Unskilled workers are in short supply, slowing down major construction projects. Labor imports from the region can help, but the solution is not popular.
An acute shortage of unskilled workers in Taiwan has prompted the import of Southeast Asian laborers to help with the construction of the island's highways, rapid transit systems, and other major public works. The first batch of 250 such workers arrived from Thailand in December 1990. They were hired by BES Engineering Corporation, the largest engineering and construction firm in Taiwan. In the months ahead, the company plans to request government approval to import hundreds more because it faces a shortage of some 4,000 laborers for eleven of its ongoing public works projects.
BES is the first local company allowed to import unskilled workers under a recently adopted government policy. The policy covers engineering companies that were commissioned to build fourteen major government-funded construction projects (including power projects, railway system expansion, and flood control) and several large housing developments (each with more than five hundred units). The companies are now permitted to turn to overseas labor markets if they cannot hire enough workers locally to fulfill their contracts.
Employers must contract to hire foreign workers in groups, and they must guarantee that the workers will leave Taiwan after a maximum of two years. The Ministry of Foreign Affairs currently restricts the number of countries allowed to supply unskilled workers to Indonesia, the Philippines, and Thailand. These countries were chosen for two major reasons. First, all three, particularly the Philippines, rely heavily on the export of labor to earn badly needed foreign exchange. Second, the three governments have repeatedly called on Taiwan to open up its labor market, and they are willing to take whatever cooperative measures are needed if they are allowed to export labor to the island.
No official estimates are available on how many foreign workers will be needed to complete the government's major construction projects. But it is already known that two of the projects alone – Taipei's mass rapid transit system and the second freeway in northern Taiwan – will require around 40,000 workers by late 1991 when they are proceeding at full speed. At present, some 9,000 people are working on the two projects, 25 percent less than the number needed to keep construction on schedule.
Foreign laborers are willing to work overtime and for lower wages than local workers. Prime sources: the Philippines, Indonesia, and Thailand.
Almost all of the industries that require manual labor suffer from a shortage of unskilled workers, but the construction sector has been hit the hardest. According to the Council of Labor Affairs, the island's non-service industries require nearly 200,000 more unskilled workers. The construction industry leads all others with a labor shortfall of 8.8 percent, followed by the manufacturing sector with 5.7 percent.
The labor shortage problem appears to be chronic, and is not showing any signs of improvement, even during the current economic slowdown. While sluggish business caused the unemployment figure in August 1990 to rise to the year's high of 181,000 or 2.1 percent, many construction and manufacturing companies are still having difficulty recruiting workers.
This indicates that there is a serious imbalance between supply and demand in the local labor market. Although there is a shortfall of close to 200,000 manual workers, more than 180,000 people are jobless and, for one reason or another, prefer to remain unemployed. The failure of many employers to improve working conditions, offer reasonable pay, and provide employee benefit programs are major reasons for this situation. Such shortcomings are especially widespread in the construction sector.
According to Feng Huang-sung, executive secretary of the Taiwan Provincial Construction Workers Union, many construction companies do not pay their workers the prevailing wage rates. He explains that most contractors disregard labor laws requiring employee insurance and pension programs. Feng also points out that few companies adopt the required safety measures at work sites to protect their workers from accidents.
Another major reason for the acute shortage of manual labor is the changing work ethic. As one top executive of a steel company says, "A lot of young people these days would rather remain jobless rather than do manual work in a factory."
Taipei's mass transit system ,like other major construction projects, is behind schedule because of labor shortage.
Also, the quick and substantial profits made possible by the stock market boom in the last few years have led many workers to fall away from the traditional Chinese value of hard work. Despite the precipitous drop in the stock market since February 1990, workers are not flocking back to factories and construction sites.
"Some people who gave up manufacturing jobs to play the stock market returned briefly to their factories," says an owner of an industrial machinery plant. "But they soon left, because they're no longer used to doing manual labor for fixed wages."
Because it has been hard to find enough young people to take jobs in manufacturing and construction, many employers have been hiring illegal foreign workers. According to the latest official statistics, there are some 61,000 foreign nationals who have overstayed in Taiwan and are working here illegally. But some observers in the private sector estimate the number of illegal foreign workers at more than 100,000.
These foreign workers are primarily from Malaysia, the Philippines, Thailand, and Indonesia. Typically, they work in labor-intensive industries, such as textiles, food processing, iron and steel works, and construction. The number of foreigners hired in service industries, such as restaurants and nightclubs, is also increasing because of the rapidly growing demand for manpOW6l in the services sector.
Employers have found other important advantages in hiring illegal aliens. One is that they are more subservient and more eager to work overtime than local workers. Another advantage is that they will work for lower wages. For example, illegal aliens working in the construction industry earn up to US$600 a month. This compares with the upper range of US$1,400 paid to local construction workers.
For some companies, especially small ones, hiring illegal foreign workers also means saving on employee benefits. These employers, taking advantage of the workers' illegal status, often refuse to give them insurance coverage and other benefits in compliance with labor laws. Some even require aliens to work overtime without due compensation.
The unfair treatment of foreign workers has raised concerns from many segments of society. In a seminar held by the Central Daily News in November 1990, Chiu Chun-yen, an expert in labor affairs, asked the government to consider passing legislation to ensure that foreign workers receive equal treatment as local workers. "Discriminating against foreign workers violates both humanitarian principles and international practice, and it should be stopped by enacting appropriate laws," Chiu said. He also suggested that the government should legalize the employment of unskilled foreign workers if that cannot be avoided.
Some people have called for legalization as a means of improving security and social order. Chen Shiao-lien, deputy director general of the National Police Administration, notes that crimes committed by foreigners are on the increase. He adds that most of the foreigners committing the crimes were manual laborers. Chen says that these crimes would be easier to solve if foreign laborers were legally employed and registered with the government as required by law.
Another argument is that lifting the government ban on importing foreign laborers only serves the island's economic interests. According to Wu Hui-lin, a fellow at the Chung-Hua Institution for Economic Research, nearly all industrialized nations have experienced labor shortages. Now that Taiwan has a more advanced economy, it is not surprising that it is facing similar problems. "Taiwan should liberalize the importation of foreign labor and at the same time seek to prevent its adverse effects," he says. But many people are strongly opposed to the idea. Their primary concern is that such a move could reduce job opportunities and wages for local workers. In addition, employers would be even less inclined to improve working conditions as a means of finding and retaining workers.
Opponents of importing labor raise other considerations as well. Says Lin Chung-cheng, a fellow at the Institute of Economics at Academia Sinica: "With the availability of cheap foreign labor, companies currently manufacturing labor-intensive products will not bother to automate their production facilities and upgrade operations. This will hurt the overall economy."
And Ko Yu-chin, a legislator elected to represent labor unions, indicates that because of Taiwan's small size and limited natural resources, it simply cannot take in large numbers of foreign workers or immigrants without overloading public facilities and programs.
During the legislative debate on the legalization of foreign labor, Chao Shoupoh, the chairman of the Council of Labor Affairs, indicated that the government currently has no intention of allowing industries other than construction companies to import foreign labor. He explained that only public works contractors would be allowed to hire from abroad because labor shortages had already caused important public works to fall far behind schedule. The inadequate development of basic facilities has already had a major impact on Taiwan's economic expansion and quality of life. He added that allowing the major construction projects to be delayed further by manpower shortages would only make the problems worse in the years ahead.
The Council of Labor Affairs suggests that the other private companies could tackle the problem of labor shortages by adopting various other measures. For example, according to Chen Tsung-shen, director of the council's Vocational Training Bureau, they should seek to improve their working conditions, automate production facilities, switch to technology-intensive businesses, or move their labor-intensive operations overseas. "Only after these measures have been tried, and we still cannot help overcome the labor shortage problem will we consider further liberalizing the import of foreign labor," Chen says.
Beyond keeping a tight reign on labor imports, the government in early December 1990 launched a one-year nationwide crackdown on illegal foreign labor. Targets of the check include foreign nationals who enter Taiwan without valid documents, work here illegally, or overstay their visas. Foreigners discovered and charged with the violations will be deported back to their home countries. Those who report themselves to police authorities before the end of February 1991 will be exempted from paying taxes and fines.
Government authorities have said that the crackdown is intended to protect the job opportunities of local citizens as well as maintain social order. They add that it is necessary for the government to be firm about deporting aliens working illegally in Taiwan, or their presence will surely encourage more foreign nationals to use unlawful means to enter Taiwan and seek employment.
But many analysts believe that deportation alone is not an effective means of reducing the number of illegal foreign laborers. In the last few years the government has deported large numbers of alien workers: 10,000 in 1988, 16,000 in 1989, and more than 6,000 in the first nine months of 1990. Despite these massive deportations, the number of illegal foreign laborers is still growing.
To prevent the inflow of foreign laborers, some analysts suggest that the government act quickly to promulgate the Employment Act, a draft of which has already been sent to the Legislative Yuan for approval. The law would make job brokers who place illegal aliens and employers who hire them subject to three years in prison or stiff fines up to US$11,000. Such a move, they say, would have a greater deterrent effect on the import of illegal workers. – Osman Tseng (曾慶祥) is a senior economic journalist based in Taipei.