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Current Labor Status and Reforms of
Labor Legislation in Taiwan

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I. Introduction

This paper, entitled "Current Labor Status and Reforms of Labor Legislation in Taiwan," describes major reforms in labor legislation anticipated in the immediate or near future, based upon the most recent analyses of the labor situation of Taiwan, and also intends to present issues facing Taiwanese labor unions in the future and approaches to be taken to address them.

II. Current Labor Status of Taiwan

1. Demographic Structure
In the past 20 years, the population of Taiwan increased from 16,150,000 at the end of 1975 to 19,258,000 as of the end of 1985, and then to 21,468,000 at the end of the year 1995. The population growth rate registered 18.79% in 1975, and dropped to 12.9% in 1985 then to 8.44% in 1995, followed by another downward shift to 7.84% in 1996. This dramatic decrease in the population growth rate impacts the Taiwanese demographic structure; that is, the working population in Taiwan was 61.2% of the total population in 1975, then hiked to 68.5% and to 68.70% in 1995 and 1996 respectively. The total working population increased by 7.5 percentage points during those two decades. The old-age population was 7.5% in 1995 and 7.7% in 1996. Demographic structures show an aging tendency.

(Figure).

1975/ Male/ Age/ Female/
1995/ Male/ Age/ Female/
Unit: 100,000

References:
1. Demographic Statistics by Ministry of the Interior, 1976 and 1988
2. Monthly Statistical Report by Ministry of the Interior, December 1996

2. Labor Force and Labor Participation Rate
In the recent 20 years, the civil population over the age of 15 in Taiwan shifted from 9,712,000 in 1975 to 15,687,000 in 1995, registering an annual increase of 299,000, or 2.48%. In 1996, it marked another rise to 15,932,000, showing a gain of 245,000 in number, or 1.56%. In breakdown, the labor force went from 5,656,000 in 1975 up to 9,210,000 in 1995, registering an average annual increase of 178,000, or 2.4%. In 1996, it reached 9,310,000, marking 100,000 up in number, or 1.09%. The labor force participation rate in 1996 was 58.44%, the lowest mark in the past 10 years. (See Figure 1)

Figure 1. Labor Force Statistical Index
Unit: 1,000 & %

Civil Population over age 15 Labor Force
Year Labor Non-Labor Employed Unemployed Participation
Force Force Rate
1975 9,712 5,656 4,056 5,521 136 58.24
1985 12,860 7,651 5,209 7,428 222 59.49
1994 15,401 9,081 6,321 8,939 142 58.96
1995 15,687 9,210 6,478 9,045 165 58.71
1996 15,932 9,310 6,621 9,068 242 58.44

Unemployment
Year
Rate
1975 2.40
1985 2.91
1994 1.56
1995 1.79
1996 2.60

Source:
1. Data on the employed and unemployed population of Taiwan by Directorate General of Budget, Accounting and Statistics of Executive Yuan, 1984
2. Monthly Statistical Report on Manpower Resources by Directorate General of Budget, Accounting and Statistics of Executive Yuan, January 1997

The labor participation rate of youths decreased from 53.94% in 1975 to 38.46% in 1995, registering a 15% drop. It further declined to 37.40% in 1996. An extended education period is deemed to be the cause of this tendency.
The labor participation rate of adult workers increased from 68.03% in 1975 to 78.19% in 1995, and further grew to 78.60% in 1996. A big increase in the female labor participation rate is considered to have contributed to this. The adult female labor participation rate went up from 38.56% in 1975 to 50.57% in 1985, and reached 60.32% in 1995. A 22 percentage points of increase was seen in 20 years. It further grew to 61.60% in 1996. The labor participation rate of the middle-aged hovered around 60% or so, and that of the old-aged always stayed somewhere below10%. (See Figure 2)

Figure 2. Labor Participation Rate by Age Group
Unit: %

Youth Adult
Category Grand Total
(15-24 years old) (25-44 years old)
Grand Total
 59.24 53.94 68.03
 58.49 49.05 74.03
 58.96 39.78 78.14
 58.71 38.46 78.10
 58.44 37.40 78.60
Male
 77.63 57.03 96.60
 75.47 48.90 96.87
 72.44 38.84 96.06
 72.03 37.93 95.84
 71.13 36.44 95.41
Female
 38.56 51.21 38.56
 43.46 49.16 50.75
 45.40 40.60 59.86
 45.34 38.93 60.32
 45.76 38.25 61.60

Middle-aged Old-aged
Category
(45-64 years old) (over 65 years old)
Grand Total
 60.20 6.97
 60.55 9.74
 60.20 9.68
 60.82 9.79
 60.87 8.95
Male
 86.19 13.15
 82.07 15.72
 82.37 14.38
 82.91 14.39
 82.44 13.05
Female
 27.27 1.36
 34.50 6.36
 37.17 4.04
 38.08 4.24
 39.04 3.98

Source:
1. Data on the employed and unemployed population of Taiwan by Directorate General of Budget, Accounting and Statistics of Executive Yuan, 1984
2. Monthly Statistical Report on Manpower Resources by Directorate General of Budget, Accounting and Statistics of Executive Yuan, January 1997

3. Structure of Working Population
Percentage of people who engage in farming in the working population declined from 30.45 in 1975 to 10.55 in 1995, then to 10.12 in 1996. Those who engage in industrial work out of the total working population dropped from 41.57% in 1985 to 37.49% in 1996 over the decade, and those in service industry showed growth from 34.65% in 1975 to 52.39% in 1996, marking 17.74 percentage points of gain. The transformation of the industrial structure is obvious. (See Figure 3)

Figure 3. Working Population by Age Group
Unit: %

Youth Adult
Category Grand Total
(15-24 years old) (25-44 years old)
Grand Total
 100.00 29.55 46.60
 100.00 21.11 53.70
 100.00 14.50 61.31
 100.00 13.89 61.38
 100.00 13.27 61.49
Male
 100.00 21.80 49.85
 100.00 14.73 55.73
 100.00 10.73 61.59
 100.00 10.43 61.50
 100.00 9.92 61.56
Female
 100.00 45.54 39.95
 100.00 32.25 50.13
 100.00 20.55 60.86
 100.00 19.40 61.20
 100.00 18.46 61.39

Middle-aged Old-aged
Category
(45-64 years old) (over 65 years old)
Grand Total
 23.17 0.69
 23.96 1.24
 22.54 1.64
 23.01 1.72
 23.60 1.64
Male
 27.48 0.89
 27.91 1.61
 25.51 2.16
 25.82 2.25
 26.37 2.15
Female
 14.31 0.22
 17.02 0.55
 17.77 0.82
 18.53 0.88
 19.31 0.84

Source:
1. Data on the employed and unemployed population of Taiwan by Directorate General of Budget, Accounting and Statistics of Executive Yuan, 1984
2. Monthly Statistical Report on Manpower from 1985 through 1995 by Directorate General of Budget, Accounting and Statistics of Executive Yuan

4. Quality of the Labor Force
Education levels of the working population in the past 20 years show the following trend. In 1975, the working population with an education of junior high school or less accounted for 79.80% of total and that with university or junior college education was just 6.00%. However, in 1996, the working population with an education of junior high school or less went down to 43,59%, while that with university or junior college education increased to 22.28%. It is projected that in the year 2000, the working population with an education of junior high school or less will be 3,924,000 (40.4%), while there will be 3,371,000 (34.07%) people with a senior high school education, and 2,425,000 (24.9%) people with university or junior college education. In comparison with the figures in 1996, the number of workers with an education of junior high school or less projects a decrease of 29,000, with an average annual decline of 7,000, while the working population with a senior high school (including vocational school) education projects a 276,000 increase, with an average annual growth of 69,000. Working population with university or junior college education projects a gain of 406,000, registering an average annual hike of 102,000 (4.7%). It is obvious that education levels of the working population is getting higher.(See Figure 4.)

Figure 4. Education Levels of the Working Population

By Education Level 1975t 1985t 1995t 1996t
Junior High School and Less 79.80 63.32 46.21 43.59
High School 14.20 24.19 33.15 34.13
Junior College and Higher 6.00 20.64 20.64 22.28

Source:
1. Data on the employed and unemployed population of Taiwan by Directorate General of Budget, Accounting and Statistics of Executive Yuan, 1984
2. Monthly Statistical Report on Manpower Resources by Directorate General of Budget, Accounting and Statistics of Executive Yuan, January 1997

5. Organization of Labor Unions
The organization of labor unions in the last decade shows the following trends. Unions counted 2,510 units in 1987, with 2,099, 813 unionists and a unionization rate of 34.20%. Among this, industrial unions were 1,160 units, with 703, 526 unionists and a 30.72% unionization rate, and craft unions were at 1,286 units with 1,396,287 unionists and a 36.27% unionization rate. In 1996, the number of labor union units reached 3,700, with 3,048,270 unionists and a 46.58% unionization rate. Of this, 1,190 units fell into the industrial union category with 587, 559 unionists and a 25.35% unionization rate, while craft unions counted 2,422 units with 2,460,711 unionists and a 58.05% unionization rate. Declines in the unionization rate of industrial unions and increases in those of the craft unions are observed. (See Figure 5.)

Figure 5. Number of Labor Unions and Unionists by Type

Number Number Unionization
of Federations
Year of Labor
Unionists Rate
Unions
1987 2,510 2,099,813 34.20 64
1988 3,041 2,260,585 37.58 76
1989 3,315 2,419,664 38.06 87
1990 3,524 2,756,620 43.34 87
1991 3,654 2,941,766 47.99 87
1992 3,657 3,058,414 48.06 86
1993 3,689 3,172,116 49.53 85
1994 3,706 2,277,833 48.86 87
1995 3,704 3,135,875 46.73 87
1996 3,700 3,048,270 46.58 88

Industrial Unions Craft Unions
Year Number Number Unionization Number Number Unionization
of Labor of of Labor of
Unions Unionists Rate Unions Unionists Rate
1987 1,160 703,526 30.72 1,286 1,396,287 36.27
1988 1,285 696,515 29.52 1,680 1,564,070 42.78
1989 1,345 698,118 30.57 1,883 1,721,546 42.79
1990 1,354 699,372 31.30 2,083 2,057,248 50.65
1991 1,350 692,579 29.29 2,217 2,249,187 59.73
1992 1,300 669,083 28.33 2,271 2,389,331 59.70
1993 1,271 651,086 28.51 2,333 2,521,030 61.19
1994 1,267 637,095 27.38 2,382 2,640,738 60.26
1995 1,204 598,479 25.35 2,413 2,537,396 58.08
1996 1,190 587,559 2,422 2,460,711

Source: "Report on the survey of general status of labor unions in Taiwan" by Council of Labor Affairs of Executive Yuan


6. Status of Labor Disputes
The number of labor disputes handled by the labor authorities increased 1,609 in 1987 to 2,581 in 1996, totaling 18,952. The number of people who were involved in disputes grew from 15,654 to 20,082 during the same period. The total number of people involved in disputes during the decade from 1987 to 1996 was 276,716. (See Figure 6.)

Figure 6. Number of Dispute Cases and People Involved

Year Total 1987 1988 1989 1990 1991
Number of Disputes 18,952 1,609 1,314 1,943 1,860 1,810
Percentage 100 8.19 6.93 10.25 9.81 9.55
Number of Disputes 276,716 15,654 24,237 62,391 34,089 12,696
Percentage 100 5.66 8.76 22.55 12.32 4.59

Year 1992 1993 1994 1995 1996
Number of Disputes 1,747 1,856 2,021 2,211 2,581
Percentage 9.22 9.80 10.66 11.67 13.62
Number of Disputes 11,884 37,925 30,526 27,232 20,082
Percentage 4.30 13.71 11.03 9.84 7.26

As to the reasons for disputes, contract-related disputes account for 7,671, followed by 5,183 wage-related cases and 3,419 labor-injury-related cases. These represent the three major causes of disputes. Conciliation was applied to 14,203 cases, and succeeded in 10,142 (71.41%) of the cases. Among these, 1,842 (11.48%) of the cases were disposed of by mediation and mediation succeeded in settling 1,162 (63.08%) cases. Only 4 cases out of this number were settled by arbitration. It is observed that the absolute majority of cases were settled through non-regulatory, conciliation efforts by administrative organizations, rather than by taking legal steps. In Taiwan, labor disputes concerning rights-related matters are predominant. (See Figure 7.)

Figure 7. Number of Disputes by Nature

Category Total 1990 1991 1992
Total 14,086 1,860 1,810 1,747
Labor Disputes Concerning 13,949 1,840 1,783 1,727
RightsLabor Disputes Concerning
122 20 23 18
Working Conditions
Others 15 0 4 2

Category 1993 1994 1995 1996
Total 1,856 2,021 2,211 2,581
Labor Disputes Concerning 1,825 2,002 2,201 2,571
RightsLabor Disputes Concerning
27 16 9 9
Working Conditions
Others 4 3 1 1


III. Reforms in Labor Legislation

1. Expansion of Range of Coverage of the Labor Standards Law
Since it's invocation on August 1st 1984, various opinions on the Labor Standard Law of Taiwan were expressed both by employers and employees. Considering these opinions, the government conducted a comprehensive review of the law and submitted an amendment bill to the Legislative Council for deliberation, but the process at the Council has been slow. However, in response to an incident last year where the Banking Trade Union Federation took a very strong action demanding the application of the Labor Standards Law to its industry, the government decided it was inappropriate to expand the application of the law only to the banking industry as an exceptional measure. This incident prompted a consultation between the Executive and Legislative Yuans on the subject of expansion of application of the Law, followed by a government proclamation in Article 3 of the Labor Standards Law that the Law should be applied to all industrial relations no later than the end of 1998. It also stated, however, that those business or job types which proved to be difficult to apply the Law to might be excluded, provided the total number of exempted workers should not exceed a fifth of the total number of workers. In order to facilitate a smooth enforcement of this regulation on the extended application of the Labor Standards Law, the national labor administrative body phased the process into 3 stages toward the end of 1998 in order to extend it gradually.

2. Promotion of More Flexible Working Hours
Conventional rules of working hours were forced to be revised to justify the expansion of application of the Labor Standards Law. This amendment allows only the employers of business types designated by the national labor administrative body to regulate the working hours in compliance with the following rules, provided a consent by its labor union or a half of its workers:
(1)
Regular working hours can be apportioned to the other working days within a 4 weeks' span. However, the allocated hours to another working day shall not exceed two hours per day. (Originally it was permissible to distribute the working hours inside the span of a week).
(2)
The overtime of workers whose regular working hours reach 10 hours per day shall not exceed two hours per day.
(3)
Two holidays per two week are required.(Formerly, one holiday a week was required.)
(4)
Women's nighttime work is allowed, but facilities with complete safety and health are required. (Formerly, the provisions were more strict.)

In principle, this flexibility applies only to those business types that are newly incorporated under the scope of the Labor Standards Law. But agriculture, forestry, fishery, and stock farming are allowed to apply as exceptions. Those business types that can apply the more flexible working hours mentioned above, however, shall be specified by the national labor administrative body in consideration of their circumstances.
In addition, with respect to supervisors, managers, experts with responsibilities, and workers engaging in monitoring, intermittent, or other special work, labor and management are allowed to determine working hours, regular holidays, leave, and conditions for nighttime work of female employees on a contract basis. This contract is required to be documented and submitted to the competent regional administrative body for approval. However, only the job types approved by the national administrative body are allowed to do this.

IV. Improvement of Retirement Allowance Plans

Retirement plans for workers in Taiwan are stipulated in the Labor Standards Law. In the case of voluntary retirement, workers with more than 25 years of service, or workers over 55 years old with more than 15 years of service at one company are eligible to make a claim. In the case of compulsory retirement, only workers over 60 years old, or those who cannot work because of lunacy or physical disability are eligible to claim. The amount of retirement allowance is determined in accordance with years of service. Under the system, two months worth of average wages per year for service of 15 years or less, and one month worth of average wages per year for service over 16 years are paid. However, this system obviously has some practical weaknesses. First, small and medium sized businesses are largest in number in Taiwan and the survival ratio of companies is low. Average surviving years of enterprises is 13.3 years, and just 10.75% can last more than 30 years. This makes a worker's average service years at one company 8.3 years. Therefore, it is difficult for the majority of workers to satisfy the conditions for claiming retirement allowance stipulated in the Labor Standards Law. In view of this circumstance, in the new retirement allowance plan, the condition to require certain years of service at one company is omitted and workers are allowed to add up service years at different companies to claim the allowance. Efforts to rectify the discrepancy are being made. In the new plan, three different conditions are provided on the right to claim the worker's retirement payment: (1) a lump-sum payment, (2) a monthly installment payment, or (3) a combination of (1) and (2). Those who claim the lump-sum retirement allowance payment are required to: (1) be over 50 years old with more than 15 years of service, (2) have more than 20 years of service, (3) be over 60 years old, (4) be incapable to work because of lunacy or physical disability, (5) be immigrants to foreign countries or have forfeited of Taiwanese nationality, or (6) be dead. Those who claim the monthly installment payment or the combination of a single payment and installments are required to be over 60 years old, with more than 20 years' of paying deposits into the retirement fund, or to have paid deposits equals to or greater than the amount determined by the competent authority. 10 years of monthly installment payments will be guaranteed and if the payee dies during the period, the remaining monthly installments may be inherited. The Bureau of National Health Insurance will be responsible for the administration and operation of deposit collection and making grants from the retirement fund. The Board of Supervisors, consisting of representatives from labor, the employers, and the government, will be responsible for monitoring and inspecting the process. Please note that this bill was completed but is waiting for responses from labor unions, companies, and academic experts at the moment. A finalization process and submission to the Legislative Board for deliberation will follow.

V. Amendment of the Labor Union Law

Since its promulgation in 1929, Taiwanese Labor Union Law was amended 7 times. 20 years have passed since the last amendment was made, May 21, 1975. During these two decades, the political, economic, and social environments of Taiwan have gone through drastic changes. It's society has become heterogeneous, workers have became more aware of their rights, and labor union activities are increasing. The existing labor union law, designed to control unions, has become incompatible with these kinds of developments. In response to the situation, a new labor union bill has been drafted and committed to the Legislative Yuan for deliberation, aiming at more liberalized and autonomous labor unions. A portion of the contemporary labor union law, which stipulates that it is a right and an obligation of a worker to join a union, has been revised to omit the word obligation, leaving the word right only. Under contemporary law, industrial unions organized by area across companies are allowed to organize and admit members only when the legally required membership for an enterprise-based union could not be obtained. The amendment bill omits this requirement. In other words, it allows free organization of industrial unions by area across companies. The new bill also abandons a provision to limit the number of industrial or craft unions to one unit per area, allowing multiple industrial or craft unions to organize freely. However, enterprise-based unions are still restricted to one per company as before. Although industrial, craft and enterprise-based unions in an area may organize industrial or craft union federations, they are required to join a general assembly of union federations in the area. In the amendment bill, the legal requirement on the number of promoters to organize a union is reduced to 20, while 30 organizers are needed in the existing law. Contemporary labor law makes many stipulations as to the details concerning local organizations under a labor union, while the new amendment abolishes all those provisions in order to promote the autonomy of labor unions, and enable them to structure internal organization at their own discretion. At present, dissolution of unions are justified only with such limited causes as (1) insolvency of a union, (2) insufficient membership, or (3) mergers or splits of unions occur, but another cause, (4) resolution at a convention to dismiss a union is added in the new bill, allowing autonomous dissolution by unions. Sections dealing with unfair labor practice pertinent to workers' rights to organize, and exercise of the right to strike are also amended.

VI. Enactment of an Unemployment Insurance Law

In Taiwan, unemployment insurance was mentioned in the Labor Insurance Act , but has not been laid down as a law because the provision in the Act was not specific enough to enact. Immaturity of job placement and job training systems were considered to be the reasons. However, demand for the full provision of unemployment insurance and a job security system intensified as job placement and training measures gradually put in place in recent years. Last year, the unemployment rate went up, companies closed plants, and dismissed employees without paying severance allowance. During this period, demands for unemployment insurance, accompanied by very severe demonstrations, were expressed against the government. In response, the government initiated serious efforts to establish an unemployment insurance system, and completed a bill titled the Unemployment Insurance Act. Taiwanese nationals from 15 to 60 years old, with an employment relationship only, are covered by this unemployment insurance. The insurance premium is 1% or 2% of the insured wage, and is to be paid monthly. Conditions to claim the unemployment benefit are as follows: (1) to have capability and will to work, and not to be voluntary unemployed, (2) to be insured by the Labor Insurance more than two years before the date of severance, and more than one year worth of insurance premium paid after the Unemployment Insurance Act becomes effective, (3) not to be able to get employed for 7 days after having registered at the Public Employment Service Instituted. Those who however are legally dismissed for a violation of labor laws and regulations, labor contracts, or office regulations, or, those who would not accept job offers or job training without a proper reason are not allowed to claim the unemployment benefit. The amount of unemployment benefit is 50% of the average wage insured, and it is divided into two payments a month. When the insured engages in any paid, temporary work during the unemployed period or the unemployment benefit coverage period, the sum of the amount earned and unemployment benefit granted shall not exceed 80% of the average wage insured, and the amount in excess of 80% shall not be paid. Unemployment benefit coverage is 3 months at the maximum per occasion and limited to 6 months in total within 5 years, for those who paid premiums over one year and less than 5 years. For those who paid premiums over 5 years and less then 10 years, the maximum benefit coverage period is 6 months per occasion and a combined payment period shall be up to 12 months during 10 years. For those who paid premiums for more than 10 years, the maximum coverage of benefit is 8 months per occasion and the combined coverage shall be up to 16 months. The unemployment benefit shall be calculated and paid from 8 days after severance.

VII. Conclusion

This chapter summarizes the issues facing Taiwanese labor unions and approaches to be taken to address those issues.
1)
In response to the liberalization of admission to labor unions, labor unions are required to effectively educate workers as to the reason and need to join them. Labor unions should be more active on behalf of workers, as it seems that ideas or principles alone cannot persuade today's generation and it takes actual benefits to inspire them.
2)
With the provisions in the Labor Standards Law to promote more flexible working hours, labor unions' roles become more diversified. In other words, many provisions are found in the Law that allow more flexible working hours only with a consent of a labor union. Labor unions should make decisions in consideration of enterprise-wide requirements. A one-sided way of thinking solely aiming to protect the worker will not serve the purpose of the Law. It is expected to cultivate the knowledge and discernment required to perform these expanded roles.
3)
Organization of a multiple number of labor unions in one area will intensify organizational competition among labor unions in Taiwan, and lead to dispersion of power. Leaders of labor union movements are expected to build up more wisdom and make innovative efforts to solidify the linkage between labor unions.
4)
In Taiwan, labor management consultation system is preferred to collective bargaining system. The government is trying to form a labor-management council under the Labor-Management Consultation Law in order to maintain peaceful industrial relations. Labor unions are concerned that the collective bargaining role of labor unions will be nullified if this system works properly. This represents another issue facing labor unions.