Taiwan’s Elder Care Industry Faces Embattled Future

Insufficient government budget for senior care and a system that overworks and underpays foreign caregivers do not bode well for Taiwan’s elderly as their proportion of the population continues to increase.

A public hearing in Taipei on August 6 addressed a Ministry of Labor (MOL) proposal to temporarily suspend the right of migrant caregivers to transfer to factory work, which is both higher paid and protected by the Labor Standards Act (LSA). 

Representatives of the caregivers aired their grievances, such as lack of time off, pay below the nation’s minimum wage, and having to do work outside their job description. Attempting to deflect concerns, an MOL official argued that for every tale of woe from a caregiver, he had heard similar stories of bad experiences suffered by employers.

At the end of the hearing, Jasmin Bonang-Sanchez of the Domestic Caretakers Union stood and spoke directly to the official. “Sir,” she said, “I wish you good health, and I hope in your old age, you won’t need a caregiver.” 

Since Taiwan began bringing in migrant caregivers in 1992 (largely from Indonesia, followed by the Philippines), the government only once – briefly in the year 2000 – considered extending LSA protection to this ever-growing workforce. That proposal, which would have entitled caregivers to benefits like overtime pay and regular days off, drew such strong complaints from the public and within the government itself that the plan was quickly scrapped.

“People said being a caregiver was a different kind of work,” says Chuang Kuo-liang, senior specialist with the MOL’s Workforce Development Agency. “Working on a machine in the factory might be tiring and dangerous, so it makes sense to restrict that kind of work to eight hours per day. In the home, maybe caregivers aren’t doing much some of the time, just accompanying the elders. So, we found it isn’t reasonable to include them in the same set of laws.”

Chuang recalls the reason why Taiwan started to look to its Southeast Asian neighbors for help with elder care in the early 1990s. “We could see that when there was a demand for a caregiver, it was usually a female family member who took on the job,” he says. “Women were taking up important positions in the workforce, so we wanted to reduce their stress and ensure that they would be able to remain a strong part of the workforce, without burdening them further in the home.”

Home-based care is the usual approach to looking after the elderly in Taiwan, a contrast to the practice of moving them into nursing homes or assisted-living facilities that is common in the West.

Home-based care is the most common approach to looking after the elderly in Taiwan. The high demand for such care at low cost has led Taiwan to seek out migrant workers from Southeast Asia to work as caregivers. Photo: May-God Human Resource

In fact, Taiwan only began to construct and promote senior care homes in the 1980s, at the tail end of the island’s “economic miracle.” However, the facilities were given a bare minimum of government support, a bare-bones budget siphoned from the lowest-earning sources in Taiwan’s taxation structure – the tobacco and alcohol tax and the estate and gift tax.

Wu Jing-ru, a researcher with the Taiwan International Workers’ Association (TIWA), an NGO that advocates for migrant caretaker rights, recalls how the decline in Taiwan’s nursing homes led to a sea change in the government’s long-term care plan.

“Those nursing homes fell into very poor condition,” she says, adding that the government promoted home care by encouraging people to “‘grow old in your own house, grow old in your own community.’ They even said it was traditional Asian values.”

Today around 225,000 foreign caregivers are currently working in Taiwan, providing daily, round-the-clock assistance to the nation’s elderly, according to the MOL. In the future, the ministry says, that figure could rise to as high as 280,000 workers as the number of elderly persons increases and the population as a whole declines. By 2025, one in five citizens will be aged 65 or older, making Taiwan a super-aged society. By then, Taiwan’s population is projected to peak at approximately 24 million, holding steady until the mid-2030s and falling thereafter, hitting 16.3 million by the century’s end.

A decreasing population also means a dwindling tax base from which to fund the government’s Long-Term Care 2.0 (LTC 2.0) program, aimed at assisting Taiwan’s senior citizenry. Wu of TIWA says that the sources of funding for LTC 2.0 are the same as those for Taiwan’s ill-fated nursing homes – the tobacco and alcohol and estate and gift tax.

Even today, the tobacco and alcohol tax is a drop in the bucket when compared to Taiwan’s overall tax revenue. In 2019, the total take from this tax was approximately NT$68.5 billion (US$2.45 billion), against total revenue of NT$2.47 trillion (US$88.4 billion). The estate and gift tax amounted to around half of the revenue accrued from alcohol and tobacco sales that same year.

Meanwhile, the business tax, with earnings of around NT$420.9 billion (US$15.1 billion) in 2019, goes untapped when it comes to elder-care funding in Taiwan.

Wu says that the government should think bigger on this issue, arguing that LTC 2.0 should be provided a regular budget.

For its part, the Ministry of Health and Welfare (MOHW), the agency in charge of the Long-Term Care plans, recognizes the need for greater financing for senior care in Taiwan. According to written responses provided by the MOHW to Taiwan Business TOPICS, LTC 1.0, launched in 2007, began with a budget of NT$2.85 billion (US$102.1 million). By 2024, just before Taiwan ticks over into super-aged status, LTC 2.0 will have a projected budget of NT$60.16 billion (US$2.2 billion).

Article 15 of the Long-Term Care Services Act provides that the funding for LTC 2.0 may come from various sources, including adjustment of estate and gift tax rates, adjustment of the taxable amount of the Tobacco and Alcohol Tax, appropriation from the government budget, a Health and Welfare surcharge on tobacco, donation income, interest income from the fund, “other income,” and tax income from the “Regulations for Allocation and Utilization of House and Land Transactions Income.”

The MOHW response gave details only for the adjustment to the estate and gift tax, noting that the ministry plans to increase the earmarked portion of the tax from 10% to “within 20%.” It remains unclear exactly what adjustment will be made to the tobacco and alcohol tax, what “other income” might consist of, or how much income will be extracted from taxes on housing and land transactions.

When asked about future plans for funding LTC 2.0, MOHW repeated the part of Article 15 stating that funds will be derived from “appropriation from the government budgets.”

Shouldering the burden

As of June 2021, the number of people in Taiwan receiving care under LTC 2.0, including those housed in elder care institutions and those receiving in-home care, came to 357,553, a 3.5% jump from the same period a year prior, according to MOHW.

The task of keeping up with inevitable subsequent leaps in demand in part falls on Taiwan’s employment brokerage firms, those agencies that recruit caregivers in their home countries and place them in employment in Taiwan. These firms, and their counterparts in the Philippines and Indonesia, have a dubious reputation among caregivers and the NGOs that assist them, largely due to the various burdensome fees the agencies charge recruits.

Past reportage on the subject has noted that brokers levy a monthly service fee on caregivers, ranging from NT$1,500 to NT$1,800 per month, regardless of whether the caretaker actually requires anything from the broker.

In addition, many caregivers must take out a loan of between NT$60,000 and NT$80,000 from the brokerage firm to cover the administrative, transportation, and other related costs of getting to Taiwan. That loan must be paid back in monthly installments, the balance steadily accruing interest. 

All these payments are taken from a monthly wage of about NT$17,000, far below Taiwan’s current minimum wage of NT$24,000 per month.

At least one brokerage firm, however, is looking to buck this trend. Roger Hsu has been running May-God Human Resource, based in Taichung, for nine years, placing approximately 250 caregivers in employment. May-God is currently the only agency in Taiwan that asks employers of caregivers to shoulder all fees, including those related to bringing the caregiver to Taiwan and the monthly service fees. It began this initiative in 2017, and in 2020 the Indonesian government requested that Taiwan’s MOL implement the practice across the board – a request that was swiftly rejected.

Taichung-based May-God Human Resource stands out among its peers for requesting that employers of foreign caregivers pay all fees associated with hiring them. Photo: May-God Human Resource

Hsu’s agency faced derision and, he alleges, blackmail attempts from other agencies over his proposition. This harassment caused May-God to temporarily take leave of the Manpower Agencies Association of the R.O.C. As a result, it was left out of the loop when the government provided updates regarding its industry. May-God rejoined in 2020.

To date, says Hsu, getting private employers to ease the financial burden of foreign caregivers remains a hard sell, with many refusing outright. In spite of this, he remains hopeful.

“We have spoken to the government, and we know they support the movement we’re undertaking,” says Hsu. “Maybe they are still wondering if there is a way to make it more peaceful for both employers and the foreign workers. We hope that by sticking to our ideals, we’ll receive support.”

Of course, there is an alternative to hiring a mostly foreign caregiver force: training and hiring such workers domestically. Lin Mi-lan has been a caregiver for an elder care firm, Yong Nian, for the past four years, working eight to nine hours per day and earning a salary of between NT$35,000 and NT$40,000 per month. All the caregivers at Yong Nian are aged 40 and above, with at least one as old as 70, she says.

“I’m already 55, so for me this salary is OK,” she says, but adds that for a younger person, a higher wage would be more appropriate. “It’s a very difficult job.”

The problem is that the higher cost of hiring a local caregiver is passed on mostly to the employer, although need-based government assistance is available. It ranges from simple income tax deductions to a yearly subsidy that maxes out at NT$60,000. According to the MOHW, nearly 88% of families with elderly relatives in institutional care have received some form of government assistance. However, it provided no corresponding information regarding subsidies awarded to those in need of in-home care.

Furthermore, says Yong Nian’s Lin, younger Taiwanese who join her industry tend not to last long due to the stressful and tiring nature of the job. “They retire quickly,” she says. “They can’t have a long career. We hope there will be more young people, but it doesn’t look like it will be like that in the near future.”

June Chiu, owner of Honear Home Healthcare, which places Taiwanese caregivers in private homes and elder care facilities in Taipei and New Taipei City, agrees that not enough young people are joining the industry to mitigate the demand for imported labor. “For every 10 applicants, [only] one or two are young people,” says Chiu.

This situation, she says, is in spite of the subsidies the Taiwan government provides to incentivize locals to join the eldercare field. The money can be used to top up a local care provider’s salary.

“Once a person is hired by my company, the government will pay 18 months of subsidies,” says Chiu. “So for the first six months we get NT$5,000, and from seven to 12 months, we get NT$6,000, and for the last six months we get NT$7,000. It’s like a bonus on top of the base salary that ranges from NT$32,000 to NT$50,000 or higher.”

Though work is virtually guaranteed once the requisite 130 hours of training is completed, and despite the promise of a salary above the national average, few young people apply.

Neighboring competition

Low pay, hefty fees levied by brokerage firms, long hours, and a lack of basic labor rights have led migrant caretakers in Taiwan to form unions and organize protests to raise awareness of their plight. Photo: Martti Chen

Chuang of the MOL notes that his agency is aware of competition from places such as Korea and Japan, countries with their own aging populations, in recruiting and importing caregivers from Southeast Asia.

“As far as we know, Japan is giving NT$80,000 per month, and Korea NT$60,000,” he says. “Though we cannot offer such a salary, we are confident about raising the rights of the workers.” He points to services such as the 1955 hotline, which migrant workers can call to request any needed assistance, and the country’s National Healthcare Service, which can see to it that necessary medical care is provided, something they might not enjoy in their home countries.

Given the more attractive salaries in other nearby countries, Chuang says the MOL is looking to places other than Indonesia and the Philippines to shore up the caregiver workforce as demand increases. While not specifying which countries the ministry is targeting, he says it is looking at those where it can be easily verified that an applicant has no criminal record, where the COVID-19 pandemic is well in hand, and where “the people have habits closer to our own.”

From an earnings perspective, however, the onus of attracting caregivers to work in Taiwan falls squarely on the employers – those families in need of assistance in caring for their aging family members.

Lennon Wong, Director of the Serve the People Association, a migrant worker advocacy and assistance NGO, recently hired a migrant caregiver to look after his elderly father, who has since passed away. Adhering to his ideals of aiding migrant caregivers in securing higher pay and equal rights, Wong says he raised the caregiver’s salary to over NT$20,000 per month. Still, he says, “I won’t say the money compensated for her work or suffering.”

That suffering is compounded by government regulations, which strictly limit any time off taken by a foreign caregiver. “You can only hire a substitute twice a month for a total of six hours. Not even a full day,” says Wong. The cost of the substitute is subsidized by the government, and the employer is responsible for paying only NT$300 for three hours of work. For the caregivers, however, it means that if their employer agrees to hire a substitute, they might enjoy only a few hours of relaxation each month, amounting to less than a regular eight-hour workday.

Small wonder then that foreign caretakers want a change. “A caregiver only gets NT$17,000, but if they work in a factory, they can get at least NT$24,000,” says the MOL’s Chuang, referring to the recent protests against his ministry’s restrictions on the movement of caregivers to factory work. “So, we’re trying to tell the employers that maybe they should raise their salary themselves. It’s natural that workers will choose a higher salary. If they don’t get higher pay, fewer and fewer will join the caregiver industry.”

With no plans to raise that pay from the government side, and with the average yearly salary for the local population stuck at around NT$641,000, according to local job search website 104.com.tw, Jasmin Bonang-Sanchez’s statement at the August hearing seems increasingly prescient. For Taiwanese, the best they can do is hope that in their old age they won’t need the services of a caregiver.