Along with the transformation of the structure of industry in the past few years, traditional, labor-intensive industries have, one after another, left Taiwan for Southeast Asia and China. Moving offshore has recently become a trend among the high-tech information sector as well. As a result, the problem of unemployment among low-skilled and unskilled laborers is becoming increasingly serious.
The Council of Labor Affairs (CLA) has put forward a proposal to reduce working hours and lower the percentage of foreign labor employed in Taiwan. This, plus measures to reduce energy and water supplies, has effectively kicked industry where it hurts. Several large enterprises -- both TAIEX and TAISDAQ companies -- have considered leaving. In addition, the domestic effects of a sluggish economy and lackluster stock market have caused a local unemployment problem to surface.
The CLA and labor representatives have long believed that foreign labor competes for local labor's rice bowl and that reducing the number of foreign laborers will improve the unemployment situation.
They're not aware, however, of another phenomenon -- one in which foreign labor guarantees job opportunities for local labor. This is because, as a society develops, local labor is ever more eager to avoid many types of jobs that involve heavy, dirty or highly polluting work. It is only the willingness of foreign workers to work hard for little pay, that allows traditional, labor-intensive industries to survive. In fact, if foreign labor numbers were reduced, factories would be unable to operate efficiently -- and local workers would lose jobs.
Another consideration is that weekly working hours have been reduced from 44 to 42 hours. In effect this gives laborers only a 5 percent increase in salary and benefits, but companies must pay additional over-time to workers opting to work over 42 hours a week to maintain productivity at established levels. Companies also incur costs in the co-ordination and transfer of staff for overtime work. Corporate expenditure has therefore increased by 15 to18 percent, eliminating companies profit margins, or even forcing them to operate at a loss. Naturally, labor-intensive industries who have been clinging to their Taiwan roots are unable and unwilling to force themselves to do so any longer. Southeast Asia and China are extending large welcome mats, offering labor conditions that are far better than those that prevail here.
Environmental protection departments have also given industry a lot of pressure. If domestic labor and capital interests cannot arrive at a consensus, businesses will inevitably choose to move out. If moving out creates the hope of getting a second breath and, moreover, if workers receive better treatment on foreign soil, who will want to stick around here, only to get bullied and yelled at? Actually, the true test will come after both Taiwan and China join the WTO next year. When that time comes and Taiwanese products made in China start flowing back into Taiwan, local industries will be completely unable to stem the low-capital, competitive advantages enjoyed by those that have moved off-shore. Be they agricultural products or general consumer goods, cheap Chinese-produced goods will take advantage of our low customs tariffs and come a-knocking.
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