The issue of unpaid leave has once again become a topic of public debate.
Even expert economists seem to find it difficult to determine how bad the economy and how critical the labor situation really are. It is even more difficult to determine whether the issue of unpaid leave will expand from the odd individual case to become a more general problem, which might even deteriorate to the point where it puts the nation as a whole at risk.
Taiwan’s labor market is going through a major paradigmatic shift. Just like in other advanced high-technology economies, traditional labor relations have gone through massive changes as a result of great changes in the industrial economy and social lifestyle attitudes.
The impact of at least three variables have resulted in drastic changes to the variability in the development of business organizations and the continuity of business operating mechanisms.
The first is that the speed of technological innovation on the supply side has increased, which has resulted in a short and steep manufacturing and production learning curve. The appearance and replacement cycles for new products and services are short, which also shortens the replacement cycles for old production technologies, from about 100 years in the more distant past, to a couple of generations, to a few years and now to the current one-year replacement cycle. This has been an astonishing development. The more high-tech and knowledge-intense the industry, the more rapid the changes — lack of innovation means lagging behind and then disappearing.
The second variable is what can be called the “winner’s circle” effect. In the late 1990s, the so-called winner’s circle, a new model of market competition, appeared in markets on the demand side, in particular in high-tech industry markets. In global competition, anyone who made it to the winner’s circle would take all, while those unfortunate enough to remain outside the circle were doomed to disappear. This makes the zero-sum game both the law and the destiny of high-tech industry operations.
This is diametrically opposed to the traditional market competition model, where success or failure would only result in a bit more for the winner and a bit less for the loser, basically leaving a little something for every market participant.
This is why industrial competition on the global market went from the borderless competition of the mid-1980s to the boundless competition in the late 1990s, where everyone went to extremes, regardless of which method they were using. Every participant, companies as well as individuals, is helpless in the face of the ruthlessness of the market.
The third variable is that there are no more constants. With big simultaneous structural and paradigmatic changes on both the supply and the demand side, all industrial and professional life cycles have shrunk, which means that there are no more permanent industries or occupations.
Given this overall trend, the days when a company could win large, long-term orders are over. Short-term and urgent orders are gradually becoming the norm and it is now normal to hire large numbers of workers during peak seasons and lay them off during the slow seasons, while it is becoming unusual to hire workers on a permanent basis.
This is of course the reason why temporary work services with their “atypical employment” are gaining a larger market share.
Today and for the foreseeable future, both the government and the public will have to get used to looking at unpaid leave as the norm.
Bert Lim is president of the World Economics Society.
Translated by Perry Svensson
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