April 6, 2017 12:00 pm JST

Taiwan business keeps heat on Tsai over labor reforms

Employers object to additional day off, higher overtime pay

Taiwanese President Tsai Ing-wen's administration has faced criticism from businesses over labor reforms.

Taiwanese business leaders have blasted President Tsai Ing-wen's administration over labor reforms enacted last December, in a battle that says much about the demographic changes confronting the island economy.

One of the pillars of the amended labor standards law was a move to a five-day workweek. Employers are now mandated to provide one day of rest in every seven, in addition to a legally required fixed day off each week. Rates of pay for work outside normal hours were doubled, pressuring employers to curb overtime as well as work done on days off.

Critics warn these requirements will dampen customer sentiment, decrease sales and drive up bankruptcies owing to higher labor costs.

Trade groups in services and other sectors where arranging work shifts could become harder have voiced opposition to the changes. The reforms will impact the semiconductor industry, which requires plants to run 24 hours a day, said Morris Chang, chairman of Taiwan Semiconductor Manufacturing Co., the world's largest contract chipmaker.

Workers will suffer from less pay and costlier goods, warned Tsai Lien-sheng, secretary-general of the Taipei-based Chinese National Federation of Industries. There have already been moves among employers to limit overtime even for workers who want to put in more hours, and to pass along higher costs to consumers in industries such as dining and transportation.

The tendency to favor promoting industry over protecting workers remains strong in Taiwan compared with Japan, which is starting to make a high-profile effort to reduce overtime and other burdens on employees. This helps explain why the Taiwanese reforms have drawn a fierce backlash from the private sector.

Yet the pro-business, pro-growth Kuomintang candidate Eric Chu lost last year's presidential election, and not because of his China-leaning stance alone. Tsai of the pro-labor Democratic Progressive Party won a resounding victory by tapping into frustration with a widening, entrenched income gap. Tsai's premier, Lin Chuan, has fired back at Taiwanese corporate critics, saying they do not represent labor.

What is more, the 65-and-older population has surpassed the number of Taiwanese age 14 and younger for the first time, according to a February survey by the Ministry of the Interior. Placing greater store on workers is arguably a sign of the times for Taiwan as an aging population brings a labor shortage.

Some have begun adapting to these changes. Japanese fast-food chain Ringer Hut, returning to the Taiwanese market, opened on Saturday its first new Taipei location, where robots automatically prepare the shop's specialty Nagasaki-style champon noodles. It marked the company's first introduction of the mechanized system outside Japan.

Japan is finding ways to reduce employees' burden and cut labor costs. "All of Asia will face the same problems as Japan," said Takahito Hamajima, head of Taipei-based Synergy Global Management, Ringer Hut's local operator.

(Nikkei)

Asia300

Taiwan Semiconductor Manufacturing Co., Ltd.

Taiwan

Market(Ticker): TAI(2330)
Sector:
Industry:
Electronic Technology
Semiconductors
Market cap(USD): 176,990.29M
Shares: 25,930.38M

Ringer Hut Co., Ltd.

Japan

Market(Ticker): TKS(8200)
Sector:
Industry:
Consumer Services
Restaurants
Market cap(USD): 560.25M
Shares: 26.06M

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