Root Cause 3: The Impotent Bargaining Power of Labor Unions

Employer behaviors cannot be the whole story of this complicated problem of salary stagnation. Another root cause we identified in our studied event is the weak negotiation power of Taiwan’s labor unions. In this section, we elaborate about how the the inability of Taiwan’s labor to defend their rights have the severe impact on salary growth.

Labor unions are organizations that unite labors. The organizations’ ability to defending their rights against the authorities and capitalists hinges on labor’s self-recognition as a labor and the self-recognition of the necessity of labor union. With no shared identity, the labor union formed under regulation or governmental administration is unable to give full scope to its function. Conversely, even with the fact that the labor union is not recognized, leading to limited legitimacy, if the labors are to unite, the labor union can be strong enough to direct the progress of labor related affairs.

Under global capitalism, this inherent deficiency of Taiwan’s labor union was not only unable to support labors, but escalated the seriousness of the stagnation of salary growth. Dysfunctional execution of the regulation, the lack of labor collective negotiation, the inefficiency of labor unions, and the dilemma between labor’s well beings and corporation’s competitiveness serve to set Taiwan’s labor union into dire (謝創智，2010).

For long time, Taiwan has been accustomed to government-regulated type of labor and capital relation (謝創智，2010). The government established labor regulation laws, labor insurance laws and the like, to decide the work conditions and well beings of workers such as average work time, minimum wage, and retirement. Labors themselves are used to

39

expect governmental regulations to protect them from being exploited, making most labors lack the ability to protect their own right by collective negotiation (謝創智，2010).

As mentioned above, Employers who are locked in fierce competition in the industry deter the labor wage to remain competitive. Under this situation, labor union should have been able to reject unfavorable package provided by the employers through collective negotiation. However, due to the dysfunction of Taiwan’s labor union, labors can only accept what is determined and offered by the capitalists. 林良榮 (2011) pointed out that Taiwan’s labor union has the characteristics of factory labor unions: lack of collective strength, lack of strong labor class consciousness, and strong state-corporatism labor and capital relation. The collective strength of labor union and labor union development are limited accordingly, which is detrimental to salary growth.

The importance of powerful labor unions in this regard is significant when one conducts a cross-country analysis because it is widely accepted that Taiwan and South Korea are at the similar stage of economic development and provide similar products to the global supply chains, salaries in the two countries should stand at the similar level.

Therefore, when Taiwan encountered the studied event, South Korea should have witnessed the same event. Whereas, the fact is that South Korea does not have such issue.

Through the retroductive inference upon why this did not happen in South Korea, our analysis highly suspects that the effectiveness of labor union between the two countries can explain the reason.

In Taiwan’s labor-related regulation, the labor unions have been playing the role as the ruling party’s political machine. (Note: the labor union strike of China Airline in June, 2016 is outside of our studied event; thus, we do not provide any claims on this issue.) Like what has been said by Taiwan Labor Front, Taiwan is similar to the countries of the Third World that the policy has focused on developing the economy. Worrying that those powerful labor unions may undermine local favorable investment environment that provides low wage incentives, the authorities has often intervened in the relationship between labors and the employers, sacrificing the right of labors and the autonomy of the

40

labor unions. What’s more, Taiwan’s economy is two-folded: state-owned private company and small and medium enterprise. Those existing labor unions were assisted by the authorities through different incentives, so they did not function to support the labors (茆昔文，2008：54).

Unlike Western World that went through labor unrest suppression, tolerance, acknowledgement, and integration of the labor union development, Taiwan’s labor union development adopted the policy of “include in order to exclude”. This policy allowed the public servants from the ruling party to take part in the business of the state-owned private companies, national labor unions, regional industrial labor unions, craft unions to foster pro-government labor unions and prevent some other establishment of autonomous labor unions. Therefore, Taiwan’s labor unions have long lacked the autonomy and are pro-government and capitalist organization. Not until Taiwan’s martial law ended did the labor awareness arise. But, this awareness was only limited to some industrial labor unions. Most craft unions did not function to fight for labors’ rights but focus on some environmental issues, discouraging the development of rift unions (茆昔文，2008：54). Taiwan’s labor-related law is much like regulations for the labor unions’ management rather than the protection law for the labors. More important, many decision makers of the labor unions were also the employers themselves, making the the management of the labor unions only the agents who work to collect not only both labor insurance and health insurance fees, but membership fees and other administration fees to be used as the fund for maintaining affluent (茆昔文，2008：55).

Until the amendment of Labor Union Act in 2011, Taiwan’s labors and capitalists’

relation is only regulated by the government. Labors have been long not aware of uniting themselves to negotiate with capitalists, let alone to arrange labor unrests. Consequently, when the amendment of Labor Union Act is finally in place, members of labor union do not even aware to utilize their collective bargaining power. This can be an action that takes time to be concretized and make it self a norm to Taiwan’s labor union culture and attitude.

41

From the standpoint of critical realism, the option to freeze employees’ salary growth acts as the triggering factor of employers’ power to cutting wages. Given the option, South Korean companies such as Hyundai, Samsung Electronics should have taken this option as a capitalist. They can maximize the stockholders’ equity and offer bonus, neglecting employees’ benefit. Whereas, they cannot because their labor unions serve to balance the wage negotiation system between salary payers and receivers. The powerful labor unions serve to be the countervailing factor that make capitalist’s power of cutting wages only a tendency. That is, the capitalist has the power to lower labor wages, but the countervailing factor of strong labor unions does not allow them to. In contrast, Taiwan’s capitalists in the wage negotiation system are always the winner. They do not have to face the powerful labor unions. Those powerful labor unions with effective collective bargaining power are collapsed after most public companies turned to private ones in the 2000s.

The 1970s-1980s marked the beginning of the rising South Korean labor awareness.

Since then, South Korean labor strikes have happened one after another. Korean labor’s awareness of collective bargaining has implanted deep in labor’s mind. More powerful labor strikes have erupted. More and more independent labor unions were formed. These independent labor unions laid the foundation for the new labor unrest mode. In the 1990s, South Korea also faced the threat of lower wage from the competition posed by next-tier countries. At the time, the government secretly passed the policy of allowing companies to lay off workers that went to labor strikes. The active South Korean Confederation of Trade Unions (KCTU) organized a labor strike with more than 145 thousand labors involved at first and ended in four weeks with more than 3 million labors joined. Consequently, the new labor law was forced to be retreated and amended. Thus far, we have seen how KCTU is powerful enough to overturn the government’s legislation. More than this, in 2000, Korea’s first labor party, the Democratic Labor Party was formed and received more and more supporters. The party has appeals such as shortening work time and expanding public investment to achieve full employment, levying tax on the rich, stopping the privatization of state enterprises, and so on. In 2004, the party got ten seats in the congress. Conversely, there is no similar party in Taiwan’s congress. We do not argue that there must be one

42

similar party be elected in congress. The point here is that Korea no doubt has more powerful labor unions and activities and the awareness of collective negotiation. (夏楚，

2015)

Whereas, in Taiwan, traditionally, the labor unions are formed to act like the executor of governmental legislations that ask employers to provide well-beings to the employees. Basically, Taiwan’s labor union lose the autonomy to exercise its expected function. One of the most serious problems of Taiwan’s labor activity is the lack of labor identity. Because, in Taiwan, labor’s participation to labor union is compulsory, labors have little understanding of the function of labor union and what they can do as a part of the labor union (潘世偉， 2008).

We have seen the difference between the labor unions between the two countries and regard the lack of bargaining power of Taiwan’s labor union as one of the important root causes of stagnant salary. The two countries have development stage, so their salary level should have been close to each other. However, Taiwan’s labor often lacks the labor awareness and does not perceive it as his or her rights to protect their interests against the capitalists, making Taiwan’s labors only to accept the unreasonable packages. We can reason retroductively that if Taiwan’s labor unions were impotent in wage negotiation, then the studied event should be a matter of course. Since Taiwan’s labor union is unable to protect labor’s rights, we have strong reason to believe that the impotent labor union is the cause of our studied event. This is a root cause because it is transcendental and lies underneath the empirical stratum.

43