CAL Strikes Augur Changes in Labor Relations

Photo: ©KCS 2017. From Wikimedia Commons.

Labor strife has been a rarity in Taiwan. Most unions have been organized within individual companies rather than across industries, limiting their power. And for years under the martial-law provisions that ended in 1987, strikes were prohibited altogether.

Based on recent developments in the aviation industry, that labor tranquility can no longer be taken for granted. During the Chinese New Year holiday this year, the peak travel season in Taiwan, pilots at China Airlines went on strike and managed to win major concessions from management. The pilots were reportedly encouraged by the success of a walkout by their flight-attendant co-workers three years ago.

The seven-day strike, the first by local pilots, caused the cancellation of 145 flights during the peak air-travel season. It disrupted the schedule of an estimated 26,500 travelers and cost the airline NT$500 million in revenue.

In the end, the airline agreed to ease the burden on pilots on long flights by adding an extra pilot for flights on 10 routes. The change will entail an additional personnel outlay of NT$114 million a year (over US$3.7 million). Also included in the settlement with the Taoyuan Pilots Union was an additional NT$76 million a year in flight-safety bonuses and restrictions on the hiring and promotion of foreign pilots. The pilots pledged not to stage another strike within three and a half years.

The outcome is expected to significantly affect the labor movement and future labor-management relations in Taiwan. It is considered likely to accentuate a trend for workers to organize into broader craft or industrial unions instead of the company or factory-specific unions of the past.

Already in the past several years, craft unions have been formed by such employee groups as hospital-staff physicians, truck drivers, MRT drivers, warehouse workers, and media workers in order to strengthen their ability to negotiate better benefits.

“It’s very difficult to operate a company union, due to the pressure from employers and the concern of employees over their jobs,” says Lin Chia-wei, secretary general of the Taoyuan Flight Attendants Union, which led the 2016 strike of the CAL flight attendants. “Had the flight-attendants’ strike been carried out by the CAL corporate union, it would have failed.”

Before the recent pilots’ strike, the Taoyuan Pilots Union had won the support of over 90% of the CAL pilots in a vote over representation. The union then drew up the demands, formulated the negotiation strategy, and took responsibility for bargaining with management, enabling the pilots to avoid confronting their employer directly.

The success of the two strikes has prompted pilots and flight attendants from other domestic airlines, notably EVA Air, to join the two unions en masse.

Taiwan’s languid labor movement has long been hampered by the dominance of small- and medium-sized enterprises in the local economy. Under the law, workers in enterprises with fewer than 30 employees are not allowed to form a union. As a result, among 550,000 enterprises in Taiwan, fewer than 900, or 0.01%, are unionized. Of Taiwan’s total labor force, in addition, only 5.8% are union members, a far cry from the average 16% among OECD member countries.

Major exceptions to the rule are the powerful labor unions at many state enterprises, which have often blocked the government’s efforts to promote the privatization of those companies. At the CPC Corp., Taiwan, the state-owned oil company, three directors appointed by the labor union serve on the 12-seat board of directors, exercising significant influence on the appointment of ranking managerial staff and decisions on major investment projects.

Despite supposed term limits, some of the labor-appointed board members have served for many years.

“Out of respect for the labor union, the Ministry of Economic Affairs would not reject labor-director candidates nominated by the union, except for cases of obvious disqualification, even if the nomination in principle is at odds with the limitation of two terms,” says Wu Fong-sheng, Vice Chairman of the ministry’s State-owned Enterprise Commission.

In late 2018, the CPC union prepared to hold a vote among its 16,000 members on a motion expressing lack of trust in company chairman Tai Chien. The move was aborted due to the intervention of the Executive Yuan, but Tai eventually stepped down voluntarily, yielding the chairmanship last month to Jerry J.R. Ou, former Director General of the Bureau of Energy.

As an example from the private sector, the giant Formosa Plastics Group holds discussions with its labor unions in the middle of each year regarding pay hikes and bonuses, based on the nation’s economic growth, consumer price index, and the group’s business status and outlook. In 2018, the group raised salaries by 4.63%, higher than 2017’s 3.88%.

To uphold the interests of laborers, the legislature in November 2018 passed the Labor Litigation Act, which will become effective one year later. The law will enable non-union members to benefit from the assistance of regional or national labor unions, including industrial or craft unions, in protecting their interests through litigation.

The legislation also calls for the setup of dedicated labor courts, with the exemption or reduction of litigation costs for labor plaintiffs. Employers will bear the burden of proof concerning the provision of related documents. Except for cases of sexual harassment and assault, potential labor-related litigation should first undergo mediation.

“The Labor Litigation Law marks the first step of judicial reform in the service of underdogs in society,” says Sun You-lien, Secretary General of the Taiwan Labor Front. At present, of the 25,000 labor-management disputes undergoing mediation per year, only a third go through the process of litigation. Employers tend to resort to attrition tactics, expecting laborers to back down in the face of formidable difficulties.”

The Ministry of Labor has also established a mechanism aimed at remedying unfair labor practices. These mainly involve dismissal, demotion, pay cuts, or other adverse treatment against employees for joining labor unions or participating in union activities. In 2018, the ministry received 79 complaints of unfair labor practices, a record high. Of the 44 cases already examined, 29 were validated, 14 ended in a settlement, 8 were withdrawn by the labor petitioner, and 13 are still under screening.

Last year, for instance, the ministry required Far Eastern Air Transport to reinstate, at their original pay grade, five union leaders who had been dismissed for posting a notice that one of the company’s dormitories had failed its fire inspection. The ministry ruled that the act was a legitimate union activity.

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