Social Pillar of CSR

6.2.1 Working Culture in the Chinese Communities

In relation to persisting issues of forced overtime and unpaid work, which were detected in Lite-On’s and other Taiwanese factories, it is useful to briefly introduce the working culture of Taiwan. Often, what Western media and society consider as violation of labor standards or exploitation of workers, is accepted as a norm in Taiwanese workplace. Overtime work (often unpaid) is a common feature of corporate culture in Taiwan. On average, Taiwanese people work 20% more than Japanese and Americans, and 50% more than Germans.¹¹⁷ Simultaneously, according to government’s investigation in 2010, 80% of the big high-tech corporations in Taiwan violated overtime laws.¹¹⁸

With the relocation of labor-intensive high-tech industry to countries with cheap labor, the overtime corporate culture has spread abroad via Chinese and Taiwanese managers, as the case of Lite-On’s factories in China pinpointed. In China, the issues associated with working conditions have intensified on a much larger scale due to the massive labor-intensive production. At present, no international law regarding labor conditions exists. Companies are thus left with non-binding standards, such as the CSR Best Practice Principles for TWSE/GTSM Listed Companies in Taiwan.¹¹⁹ The international community hopes that businesses will implement fair practices in their operations voluntarily under the framework of their CSR.

Although Taiwan has shifted from labor-oriented to a service-oriented economy, harsh working conditions and violations of labor law concern both blue-collar workers in factories and engineers. Labor studies in Taiwan signalize that more than a half of Taiwanese employees work long overtime and about 700 000 do not receive overtime pay.¹²⁰ Another survey found that 61.18% of respondents reported their jobs

117 BBC News, March 20, 2012.

118 BBC News, March 20, 2012.

119 Law Source Retrieving System of Taiwan, ROC, 2011.

120 CSR in Taiwan, 2011f.

to likely cause death because of overwork.¹²¹ In 2011, the Council of Labor Affairs confirmed that over 40 people died from overwork, four times more than in 2010.¹²² 6.2.2 Loopholes in Taiwan’s Labor Law

Taiwan’s government does not tend to be supportive in protecting workers’ rights.

The problem of excessive working hours in Taiwan lies in a loophole of the law: the article 84-1 of the Labor Standards Act in Taiwan states that in certain jobs (e.g.

managers, supervisors, etc.) companies may arrange their own working hours, regular days off and national holidays.¹²³ In other words, the employer is free to set work tasks to be completed before the employee may leave his/her workplace. Whilst the article limits maximum working hours to eight hours per day and eighty-four hours every two weeks, at the same time it exempts certain employees from being protected by this law. As a result, Taiwanese companies frequently misuse this law and overwork their employees.

Apparently, compensation lawsuits in Taiwan are lengthy and it is very difficult to achieve settlements. Many times, even though the Council of Labor Affairs in Taiwan determines a person to be victim of overwork, companies refuse to recognize this fact.

Furthermore, penalties for violating overtime laws are relatively small and most employers calculate with a low chance of being checked for labor violations.

Besides frequent unpaid overtime work, unpaid leaves (not covered by labor law in Taiwan) have spread after the financial crisis in 2008 when businesses encountered less orders from their foreign clients. According to informal surveys, this problem was detected at 63 Taiwanese employers with about 33 000 employees in 2011.¹²⁴ Moreover, some employers were also caught requesting foreign workers (who only get the minimum wage) to work overtime while asking domestic workers to take unpaid leaves.

Instead of adopting legal provisions to address the essence of such problems, Taiwan government’s actions are limited to weak announcements and recommendations from the Council of Labor Affairs (CLA). For example, in the case of unpaid leaves, the

121 HR, 2005.

122 BBC News, March 20, 2012.

123 Asia-Pacific Industrial Relations Network, 2011.

124 CSR in Taiwan, 2011b.

CLA announced that unpaid leave should be mutually agreed between the employee and the employer. But given the difference in bargaining power, such announcements remain an empty statement. As for foreign workers being requested to work overtime by their Taiwanese employers, CLA would revoke their permits. Such measure, punishing foreign workers with already limited labor rights instead of punishing employers taking advantage of their relatively better bargaining position, completely ignores the cause of the problem.

6.2.3 Violations of Labor Law in Taiwan

As mentioned earlier, the problem of sweatshop conditions in the IT sector is widespread throughout the entire industry. In 2010, a number of labor issues emerged in the factory belonging to Taiwanese touch screen manufacturer Young Fast Optoelectronics in Taiwan: low wages, high work intensity, forced overtime without pay (up to 100 hours monthly), poor health and safety conditions, hiring of school interns below the age of 16 (it is illegal to employ children below 16 in Taiwan) and paying them less than a minimum wage. A full list of illegalities committed by the company includes a violation of Labor Standards Law (Articles 5, 11, 24 and 32), Employment Services Act (Articles 5, 42 and 47), Labor Union Law (Article 35), Labor Insurance Act (Article 14), Labor Pension Act (Article 14), Employees’

Welfare Funds Act (Article 5), Regulations for Cooperative Education of Vocational High Schools (Article 5) and Criminal Law.¹²⁵ Furthermore, after the workers had formed a trade union, the management transferred some of the members from production unit to cleaning unit. Eventually, over fifteen members of the union were dismissed, while the managers claimed that their production line would move to China.¹²⁶ As Wang points out: “In Taiwan, the attitude of management to trade unions is generally hostile.”¹²⁷

After investigations by Taiwan authorities, the company was accused and fined for some of the above listed labor violations. However, penalties imposed on the company were ridiculously low: 18 000 NTD (about 600 USD) for inappropriate

125 Young Fast Optoelectronics Trade Union, 2010.

126 GoodElectronics, 2010b.

127 Wang, 2005, p. 48.

dismissal of trade union leaders.¹²⁸ Regarding other violations, penalties were also extremely low, e.g. 20 000 NTD for overtime working hours exceeding 100 hours per month and the same amount applying for owing overtime wages.¹²⁹

Young Fast Optoelectronics supplies its products to Samsung, LG, HTC, Google, Qualcomm, Vodafone, Chunghwa Telecom and Taiwan Mobile. Shortly after the labor violations were proven to have occurred in the factories of Young Fast Optoelectronics in Taiwan, Lite-On partnered with Young Fast Optoelectronics to form a joint venture and open a large factory to produce touch panel modules in Huizhou, China. Interestingly, this facility obtained the certification SA 8000 for decent workplace in 2011.¹³⁰

6.2.4 Labor Movement

The labor movement in Taiwan gained more importance as a social movement after the abolition of martial law in 1987. The first labor activist organization was formed under the name of Taiwan Labor Front with the goal “to build a new society without exploitation, where people enjoy freedom and equal access to resources.”¹³¹ More labor organizations were founded later, but no powerful labor social movement has emerged in Taiwan. Many researchers attribute this fact to the traditional Confucian culture of group loyalty, acceptance of hierarchy and docility. But, if the only reason was cultural, how would one explain seeing a staggering number of strikes in Mainland China, Vietnam and other Asian industrialized economies?

There may be other reasons behind the weakness of Taiwan’s labor movement, originating in the repressive rule of martial law and political and economic history of Taiwan after 1949. Prior to 1987, trade unions in Taiwan were affiliated to the KMT Party in a very similar way as they are still affiliated to the CCP in China. All the trade unions of Taiwan were unified under the Chinese Federation of Labor with union officials being simultaneously members of the KMT. The KMT financially sponsored this Chinese Federation of Labor and had the power to dissolve any union that seemed rebellious. In short, the Chinese Federation of Labor served as a KMT

128 The China Post, April 13, 2010.

129 Young Fast Optoelectronics Trade Union, 2010.

130 Social Accountability Accreditation Services, 2011b.

131 Taiwan Labor Front website.

instrument facilitating mobilization of workers and support for KMT during elections.

Until now, member unions of the Chinese Federation of Labor are characterized by close connections to the KMT and are managed by employers with a reputation for exploiting their own employees.

The second reason for weak labor movement in Taiwan is the nature of the Taiwanese economy during the time of martial law. At the beginning of the 1990s, there were about 700 000 small and medium sized enterprises in Taiwan.¹³² These numerous small and medium enterprises were mainly family businesses run by farmers as their additional activity besides farming. Naturally, family ties, which dominated the business sector, did not set a solid base for labor movement. Furthermore, due to the widespread small manufacturing businesses, Taiwanese society did not experience the rise of inequalities (that would lead to formation of a strong labor movement) to the same extent as other industrialising economies did.

Consequently, very few labor disputes (often associated with political opposition against KMT) occurred between 1949 and 1987.

In the early 1990s, the public started to show some discontent with working conditions. Labor strikes and demonstrations became more frequent. The legislation framed in the Labor Standards Law adopted in 1984 did not allow for improvements in salaries and working conditions and the employers continued to evade the payment of overtime rates, bonuses and other employee entitlements. But, in most cases, workers’ struggles against employers violating labor laws ended up being defeated, leaving companies and managers unpunished. Workers commonly lost their jobs because of participation in the strikes. In addition, many labor-intensive businesses started to be relocated to South-East Asian countries and China, where the labor was cheaper and abundant. Consequently, Taiwanese workers have become discouraged from taking any kind of initiative and fighting for their rights. According to a survey conducted in 2005, 89.7% of publicly traded companies in Taiwan established a code of conduct, but at the same time, 69.7% of companies did not have employees’

unions.¹³³ This implies another characteristics of Taiwanese companies: not only are

132 Minns & Tierney, 2003.

133 Ip, 2007, p. 169.

Taiwanese managers hostile to trade unions, but they are also inexperienced with them:

“In the research of Malaysian Taiwan-invested factories, (…) no one company has a trade union in the workplace, because they [Taiwanese bosses] don’t allow it. (…) Most Taiwanese companies would have had no previous experience in dealing with trade unions when they were in Taiwan.”¹³⁴

In 2008, the European Union has launched several projects (e.g. MakeITfair and ProcureITfair) to raise awareness about environmental pollution and labor conditions in the IT sector and to open the discussion between local labor organizations and suppliers. However, local labor associations in Taiwan did not unite to join these Western initiatives. Non-governmental organizations in Taiwan still lack comprehensive projects dedicated to labor issues and thus, the pressure on the government remains without response. Labor movements, although growing in number and becoming more active than before, are still fragmented, weak and in most cases affiliated to political parties.