Compiled by Ed Shepherd

Potted History

Introduction
Taiwan straddles the Tropic of Cancer off the southeast coast of China. Two thirds of the land is mountainous. A spine of mountains down the east side of the island in places fall dramatically into the Pacific Ocean.
The island is 245 miles (395 km) from north to south and about 90 miles (145 km) at its widest from west to east.
Key rivers are chiefly used for irrigation and generating hydroelectricity.
Major hazards are typhoons – averaging three to four per year, often killing people - and earthquakes that rock the island with frightening regularity.

Mandarin Chinese is the official language, but the popular spoken language is Minnanyu from Fujian province, China. Chinese Hakka is another sizeable population who speak their own dialect.
Most of Taiwan’s 22.5 million population is crowded on the eastern plains; Taiwan is one of the world’s most densely populated regions. Because of this, the government promotes late marriage, female labour, and one-child families. 75 percent of the population is urban.

98 percent of the population migrated from China in waves since around 1600.
The rest of the people are Malayo-Polynesian ‘Aboriginals’, though this is denied by many Chinese. They are called ‘hill people’ locally, as that is where they, driven there after the Chinese began to arrive. Aboriginals are among Taiwan’s poorest inhabitants, many migrating to cities to work as unskilled labour.
After four decades of authoritarian KMT rule, Martial Law was lifted in 1987 when opposition parties were legalised amid social unrest.

Taiwan is now developing a liberal democratic political system; Taiwan-born citizens have been increasingly active in politics since the 1980s. Formerly the KMT dominated politics.

Culture
Chinese culture abounds. Troupes of traditional opera artists and puppet shows tour the island regularly, performing alfresco to rapt audiences of all ages.

It is not unusual for scantily clad women singing Chinese pop songs through PA systems at funerals, while the corteges parade noisily playing a variety of Chinese instruments on trucks that are almost invisible beneath floral displays. In the late 1980s the government attributed moral decline to strippers entertaining funerals.
‘ Paper money’ is burned in front of family homes regularly to finance ancestors in heaven.

Education and health
Education, free and compulsory for children aged between 6 and 15, is reputed to be second to Japan’s in Asia.
Around 70 percent of more than 100 higher education institutions are private. Taiwanese suffered from a variety of tropical diseases before colonisation by the Japanese who built treatment plants for water and sewage, largely eliminating this problem; the island now offers health services comparable with any industrialised country.

Military
China’s policy is to invade militarily if Taiwan declares independence. Hence two years’ military service is compulsory for all men; military spending is enormous for a small population, though it fell in 2002 to NT$1.6 trillion (US$46 billion), down 2.3 percent from 2001

Taiwanese-invested companies abroad have a reputation of strict discipline including saluting company officials, attributed by some to military indoctrination.

History
It is not clear when aboriginals arrived in Taiwan; the first westerners to visit were Portuguese in 1590. Dutch and Spanish settlers had established fortresses by 1626. The Dutch expelled the Spanish in 1646 and ruled the island until 1661 by which time many Ming Chinese had arrived fleeing from China’s new Qing dynasty.

Historians dispute whether Taiwan became a province of China in 1886, but Japan colonised it in 1895 at the end of the Sino-Japanese War, holding it until 1945 when it was surrendered to China’s KMT government under the Cairo agreement of 1943.

Surprising the world in 1949, Chinese Communist Party (CCP) troops ousted the KMT to end civil war in China. The KMT army fled to Taiwan and established an unpopular Chinese ‘national’ government under Generalissimo Chiang Kai-shek as president of the Republic of China (ROC). To establish control, the government invoked Martial Law, which was not withdrawn until 1987.

Taiwan’s economy developed rapidly backed by US military and financial aid, particularly after a treaty of mutual defence was signed in 1954.

Until 1971 most countries regarded the KMT government as China’s despite it having no control over the Chinese mainland. The United Nations (UN) swapped recognition from Taipei to Beijing as China’s representative government. Supported by the US, the issue of whether the KMT or the CCP represented China was avoided for over 20 years by using a UN rule to categorise the issue as an ‘important question’, meaning a two-thirds majority of the UN’s General Assembly was needed to transfer recognition. The US government continued recognising the KMT as China’s government until 1979 when it also switched to Beijing, earning the reputation as a traitor by many Taiwanese folk.

The economy was well developed by the 1980s, and a general lack of diplomatic recognition did not disguise Taiwan’s financial success.

Chiang Kai-shek’s son, Chiang Ching-kuo, succeeded him in monarchical style when he died in 1975. Ching-kuo recognised that an alternative to Martial Law was necessary to maintain social stability. He presided over the end of Martial Law barely a year before his death in 1988.
When Ching-kuo died, Vice-President Lee Teng-hui became KMT leader and was the first native Taiwanese president.

Under Lee, government became less autocratic; travel and indirect trade with the enemy, China, was formalised just as China was emerging from diplomatic and economic isolation. This trade and travel, which was strictly forbidden previously, began to flourish indirectly mainly through Hong Kong and Japan.
Lee promoted the KMT line over Taiwan’s position in relation to China (One China policy), but before losing the presidency to the DPP, he began to diverge from the line by insisting that in talks with China over contact between the two sides of the Taiwan Strait, the Taiwanese should have the status of a nation, otherwise China would dominate discussions. Lee now openly advocates independence for Taiwan – angering both the KMT and the CCP.

Although still officially at war, the CCP and the KMT came to an uncomfortable truce, agreeing that Taiwan is an integral part of China, which both governments claim to represent.
Diplomacy was further complicated by the emergence of the DPP, and its recognition by the KMT government in 1987. The DPP promoted independence from China, much to the annoyance of the KMT which had jailed and exiled several DPP leaders. In 2000 the DPP finally won presidential elections. Despite DPP policy, President Chen has not tried to declare independence, but often angers Beijing over the issue.

Government

Taiwan is governed by a constitution first drafted in 1947.
Government departments revolve around the president who is elected for six years by the National Assembly. The president has powers of appointment and oversees all government branches. Much of this work is done through five councils called yuans.
Two prominent yuans are the Legislative Yuan that introduces, amends, and repeals legislation, and the Executive Yuan, which is the presidential cabinet run by a premier who appoints it.
The Constitution also governs provincial and local government. Taipei and Kaohsiung have the same provincial status as the province of Taiwan.
Taiwan is composed of five municipalities and 16 counties.

Economy

Initial economic development was based on the ‘import substitution’ model, using high import duties to protect domestic enterprises from cheaper foreign imports; import tax on cars used to be half the cost of the car in Taiwan. Import substitution was replaced by the ‘export-led’ model of development. The island is dependent for exports on the US, which buys about a third of them. Other major export markets are Japan and Singapore. Most resources are imported from Japan, the US, and Germany.

Manufacturing contributes over one third of gross domestic product (GDP) and employs one third of the labour force. Other key sectors of Taiwan’s market economy are trade and services. Development initially depended on foreign capital, though now there are many Taiwanese entrepreneurs. Over time, light industry gave way to heavy industry, which in turn was overtaken by electronic products.

Taiwan is not rich in minerals, producing about half its energy needs mainly from oil, but the rest is imported. Politicians and businessmen promote nuclear power to be more self-sufficient in fuel, but there is opposition from residents, environmentalists, and fishermen.

Taipei is the national capital of the ROC (technically including China), hosts light industries, and is the key industrial services centre. Kaohsiung is the centre for heavy industries. Taiwan’s deepwater ports are at Keelung, Kaohsiung, and Taichung.

Around 1980, even with cheap imported foreign migrant workers, labour costs in Taiwan could not compete with a second wave of emerging economies and operations increasingly left the island. The Taiwan-owned Pou Chen Group, world No. 1 in shoe production, now employs more than 170,000 workers in China; world No. 1 jeans manufacturer Nien Hsing employs 700 in Taiwan, but over 20,000 in Central America and thousands more in southern Africa. The government, worried that too much economic dependence on China via Taiwan’s investors could lead to political dependence, encouraged firms to invest elsewhere by using economic incentives. For example in 1993 Nien Hsing started production in Nicaragua with over US$370,000 government money.
High-tech companies set up in the Hsinchu Industrial Park, but much of the labour was done by foreign migrants, and the work was not high-skilled – operations differing little from established labour intensive textile firms. Just as a handful of transnational corporations (TNC) like Nike and Reebok dominate global footwear and textile operations, TNCs like Microsoft, Intel, and IBM dominate international computer production – not owning factories or distribution, but via subcontract companies.

Some labour unions believe that economic integration is in fact forced liberalisation of emerging economies. The US forced Taiwan to open markets to US farming products; in 1988 they forced Taiwan to buy turkey meat, which the Taiwanese did not even eat! The value of annual food imports from the US increased from under US$9 million in 1973 to over US$73 million in 1980. But despite large US agricultural subsidies Taiwan’s farmers were forbidden from receiving subsidies.

The financial crisis in 1997-8 did not affect Taiwan much compared to some countries.
Taiwan suffered a recession in 2001, which is the first whole year of negative growth since 1947. Unemployment also rose to rates similar to those resulting from the oil crises of the 1970s.

Liberalisation of trade

The revised Tariff Law of 1971 resulted in falling import taxes throughout the 1980s. Between 1971 and 1989 tariffs were lowered on 16,038 classes of goods and removed from 514 classes, though raised on 603 classes.
Taiwan had three grades of import: importable goods, regulated importable goods, and restricted imports. ‘In 1953 importable goods accounted for 55.2 percent of all goods, regulated importable goods 39.3 percent and restricted goods 5.5 percent. By 1989 there were no longer any restricted goods, and regulated goods only accounted for 2.76 percent of all goods. Nearly all types of goods could be freely imported.’

Since around 1987 laws have been created or changed to allow domestic businesses to operate abroad, and foreign firms to operate in Taiwan. Law changes also allowed the private sector into areas that had been the state’s prerogative, such as vehicle filling stations, bus companies, and airlines.

Copyright, trademark, and patent laws were revised several times following US demands that Taiwan protect US intellectual property rights.

The 1992 Employment Service Act was introduced to regulate recruitment of foreign migrant labour. Widespread unemployment resulted from privatisation; migrant workers are blamed by some workers for unemployment However progressive Taiwanese trade unionists for example those who wrote Jonathon’s Xlation believe that if the issue of foreign workers is to be solved, then the wage discrepancy between local and migrant labour must be reduced; the labour movement should not oppose the importation of foreign labour, but should demand equal treatment for all workers to solve the animosity.

Privatisation

Pressure for liberalisation and privatisation was rooted in alliances between politicians and businessmen. In 1983 Cathay Group chairman Tsai Chen-chou helped found the group of ’13 Brothers’ – Legislative Yuan members. In 1984 after the Banking Law was reformed, the group pushed for liberalisation of the banks. But the idea became highly politicised, and the demand was turned down. Tsai Chen-chou was imprisoned over a financial deal and the 13 Brothers disbanded, but indicated the level of cronyism between politicians and business circles.
In 1989 the Ad Hoc Committee for Promoting Privatisation was established by the Executive Yuan. It drafted a plan to privatise the first batch of state-owned enterprises. Some of the pressure to privatise came from large Taiwanese TNCs like Formosa Plastic that wanted to become a huge petrochemical company via a privatised Chinese Petroleum Corporation. Similarly when the Taiwan Machinery and Shipping Manufacturing Corporation was privatised, Tainan Cement bought it. It resulted in many dismissals, partly because Tainan Cement did not buy it so it could make ships, it did so to speculate on land deals that yielded NT$700-800 million immediate profit.
Like elsewhere privatisation has resulted in large scale unemployment.

Agriculture

About one-quarter of Taiwan is arable. Fertile land and a tropical/subtropical climate encourage rapid plant growth, and Taiwan has exported agricultural products for over two centuries. Farming was the basis for economic development after World War II, but agriculture now contributes around six percent to GDP, and employs around 12 percent of the workforce. Rice is the only grain Taiwan does not import. Fruit and vegetables are produced for domestic consumption and export.

Environment

Rapid industrialisation and deforestation have resulted in environmental degradation. Deforestation has caused land erosion and flooding, and silt deposits are causing problems behind hydroelectric dam walls.
The case involving US TNC, RCA, typifies the attitude of foreign companies and the ROC government towards the environment.

RCA is the US’ biggest electrical and electronics producer. In 1970 it opened factories in Taiwan making TVs and semiconductors, and made a reputation as a model export company. RCA stopped all production in Taiwan in 1992. Then a story of pollution and environmental disregard resulting in a wave of cancer among thousands of workers and people living near an RCA factory in Taoyuan began to emerge. By 1994, the Environmental Protection Administration had established that serious pollution was caused by RCA. Dangerous organic pollutants had been deliberately poured into illegal wells, polluting the water table up to two kilometres away. Thousands of employees are still suffering from a variety of cancers. The cancer rate for ex-RCA employees is 20 to 100 times higher than that of other people. When pressed, RCA spent about US$65 million US$65 million on soil treatment, but nobody they have poisoned has received a cent in compensation (see ALU 39). “It’s the worst case of cancer cluster in the world caused by the high-tech industry,” said Ted Smith, executive director of the Silicon Valley Toxics Coalition.

Environmental protest is still common. Recently the government has embarked on major infrastructure projects involving energy. They include the Fourth Nuclear Power Plant, three naphtha cracker plants, and the Ma-chia and Mei-nung Dams. Environmentalists have found government documents to prove the two dam projects are proposed largely to supply water for the Pinnan Industrial Complex and the Seventh Naphtha Cracker Plant.

Labour legislation

Labour laws arrived in Taiwan with the KMT government in 1945: the Settlement of Labour Disputes Law 1928, the Trade Union Law 1929, and the Collective Agreement Law 1932.
The Labour Insurance Act 1958 was amended in 1995 to incorporate labour insurance funds into the National Health Insurance Programme.

The Labour Safety and Health Law was introduced in 1974 to ‘guarantee’ minimum standards at work.
The key employment law is the Labour Standards Law 1984. It specifies minimum standards in employment contracts covering wages, hours, leave, sick pay, and employment of women and minors.
The Council of Labour Affairs sets the basic wage that was most recently fixed in 1997 at NT$15,840 (US$470).
The DPP administration introduced the Protection for Workers from Occupational Hazards Law in 2001 (giving state aid to victims of accidents at work) and the Employment Insurance Law in 2002 (unemployment benefit).
The standard working day is eight hours, while the standard working fortnight is 84 hours, but with the consent of workers, employers may transfer a maximum of two hours from one workday to another day within a working fortnight.

Overtime (OT) pay not exceeding two hours is paid at not less than 1.33 times basic rates. Two to four hours OT is paid a minimum of 1.66 times basic rates. Maximum OT is three hours per day and 46 hours per month for men; two hours a day and 24 hours a month for women.
Workers with 25 years service for an employer may apply for retirement, or at age 55 if they have worked for the same employer for 15 years. All workers must retire at age 60.
Although the law allows for mediation/arbitration to resolve industrial disputes, most cases are settled by conciliation. Litigation is rarely used as it is (intentionally?) cost and time consuming – in 1990 a worker in dispute with his Tatung employer of 16 years duration went to court to claim compensation, but it took eight years for the courts to make a decision.

Labour

Many workers are in small- and medium-size enterprises, making it difficult for them to organise, hence only a small percentage of workers are actually union members.

Difficulties were worsened under KMT government by rules about what kind of unions and how many of them are permitted. Limiting representation to one union in an industry or enterprise was designed to be employer-friendly – once such a sweetheart union was established or taken over by company ‘yes-men’, an alternative (militant) union was illegal.

Under the KMT, the only national union centre allowed was the Chinese Federation of Labour (CFL). After initially refusing to allow other centres, in 2000 the Council of Labour Affairs legalised the Taiwan Confederation of Trade Unions by reinterpreting the law. Many unions then abandoned the CFL and now there are six union centres.
Craft unions are mostly self employed workers who must be organised if they want social insurance protection as unions are mandated to run insurance schemes. Craft unions now 2,200 outnumber industrial unions by around 2,200:1,100

The government has the right to dissolve unions that disrupt social order – it also decides what social disorder is and whether or not it has occurred.

Providing sick leave does not exceed 30 days per year, workers are entitled to half a day’s pay for each day of sick leave.

A sex equality law, the Gender Equality in Employment Law was introduced in March 2002. It protects women workers in many areas where they are prone to discrimination, including maternity leave, and equal rights to work and pay. This law gives women a legal right to eight weeks’ paid leave around the time of birth. It is quite progressive in that it also allows men to have two days’ paid leave when wives give birth.

Women in firms with at least 30 workers can demand two years’ unpaid leave at any time to nurse a child up to age three. A parent who decides to bring a child to work is allowed two paid half-hour breaks a day to nurse the child.
Firms with more than 250 workers may receive a government subsidy to set up a crèche for the workers’ children.
The law also permits one day menstruation leave per month, and is included in sick leave allowance.
Public companies also have obligations to employ aboriginals – at a rate of one per 100 employees. If the workplace is in an aboriginal region, one third of the workforce must be aboriginal.

It is argued that the laws that were adopted from China are out-dated and over-restrict union organising; they should be amended or abolished. Other laws are completely unsuited to protect workers. For example the law makes 15 years work for the same employer the minimum qualification to a retirement pension, but as it is shown that companies only exist for 13 years on average, most people fail to qualify.

Enforcement of labour law is poor, with few officials to police the vast number of workplaces. At present this situation permits companies to evade payments they should legally make on behalf of workers who are then cheated out of severance pay and pensions.

Labour flexibility is imposed under the pressure of over-production and unemployment. In Taiwan it is identified as affecting four main labour areas: wages stagnate while production increases; working hours are extended or made to suit production while overtime is abandoned and shift systems introduced; automation reduces the labour force, and leads to both deskilling and multi-skilling (not mutually exclusive); flexible industrial relations using short-term employment contracts, and agency labour reduce the number of full time workers – it also involves union busting and large-scale informal labour.

1996 witnessed a high tide of industrial action against enterprises closing down or relocating offshore, as happened at Fu-chang Textiles, Tung-ling Electronics, and the Tung-yang Needle Company.
The government runs schemes for social insurance, health, and pensions funded by labour insurance and health insurance schemes. Workers criticise the systems because they pay twice for similar systems, while employers contribute little or none, as the schemes are not officially acknowledged as welfare systems.

Safety at work

Since 1960 over 50,000 workers were killed and 200,000 permanently injured in industrial accidents. In the 1990s an average 1,500 workers were killed each year; 6,000 a year lost limbs. Taiwan’s industrial accident rate is five to 10 times greater than Japan’s.

Lots more information is available on Taiwan in AMRC’s new Asia Pacific Labour Law Review.