanded little from their factory employers beyond their wages. For many families, factory wages were supplemented by farm incomes. Except for scattered incidents, laborers were generally resigned to poor working conditions and low wages. If workers lost their factory jobs, they simply returned to farming.

Fifteen years ago, industry overtook agriculture as the source of a better livelihood, and for an increasing number of laborers who migrated to the cities, there was no turning back to the farm. "Laborers today are different," says Yao Chang-lin, president of the Labor Friendship Association at Taiwan Power Company (Taipower), a state enterprise. "We make our living in the cities. We are the second generation to be urbanized, and our roots are in the cities. We can't go back to the village, and we don't want to sell our labor for subsistence wages. It is time for us to get a larger share."

The Taipower labor organization was originally one of the underground labor unions that operated under the name of "friendship associations." These associations actively organized labor support for reforms after the lifting of the martial law. Because of growing worker dissatisfaction with the formal unions, which often had close ties with the government, the friendship associations started gaining more members and became more effective organizers.

"Several of us ran in the 1988 election for board directors of the Taipower Labor Union," Yao says. "I'm already a board member, and I'm quite sure that members of the association will gain con­trol of the union in the next election to be held in February." Taipower has over thirty-one thousand employees, twenty eight thousand of whom belong to the union. Currently, the Labor Friendship Association has about ten thousand members.

Yao, a vocational school graduate and father of five daughters, has been working for Taipower since 1972, but he did not participate in association activities until 1988. That was the year the association members engaged in the first battle with their employers—Taipower and the Ministry of Economic Affairs (MOEA).

At that time, there was considerable variation in the wage structure of the different state enterprises under MOEA administration. A senior high school graduate could receive only US$490 a month as a technician at Taipower, while at the Taiwan Railway Administration under the Department of Communications, the same technician could earn US$240 more. "We found the wage discrepancies extremely unfair," says Yao, "and so we asked for a review of Taipower's wage structure. But we were turned down."

The association called on Taipower workers throughout the island to go on strike if necessary. Management and the MOEA buckled, and the minimum wage was raised to US$655 a month. "It was less than we expected, but we were happy to find out for ourselves just how well collective bargaining works," Yao says. Negotiations took less than two months, and the benefits of the initiative were not limited to Taipower workers. The minimum wage at the other enterprises under MOEA administration was raised to the Taipower level.

This initial success has encouraged Taipower workers to be bolder about their demands. Sometimes it has been higher pay, sometimes much more. According to Yao, the Taipower Labor Friendship Association is striving for worker dignity, advancement opportunities, and job security. They take pride in their contribution to the company's growth, and assert that they are also entitled to share in the company's profits. Taipower has US$19 billion in capitalization and in 1989 earned a net profit of US$1.03 billion.

For many workers in Taiwan, profit-sharing means a good year-end bonus, and the amount of the bonus reflects the employee's level in the company and work performance. Year-end bonuses range, on an average, from one month's pay in small private companies to six months' pay in large, flush corporations. At Chinese New Year, the traditional time for bonuses to be given, relatives, friends, and co-workers often compare their bonuses.

"Two years ago I was very ashamed to tell my mother that I only received 70 percent of my monthly salary, even though my work performance rated an 'A.'" Yao says. But last year he received the equivalent of over two months' pay.

The friendship association has learned that threatening to strike is one method of securing higher wages and better bonuses. But it has also learned the art of lobbying members of the Legislative Yuan. "Sometimes, persuasive communication is a more effective tool," Yao says.

At the end of FY 1990, the association faced another struggle. Taipower had set its FY 1991 projected net revenue at US$620 million. This figure was then passed on by the MOEA to the Legislative Yuan, which nearly doubled the budgeted figure to almost US$1.1 billion. Both management and workers felt this budgeted figure would be difficult to achieve, and foresaw the loss of bonuses and wage increases. The association sent workers to the Legislative Yuan to petition the legislators to cut the budget. During the third reading of the draft, the Legislative Yuan reduced the net reve­nue projection by US$100 million, relieving pressure not only on the workers, but also on the company as a whole.

While the achievements of the Taipower Labor Friendship Association indicate positive prospects for the effectiveness of labor organizations in Taiwan the association is not reflective of the labor organizations in private companies. Neither does the government's ac­ quiescence to the association's labor demands reflect government action in private labor disputes. Inasmuch as there is great disparity in the clout of labor organizations in government-run and privately run enterprises, there are labor laws that have been enacted by the government to protect the rights and ensure the welfare of all workers.

Labor laws date as early as 1929, beginning with the Labor Union Law and the Factory Law. These were followed by the Settlement of Labor Disputes Act (1930), the Factory Inspection Law (1931), the Employee Welfare Fund Act (1943), the Labor Insurance Act (1958), the Labor Safety and Health Law (1974), the Vocational Training Act (1983), and the Labor Standards Law (1984). Through the years the laws were revised to adapt to the times. For example, the law on the Settlement of Labor Disputes Act was revised in 1932, 1943, and 1988.

One example is the Employee Welfare Fund (EWF) Act, which obligates a company with fifty or more employees to set up a welfare services fund for its employees. The EWF Act was promulgated in 1943, and has been revised only once since then, in 1948. The Collective Agreement Law has not been revised since its enactment in 1932. In most companies, collective agreement is still taken to mean that management sets the regulations, and then expects the employees to follow them.

But the new vigor of labor organizations in the last few years, and the energetic support of academics and labor activists for labor reform, have prompted the government to update the relevant legislation. Says Chao Shou-po, chairman of the Council of Labor Affairs in the Executive Yuan: "If the government does not want people to defy the law, the laws must be workable. The government analyzes new facts and proposals, and enacts new laws or revises existing laws to make them enforceable and workable."

Largely in response to growing labor awareness, in August 1989 the government elevated the Labor Department under the Ministry of the Interior to the Council of Labor Affairs under the direct jurisdiction of the Executive Yuan. The Council is the coordinating body for all local labor affairs departments and bureaus, and has for its goals the promotion of labor welfare and harmonious labor-management relationships. It also seeks to uphold workers' rights and strengthen labor productivity and job skills.

The Labor Union Law gives laborers the right to organize and to strike. The Settlement of Labor Disputes Act sets standards for the settlement of labor-management disputes. And the Labor Standards Law guarantees decent working conditions, regular adjustments of the minimum wage, and affords protection against management neglect of worker welfare.

The Council of Labor Affairs drew up a draft revision of the Labor Union Law in 1988. The latest revision of the Settlement of Labor Disputes Act was promulgated in 1988, and the Council is considering adding provisions to restrict unfair management practices such as the summary dismissal of employees sweetened with nothing more than some severance pay. The Labor Standards Law is presently undergoing revision.

In short, Taiwan does not suffer from a lack of laws or legislative activity in the field of labor. But whether the laws are enforceable or whether they indeed serve labor interests is still widely disputed by labor activists. For example, the Labor Standards Law has come under increasing fire because it applies to a more advanced and affluent economy, and inspires high worker expectations that cannot be complied with by small and medium-sized enterprises. Considered the most important labor legislation, the Labor Standards Law is comprehensive in its protection of workers' rights, and sets the minimum stan­dards that a labor contract must meet. The law's major provisions ensure a safe and decent working environment, compensation for work-related accidents and illnesses, and fair compensation for labor.

On the other hand, the Labor Insurance Act continues to benefit the island's workers. Compulsory for all employers with five or more employees, labor insurance covers maternity, hospitalization, injury and illness, disability, old age, and death. Employers pay 80 per cent of the premium, and the employees pay 20 percent. Workers who do not have a fixed employer pay 60 percent of the premium, with the government shouldering the remaining 40 percent. As of 1989, 6.6 million out of the total working population of eight million are covered under the labor insurance plan.

Restrictions imposed on labor unions during the period of martial law prevented the rise of labor-management disputes. But the new reformism sweeping across society and the growing awareness of labor organizations concerning their strength has led to an increase in labor-management disputes. According to statistics compiled by the Council of Labor Affairs, labor disputes increased from 907 in 1984 to 1943 in 1989. Yet labor organizations continue to claim that their freedom to exercise their rights under the law are restricted, and they feel that the legal system is on the side of the employers.

A number of cases of labor action has been forwarded to public prosecutors on charges of violent assault. In one case, workers at the Hsinpu Synthetic Fiber Plant of Far Eastern Textile Ltd. organized a strike in May 1989 for a higher year-end bonus and overtime pay. Although the strike won a two-thirds vote in the union, it was illegal because the union did not apply for the required permit from the provincial government. The strikers blocked the entry of other laborers reporting for work, and according to press reports, a number of strikers beat up these laborers and as­saulted the police. The strike ended after ten days, with partial settlement of the workers' demands. Among those arrested were labor movement activists.

In November 1989, four hundred women workers from two shoe manufacturing companies in Kaohsiung joined a rally to petition the Council of Labor Affairs for an immediate resolution of their plight. The companies had gone bankrupt and the owners fled overseas, leaving their workers without compensa­tion. Some workers, labor and student activists, and a member of the Kaohsiung Labor Federation were arrested by the police on charges of inciting violence or assaulting the police with bamboo sticks.

While confrontation has been one recourse for laborers in the settlement of disputes, individual laborers and labor organizations can now seek mediation from volunteer organizations such as the Labor Ethics Foundation. Established in December 1989, the Labor Ethics Foundation was established by Chang Hsiao­-chun, a sociology professor at National Taiwan University and special­ist in the labor problems of Taiwan. Chang raised US$55,000 from contributions to set up the foundation, and today it has funds totaling US$110,000.

Says Wang Yih-chi, secretary-general of the foundation: "By law, industrial trade unions are divided according to administrative districts, making it hard for them to consolidate their actions into a single collective approach. Also, by law, only unions in government enterprises with more than seven branches islandwide are allowed to form federations. So it follows that only the unions organized in government enterprises such as Taipower, China Petroleum Corp., China Shipbuilding Corp., and the Directorate General of Telecommunications can grow stronger, operate better, and have easier access to collective bargaining."

Oftentimes, individual workers in private companies have to wage their own battles with management. Lacking organization and solidarity, it is not easy for laborers in small and medium-sized enterprises to question their employers' adherence to the labor laws. "The prob­lem is non-enforcement," says Wang. "Many employers do not respect the labor laws because they can get away with not implementing them. The laborers continue to work anyway. Also, the laborers are not very well informed about the meaning of these laws, and are not aware that these laws are there to ensure their rights and welfare."

The Labor Ethics Foundation, which is made up of volunteer labor and legal specialists, and lawyers and academics, can help in such matters. The foundation gives advice to workers and labor unions, mediates in labor-management disputes, provides legal counsel to work­ers, and also acts as a labor relations consultant to private and government enterprises.

Wang cites the Employee Welfare Fund Act as the law most often violated by employers. The Act stipulates that every mining company with more than one employee, and all other companies with fifty or more employees, must set up an Employee Welfare Fund to provide and improve welfare services for its employees. The Fund is made up of from 1 to 5 percent of the company's capital at the time of its establishment; .05 to .15 percent of the company's monthly net income; .05 percent of the monthly salary of each employee; and 20 to 40 percent of the proceeds from each sale of scraps and other waste materials from production. As of 1989, only about seven thousand of Taiwan's eighty thou­sand companies have set up employee welfare funds.

According to Wang, the company must also set up a committee to monitor the welfare fund, and two-thirds of this committee should be made up of labor union representatives. "Four of the labor disputes we were recently asked to help solve involved the welfare fund," Wang says. "In one case, fourteen of the twenty-one members in a bank's EWF committee were top management people. And in another case, the EWF committee reported that over the previous five years the company had accumulated a debt to the Fund amounting to more than US$350,000. Was there anything they could do? The company ignored the government view that they should pay up."

The Labor Ethics Foundation has helped many individual laborers settle disputes with their employers. It has also mediated in six factory closures, in which the workers ultimately received 1.8 to 2.9 times the severance pay stipulated in the Labor Standards Law.

Because workers in small and medi­um-sized enterprises have yet to organize themselves for collective action, most disputes occur in large enterprises. In 1989, the majority of the disputes centered on year-end bonuses, but in 1990, the abrupt dismissal of workers and the amount of severance pay have become the major causes of disputes. As more workers are returning to the industrial sector from the overheated service sector or are trying to recover from heavy stock market losses, large enterprises are finding it cheaper to absorb these returnees rather than to keep old employees at higher wages and with substantial benefits.

Unemployment, however, is not a problem. It is generally thought that an unemployment rate of no more than 5 or 6 percent indicates a healthy economy. Since the 1970s, Taiwan's unemployment rate has stayed below 3 percent. The unemployment rate in 1989 was 1.6 percent, and it has recently dropped to 1.3 percent. In fact, manufacturers and industrialists are complaining that their businesses, and consequently the economy, are threatened by a labor shortage. Yet it is perhaps this threat that assures an improvement in labor conditions and benefits.

Says Chao of the Council of Labor Affairs: "In the last two years, manufacturers and construction companies have been urging the government to adopt an open policy for importing cheap labor from Southeast Asian countries. But the government has been very cautious because there is a possibility that a huge influx of foreign workers will pro­duce a strain on society. Beyond that, cheap foreign labor would lessen the motivation for employers to upgrade technology and improve working conditions. "

The fact that the interests of Taiwan's workers influence the government's approach to the issue of imported labor illustrates the government's priority on preserving the workers' edge. Labor unions in private enterprises may still be largely ineffective, but the exam­ple of the inroads made by labor organizations in government-run enterprises and the active involvement of the Labor Ethics Foundation in solving Taiwan's labor problems can only point to an encouraging future for organized labor.