Taiwan unions rejoice at pan-blue
win By Mac William Bishop
TAIPEI - Last week more than 17,000 people
gathered throughout Taiwan to protest against the
policies of the Chen administration. They even
threatened to besiege the presidential office and
Legislative Yuan in Taipei and launch a
civil-disobedience campaign and violence if their
concerns were not addressed.
What were these
protesters so upset about? Were they concerned about the
state of cross-strait relations? Were they against the
proposed purchase of US$18 billion of weaponry from the
United States? Were they against the pro-independence
agenda of President Chen Shui-bian? None of the above.
Though all of these issues have been the focus of
demonstrations in the past, the issue that brought
thousands out into the streets last week was pensions
and employment guarantees.
The protesters were
members of the Chunghwa Telecom Workers Union. Chunghwa
Telecom, Taiwan's largest telecommunications firm, is a
state-owned enterprise (SOE) that was, for most of its
47-year history, a state-run monopoly. The defeat of
President Chen and his pan-green coalition in Saturday's
legislative elections has been welcomed by many parties,
from pundits in Beijing to cross-strait investors, but
few were as overjoyed as the unions of Taiwan's SOEs.
Under the Statute Governing the Privatization of
State-Run Enterprises, passed in 1991, the government is
required to implement the privatization of more than 40
of Taiwan's SOEs. Since the statute was passed, 13 SOEs
have become private firms. Of these, eight have gone
bankrupt. There are still 18 SOEs awaiting privatization
in varying degrees. It's little wonder then that
Chunghwa Telecom's workers are so bitterly opposed to
privatization. But though the union may feel inclined to
celebrate the opposition's victory on Saturday, when it
comes to privatization, it probably does not make much
of a difference which parties hold the legislative
majority.
Iron rice bowl The statute
requiring the government to implement SOE privatization
was, after all, passed by pan-blue's Chinese Nationalist
Party (Kuomintang, KMT) administration in the early
1990s, when Chen's Democratic Progressive Party (DPP)
was still a decade away from achieving power. The
problem with the state-run firms was then - as it is now
- that they are hugely inefficient, uncompetitive
throwbacks to an era in which Taiwan had a centrally
planned economy. With massive labor forces - overpaid
workers who enjoy the status of civil servants, and who
are therefore virtually impossible to lay off -
state-run firms have become the latest example of what
is called in Chinese the "iron rice bowl": a cushy
government job with little accountability or
responsibility.
For example, Taiwan Tobacco and
Liquor (TTL), another state-run firm, spends nearly 40%
of its sales income on overhead. Of the company's 7,000
employees, more than 200 earn salaries over NT$2 million
(US$61,700) per year. Despite such obstacles, TTL is one
of the few SOEs that have been able to make a profit in
recent years. This year, the firm forecasts it will make
a pre-tax profit of about NT$10 billion. All state-run
firms have powerful labor unions as well as protected
working conditions, benefits and salaries. This has left
the firms with bloated workforces that often have more
influence than the companies' executives in determining
company strategy.
It has also led to some rather
comical situations. Taiwan Railway Administration (TRA)
workers decided on a walkout last September on
Mid-Autumn Festival, one of the busiest travel days of
the year. The TRA union, the Taiwan Railway Labor Union
(TRLU), thought that creating chaos on this important
holiday would provide a dramatic demonstration of their
opposition to the TRA's proposed privatization. On the
appointed day, more than 8,000 workers went on strike.
Having predicted widespread disruptions in the island's
transportation system, the union's leaders were dismayed
when not a single train in the country was delayed or
overbooked. According to some observers, the trains
actually ran more smoothly than usual.
One would
assume that such a pitiful demonstration would have put
the privatization nay-sayers on the defensive. But such
is the power - and audacity - of the SOE unions that the
TRLU quickly declared victory, saying it had taken the
"necessary steps" to ensure that the country was not
inconvenienced by its strike, out of its concern for
"social cohesion". Another strike planned for Lunar New
Year in February this year was later canceled. The most
bizarre aspect of the TRLU's labor action is that in the
end, most Taiwanese supported the union. One traveler
said at the time that he would only have thought the
union was being unreasonable if the trains had been
late. This kind of cognitive dissonance is reflected in
the government's policy of protecting the SOEs at every
opportunity despite its stated goal of seeking
privatization and greater accountability and efficiency.
After last week's protests by the Chunghwa
Telecom Workers Union, the executive vice minister of
transportation and communications, Tsai Duei, noted that
it would cost taxpayers NT$60 billion next year if the
union's demands for job guarantees were met. Tsai also
said there was simply no legal basis under which the
administration could meet the union's demands as the
privatization statute was explicit in its requirement
that the SOEs must become private firms - with the
leeway to fire staff and cut salaries.
However,
this does not mean that any government official is going
to stand up and take personal responsibility for
implementing the statute. Taiwanese officials have
become quite adept at passing the buck when it comes to
privatization. Even the island's highest officials have
not been immune from this. In February, President Chen
backtracked on his previous commitment to privatization
and told the Taiwan Confederation of Trade Unions, an
umbrella group representing SOE unions, that he would
not "privatize for the sake of privatizing". What this
meant in practice was not clear, but it was hardly the
ringing endorsement of economic liberalization that many
foreign investors had hoped for.
Premier Yu
Shyi-kun also backtracked on the administration's
commitment to privatization last month. On November 2,
Yu told reporters that the privatization of state-run
China Airlines (CAL), Taiwan's largest air carrier,
should only occur within the context of "Taiwan's
diplomatic predicament". The China Aviation Development
Foundation, part of the Taiwan Ministry of
Transportation and Communications, owns 71% of China
Airlines. The foundation had promised to sell 36% of the
airline this year, and the remainder next year.
This plan now appears to be on hold, with the
foundation's chief secretary, Lin Chun-cheng, saying the
problem with initiating a share offering at present was
that CAL's share prices were too low to consider a sale.
CAL's shares closed at NT$18.40 on Monday and Lin said a
reasonable price for the government to consider selling
CAL shares was NT$20.
In the run-up to the
legislative elections, there has been little political
will to enforce the privatization statute in the
executive branch of government and little desire to
discuss changing the statute in the Legislative Yuan. So
it appears that the unions have been winning the
privatization debate.
But with a projected 2005
budget deficit of NT$292.9 billion (US$9 billion), the
government may have no choice but to take action and
start selling the remaining SOEs. Now that the
legislative elections are over, politicians also have
less incentive to cave in to the demands of the unions
and more incentive to bow to pressure from foreign
investors interested in accessing the opportunities
offered by purchasing parts of Taiwan's SOEs.
Mac William Bishop is a journalist
based in Taipei. Comments or queries may be sent to
mwbtaiwan@hotmail.com.
(Copyright 2004 Asia Times Online Ltd. All
rights reserved. Please contact us for information on sales, syndication and republishing.)
