Taiwan seeks u-turn in
cross-strait flow of
factories By Jens Kastner
TAIPEI - Taiwan's Kuomintang (KMT)
government is to boost limits on employing foreign
workers to encourage Taiwanese companies with
factories in mainland China to move production
lines back to the island. Drawing these
manufacturers back to Taiwan is seen as vital to
reviving a floundering economy.
Taiwanese
businesses invested US$13.1 billion in mainland
China last year, and Taiwan's government, in face
of a 0.16% economic slowdown in the second quarter
from a year earlier and unemployment at 4.4%,
desperately wants them to see investment come back
to the island.
As an incentive, it has
agreed that Taiwanese enterprises active in
China and willing to
return may recruit 15% to 20% more wailao,
as foreign workers are commonly called, than local
companies, up to a maximum of 40% of their total
workforce.
Other new investors who set up
a factory in Taiwan and make products under their
own brands, or such that are "regarded as
high-value items in supply chains", will be
allowed an additional 5% to 10% of their total
workforce from overseas.
The opening is to
take effect on November 1 and is predicted to push
up the total number of foreign workers in Taiwan
from the present record high of 440,000 to more
than 520,000.
The government claims this
will not take away jobs from the local workforce
but instead create 120,000 job opportunities for
Taiwanese workers.
"What we are aiming to
do is to capitalize on the recruitment of foreign
workers to increase employment for local workers
and to enhance the nation's competitiveness," said
Lin San-quei, director-general of the Council of
Labor Affairs' Bureau of Employment and Vocational
Training, as quoted by the Taipei Times.
Economists have their doubts.
"To
the extent that this policy encourages an increase
in low-skilled labor demand, it will not increase
Taiwan's chances of improving its long-run
situation," said Ronald A Edwards, an economist
and professor at Tamkang University in Taipei.
"If anything, it may create jobs in the
short run and get the administration through some
politically tough times."
In Taiwan, the
term "3K" refers to jobs that are dangerous,
filthy, laborious - such as in care for the
terminally ill, printing and metal forging - and
are generally taken up by Thai, Vietnamese,
Indonesians and Filipinos. It also covers
positions that involve unhealthy nightshifts.
Taiwan-based manufacturing companies have
long complained that they are unable to increase
production for orders they have received because
the local workforce refuses 3K work.
At
the same time, on the other side of the Taiwan
Strait, Taiwanese businesspeople are faced with
rapidly rising wages in mainland China's coastal
provinces. By allowing more foreign labor, the
Taiwanese government seeks to kill two birds with
one stone.
The government aims to take
things further than just increasing the number of
foreign workers: as of November, they will
apparently be excluded from Taiwan's basic minimum
wage system in certain free economic zones in the
southern city of Kaohsiung.
Local labor
and human-rights groups are up in arms over the
creation of such a dual minimum wage system. From
the purely economic view, there is a very weighty
argument against it - it is almost certain to
spoil Taiwan's ambitions to beat trade rival South
Korea with its own weapon of signing free-trade
agreements with important economies. Potential
partners tend to be averse to opening their
markets to countries that make domestic and
foreign workers subject to different regulations
on wages and working conditions.
The
Taiwanese government owes the local workforce an
explanation, according to Hu Sheng-Cheng, an
economist at Academia Sinica, Taiwan's most
prestigious research institution.
"Is it
that there aren't sufficient local workers for 3K
jobs that are paid for only with regular wages, or
is it that they cannot find them for salary levels
that are 1.5 to 2 times higher, as it should be?"
he asked.
To illustrate his view that it
all comes down to adjusting Taiwan's wages, Hu
referred to a recent media uproar concerning young
Taiwanese who went to Australia on a work holiday
program and revealed the horrors they lived
through when working there in large
slaughterhouses for a year in order to save a few
thousand dollars. "In times of high
unemployment, Taiwanese have been flocking to
Australia for 3K while the number of
overwork-related deaths in the local high-tech
sectors increases because employees seek to push
their incomes a little higher. But the government
tells us they can't find Taiwanese willing to work
in reasonably paid nightshifts," Hu said.
According to Hu, rising wages in China's
coastal provinces force Taiwanese companies
operating there to look for greener pastures, but
having more foreign workers available in Taiwan is
not what will attract these manufacturers back to
their home island.
"Some will move to the
Chinese hinterland and some to other emerging
countries in search for a low-pay environment. But
there also are successful Taiwanese enterprises
that have the ability to upgrade and are willing
to come back," he said.
"The government
must help these with research and development. If
the only incentive is reduced labor cost, they
will spurn the bait."
Professor Edwards
agreed. "Taiwan needs to increase the skill level
of its average worker by encouraging investment in
education and training, not decrease it," he said.
Jens Kastner is a Taipei-based
journalist.
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