Taiwan has reached a level of affluence today that encourages labor unions and workers to demand higher remuneration for their work, but many employers are reluctant or unable to accommodate their expectations. As an alternative, some employers have been turning to cheaper foreign labor to maintain their previous levels of profitability.
But the influx of workers from Southeast Asia is beginning to send social tremors through the island, even though their numbers remain relatively small. The government now finds itself facing irate unions and employers as it tries to find a solution to this thorny problem. Its resolution, as the following story indicates, has broader implications for the success of Taiwan's continued industrial development.
The Republic of China, as all developing nations on the Pacific Rim, sparked its economic boom by successfully penetrating U.S. and European markets with low-end, inexpensive goods. This was made possible in large part by an abundant supply of inexpensive and disciplined workers disinclined to participate in labor disputes. Taiwan's thriving and dynamic economy is still fueled by exports and, as in the past, the energy and reliability of a dedicated work force helps make this possible.
But the expectations of workers and their children—have been altering in recent years as they seek a better quality of life for all their efforts. Virtually every family in Taiwan encourages its children to compete for admission to better schools and institutions of higher education so that they can escape the fate of a factory job. But in some respects, expectations have outrun realities. Despite the government's emphasis on high-tech and service industries and greater production of value-added products, much of the local industry remains strongly dependent on labor-intensive work. Because of shifts in the levels of available labor, the construction industry and many traditional small and medium-sized factories now face labor shortages.
The result has been a mass influx of illegal foreign laborers willing to work for a fraction of the pay locals now expect. The vast majority of these workers come from Southeast Asia, especially the Philippines and Thailand. Although they usually enter the ROC on tourist or student visas, they come to fill factory or domestic help positions. Unofficial estimates put the number of illegal foreign workers at approximately 30,000, although there are indications that this figure is low. While their numbers are far from overwhelming, they nonetheless have begun to create problems for the Ministry of the Interior and the Council of Economic Affairs of the Executive Yuan.
Underground employment agencies operating in the home countries of the workers usually act as the conduit for their entry to the ROC. According to the Council of Labor Affairs, these agencies have direct connections with local companies suffering labor shortages—and these are becoming severe. Company managers in the private sector face the dilemma of needing to fill positions for thousands of factory line and construction jobs that simply do not attract local workers. The situation is especially inviting to someone from a country such as the Philippines, where wages are only one-fourth of those in Taiwan, and where overcrowded companies cannot even supply posts to college graduates.
Sadly, the foreign workers attracted to Taiwan can have their rights abused by their employers since they cannot count on much protection from the authorities. But even this seems preferable to conditions at home, where unemployment is rampant. In 1988, the per capita GNP in the Philippines was US$548, and in Thailand it was US$770. In Taiwan, the figure was US$6,045. Foreign laborers willingly endure short-term mistreatment by employers because the financial returns are still lucrative, even though they earn less than Chinese workers.
Dr. Wu Hui-lin—there is "a drop in the incentive to work at the jobs that are actually available."
Some observers of the developing labor scene in Taiwan say that conditions are now ripe for abuse. Ironically, the very work ethic and the progress that came as a result of it have begun to undermine national economic health. For example, Dr. Wu Hui-lin, a research fellow at the Chung-Hua Institution for Economic Research in Taipei, points out that the gap between supply and demand stems from a continuous decline in the labor participation rate (defined as the ratio of the total labor force divided by the number of people aged 15 or older in the labor force). The drive for self-improvement has become part of the problem.
"People vigorously pursue higher education, and the level of white-collar skills they have acquired has risen faster than the number of jobs requiring those skills," Wu explains. "After secondary education, most Chinese youth today seek higher forms of education rather than immediately entering the work force. They want to escape the shame of a low-status blue collar job. This strong incentive to learn has actually caused a drop in the incentive to work at the jobs that are actually available."
Wu suspects that the lack of service industries in Taiwan may also stifle the enthusiasm of the work force. The hard-earned money a common laborer saves can be spent in few places. "Why work if there's nothing worth using your money for?" Wu asks. "Our country is hampered by excessive service industry regulations, so this industry is severely underdeveloped. "
Another reason for labor shortages has been an overall qualitative improvement in the standard of living among workers in Taiwan. Higher wages and better jobs have attached an increasingly unattractive image to low paying manual work. Added income within families has also made it less necessary for individual members to hold more than one job to make ends meet, and some family members can even stop working altogether; both situations remove workers from the labor pool. Moreover, with Taiwan awash in liquidity, other sources of income exist besides long hours in unhealthy factories, even though such sources do not always boost national productivity.
Large numbers of workers today are preoccupied with gambling games, such as playing a local variation of Hong Kong Lotto (which has replaced Ta Chia Le, based on the now-halted national lottery). The local stock market has also been called a "casino" because of the gambling atmosphere and emphasis on immediate payoffs. "Playing" for money has come to appear more worthwhile than sweating at a construction site or on a factory line.
"The idea is to work as little as possible, yet earn the salary of someone who holds down several jobs," Wu says. "The problem is not a lack of manpower but of work incentives. Taiwan has virtually no forced unemployment. Local workers just find it easier to make more money at gambling."
Conditions for illegal foreign laborers stand in stark contrast to the "games" played by local workers. One female Filipino worker, who asked to remain anonymous, has been employed illegally at a small electronics factory in Taipei for the past three years. Entering Taiwan on a student visa, she intentionally overstayed her time limit in order to work. Her salary is far below her Chinese colleagues, and a day of work can amount to 14 grueling hours assembling pocket computers. But the job is a lucky break, and the fulfillment of a dream.
"I don't care what happens to me," she says. "I'm funding my brother's college education and supporting my parents and two nieces back in the Philippines. The company pays me by the hour, so I do as much overtime work as possible before I collapse. I want to continue at this job for another three years, and I will if the authorities don't tell me to leave first."
Despite the obvious contribution of illegal foreign workers to the economy, the public regards them with misgivings. And the government worries that their continued assumption of low-end jobs will retard the transition from labor-intensive industries to capital-intensive or skill-intensive ones. Tai-chi Doong, director of the Department of Labor Standards in the Council of Labor Affairs, says it is essential for Taiwan to upgrade its industry to compete with the developed nations.
"The battle is being waged on two fronts," he says. "Taiwan faces stiff competition from the underdeveloped nations whose labor is still cheap. They are quickly catching up and taking the low-end markets away from us. And the developed countries attempt to disrupt our process of upgrading to prevent us from penetrating their markets. How can we survive if we don't completely upgrade soon?"
Professor Wu disagrees with Doong, arguing that low-end industries can co-exist comfortably with high-tech industries as long as demand for both types of goods persists. "Foreign workers can complement the efforts of local workers, provided they remain productive," he says. "I think the real issue is employment, not upgrading. Upgrading is a natural process that will come by itself."
While the government agonizes over the problem of what to do about illegal foreign workers, labor unions are airing loud and clear grievances about the situation. They are quick to point out weaknesses in current government legislation as a cause. The unions fume at the prospect of further employment of foreign workers since it jeopardizes their bargaining power to demand improved working conditions. The issue has been brought out in the open by recent union-organized protests staged in front of the Council of Labor Affairs.
Taoyuan County Labor Association leader Tsai Shou-hsien— "The country is overrun with illegal workers."
Tsai Shou-hsien, chairman of the Taoyuan County Labor Association, views the situation as a problem within a problem. "The country is overrun with illegal workers largely because the government has neglected the needs of domestic workers," he says. "The truth is that management does not want to share profits with laborers, and poor legislation helps perpetuate the situation. Present labor laws allow too much room for management to take advantage of local workers."
According to Tsai, the labor law statutes constitute no more than ambiguous formalities, providing no specified protections or benefits to laborers, while allowing management a free hand. He points to several changes that need to be made before local workers can be expected to regain their enthusiasm for work.
"One atrocity in the present law is the 25-year minimum pension clause, which states that a worker must be employed in the same company for at least 25 years before qualifying," he says. "But most small and medium-size firms rarely survive more than 10-15 years, and many owners of small exporting firms close down after five years just so they can assume another name to avoid heavy tax burdens. This absolutely must be changed."
The issue of year-end bonuses provoked several strikes and protests this past Lunar New Year, as laborers complained that managers had been far too stingy. Nothing in the present statutes specifies what percentage of a company's profits should be reserved for bonuses. "This is another example of how the law turns out to be nothing more than a jumble of words without true relevance to the needs of laborers," Tsai says.
Tsai's most recent grievance is a decision by the Council of Labor Affairs to make provisions that foreign workers aid in the 14 Key Projects, an estimated NT$900 billion (US$32 billion) public construction plan to develop an improved infrastructure for Taiwan's transportation and telecommunications systems, environmental control, and medical care programs. The action seemed to solve the labor shortage problem, but it provoked a storm of resentment.
Director Doong labels the resentment "psychological insecurity." "It's as if there were an apple I didn't want to eat, but I also prevented others from eating it," he says. "It's a psychological problem of our domestic workers." Tsai suggests that this problem be met in some other way than using cheap foreign labor. "Perhaps we could employ the military engineering corps in the projects," he says. "The current approach by the government is divisive and ill-advised. Please remember that I am a KMT member and I love the party, but when I see a mistake it is my duty to complain and try to correct it."
New labor regulations are being drafted at the Council of Labor Affairs, and they should be completed by June this year. Doong says one part of the legislation will stipulate that wages for foreign workers match those of domestic workers. This provision should force manufacturers to cut back on labor costs and upgrade local industries. Other details include a format for deporting illegal aliens whereby the people in question are first requested to return home at their own expense. If they cannot, their respective employers or embassies in Taiwan will be held responsible. If all else fails, the local government will pay for the trip.
The National Police Administration currently reserves US$14,500 for deportation fees each year, but these funds are only used to deport illegal aliens who commit crimes in Taiwan. A spokesman says that an alien working in the ROC is not actually committing a crime, but rather is violating government regulations. "When they are discovered, we ask them to leave the country within about three months," he says. "But no drastic measures are taken simply because nobody has the money to send these people back."
These mild words offer little reassurance to most illegal workers. "I have no freedom, I feel like I could be deported by a police officer at any moment," says the female worker from the Philippines. "I spend most of my time in the factory, where I have to work, cook, eat, and sleep. Except for going to church on Sunday and an occasional treat at the nearby McDonald's, I never go outside for fear of being stopped by a police officer."
Tsai is not unsympathetic to the plight of foreign workers, despite his unremitting criticism of government policies. "I understand deeply the hardships a foreign worker must endure," he says. "Speaking for all the laborers in Taoyuan, I can clearly say we harbor no personal animosity toward the illegal aliens working here. We are all trying to live and survive, and we are all laborers. But we Chinese must live and thrive, too. Until the government passes fairer laws, we must ask the foreign workers to return home."
Whether the foreign workers go home or stay to be paid wages more in keeping with the rest of society, some form of solution to their status is overdue, especially as discontent continues to grow. As Taiwan proceeds down the path of further industrial restructuring, questions about labor will become increasingly complex. The response of the government to the influx of foreign labor is one of the first real tests of a much larger process of development.