Labor Unrest and the Taiwan Economy

One of the new government's biggest headaches has been labor-group dissatisfaction over proposed work-week and holiday policies. Photo: CNA
One of the new government's biggest headaches has been labor-group dissatisfaction over proposed work-week and holiday policies. Photo: CNA

Senior government officials have cited Taiwan’s recent labor unrest as their biggest short-term economic problem, saying that continuing controversy could undermine investor confidence. Recent ruckuses in the Legislative Yuan suggest that an immediate solution is not in sight. In late October, Kuomintang (KMT) lawmakers sided with labor groups, waving placards and occupying the Speaker’s podium in a bid to block amendments to the Labor Standards Act introduced at the directive of President Tsai Ing-wen in early October. A few weeks earlier, KMT and DPP lawmakers had exchanged blows when the draft amendments were rushed through the legislature’s Social, Welfare and Environmental Hygiene Committee.

In addition, thousands of labor activists, objecting to the proposed changes in the law, surrounded the Democratic Progressive Party (DPP) headquarters, with clashes between the police and egg-hurling protesters erupting outside the Legislative Yuan.

The controversies began in January when the official working week for the private sector was reduced to 40 hours per week from a previous maximum of 84 hours over a two-week period, bringing it in line with standards for the public sector). Under the old system, seven holidays were allotted only to private-sector workers to reflect the extra time worked compared with the public sector. For example, laborers would enjoy a day off on Retrocession Day on October 25 and Teacher’s Day on September 28, while public servants still went to their offices. But in line with the reduced weekly working hours, the government late last year eliminated the seven holidays.

Following protests from disgruntled labor groups after President Tsai’s government took office last May, however, the Executive Yuan promised to reinstate the seven holidays – only to have prominent industry groups threaten in July to pull out of negotiations with the government on labor issues. Torn between pleasing business and labor (which the DPP traditionally supports), the government then prepared the current amendments. They eliminate the seven holidays, but the Ministry of Labor justified the move by noting that the accompanying changes in the length of the work week in effect gives laborers an extra six days off per year compared with the past.

The revision would also put the public and private sectors on the same schedule, which is better for the economy. Further, the amendments permit businesses to ask employees to work on one of the two days off awarded each week, although with increased overtime pay ranging from an extra one-third to two-thirds of the average hourly pay depending on the number of hours worked.

Business groups now say they are satisfied with the government’s stance. Still, perceptions remain in certain quarters that the Tsai administration is less business-friendly than the previous government. Economists note that the new government is responding to pressure from voters over stagnating salaries and is trying to improve workers’ welfare. But they caution that if this trend is carried too far, it could discourage prospective investment in Taiwan by both domestic and foreign enterprises.

Son Yu-liam, secretary-general of the Taiwan Labor Front, scoffs at that argument, saying whenever improvements in labor standards in Taiwan are discussed, business always threatens the government about moving offshore. The majority of workers, he says, want two days off without any overtime requirements.

Mark Hsieh, chairman of Synmax Biomedical Co., complains that overtime laws are too restrictive. “Because of the limits on overtime, I will need to add more staff, but the reality is that we simply cannot find enough workers, not to mention the added production costs,” he says. “The government is killing the goose that lays the golden eggs by forcing companies to raise compensation but at the same time reduce working hours, hence productivity,” he says.

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