The Function of Foreign Workers in the Economy of Taiwan

Those of you who saw yesterday’s Taipei Times may have read a translated editorial by Dr. Alex Jeo (周茂春). Dr. Jeo is described in the article as “a former convener of the social-economic team of the Taiwan Association of University Professors.” I was not able to find the university he teaches for. His editorial deals with the role of foreign labor in displacing local workers. In addition, he links this use of foreign labor to other social ills,

…many college and university students are thrown into a position of unemployment as soon as they graduate, while workers in all age groups are being retrenched in larger numbers. Since it is difficult to find a job at the moment, suicide is increasing among the poor and the sick as a way to escape the hardship of life.

and a huge drain on local currency.

For each foreign worker who earns NT$240,000 per year, an average of at least NT$150,000 is remitted to his or her home country. Thus, Taiwan is losing NT$67.5 billion (US$2.1 billion) in domestic disposable income annually. The total loss since Taiwan began to import significant numbers of foreign workers in 1993 is without doubt an enormous figure. This is an example of how a flawed production-consumption mode can adversely affect government policy.

I have written many posts on the issues related to foreign workers and education. Those who have read them will know I have no doubt Dr. Jeo is correct. While I understand a Taipei Times editorial has limited space, I still think there are other significant problems missed in the commentary.

The foreign worker situation can not be viewed in isolation from ROC labor and educational policies. The number of foreign workers have been allowed to expand for a reason. In this post, I alluded to the control their presence gives to company owners. While I agree this is important, it does not explain the government’s willingness to acquiesce to private sector demand. The comments in that post and also this post, point to a different issue related to the control of wages. And it is there, I think you will see the real argument about foreign labor.

During martial law and the incorporation of schools into military planning, the number of graduates was strictly controlled by the central government. As a result, university graduation guaranteed a more affluent life. The value of education has become diluted as post-secondary education has become more commonplace. While we all know this as common sense, it is not a minor point in Taiwan politics. Authoritarian governments all over Asia have rationalized their control through the argument that Asians are more concerned with affluence than personal expression. As recently as 1995, former Minister of Economic Affairs Li Kuo-Ting, continued to argue that,

The absence in Taiwan of combative labor movement is not due so much to active suppression as to the universality of a demand by all social classes for something other than unionism to represent labor dignity. That something else has been the opportunity to send their sons and daughters to university.

The presence of a labor market that rewards workers better than it rewards university graduates would have been a threat to such a system – as it would be today. No political party in power in Taiwan can hope to maintain power if they let the privilege of Taiwan university education slip below that of common workers. Honestly, what kind of social order could Ma Ying-Jeou (or Chen Sui-Bian, for that matter) hope to maintain if construction workers were making more money than graduates of national universities?

So while I don’t disagree with Dr. Jeo, It is not clear to me what his position on this would be? Right now in Taiwan, if you meet a young woman of ethnic Chinese descent, you can be almost 100% sure she is not a maid or a house cleaner or a babysitter in the home of a wealthy Taiwanese or foreign couple. If you meet a young man of ethnic Chinese descent, you can be sure he is not a laborer on a construction site or a worker on a line in a dangerous factory. In fact, with the high rate of university attendance, you can be sure that many (but not all) of them are students in some form of higher education. And until the MOE’s plan to demand intermediate English skills from all university graduates fell through, we were on the way to a Taiwan where every young Chinese man and woman would be an English-fluent university graduate entering the workforce, or at least a member of the unemployed waiting for a white-collar or supervisory job.

Does this sound like any other overseas Chinese nations you’ve hear of?

November 02, 2008 | Permalink

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I find this a very difficult issue to get my head around. On the one hand, restricting the number of foreign laborers could help boost local wages, reduce unemployment, etc. On the other hand, it might just move more companies overseas to Vietnam, China, etc. then it wouldn’t just be a portion of wages which are withheld from the local economy, but even the corporate profits as well (many business men working overseas keep their money overseas as well for various reasons). The only solution I see as being genuinely beneficial to everyone is to end the practice of treating foreign workers differently from Taiwanese workers. They should have all the same benefits and protections as local workers. And they should be allowed to stay as long as they like. There will be no incentive to hire foreign workers just to depress wages, and they will also contribute to the local economy.

Posted by: Kerim Friedman | November 03, 2008 at 10:16

Kerim, the argument itself makes no sense at all. The logical problem you pointed out is only one of many. In fact, I think it is a purist position on Taiwan nationalism disguised as an argument about foreign labor. What I am curious to know is the place in this argument of an understanding that it means young Taiwanese women will be cleaning toilets and young men will be working around vats of acid as big as a swimming pool.

Posted by: Scott Sommers | November 03, 2008 at 16:18

I think that the entire problem is that the “Republic of China” is not the legitimate government of Taiwan. Hence, the ROC cannot and will not advance and promote government policies that are to the benefit of Taiwan. As you can see from recent news reports, the current goal of the ROC government is merely to promote unification with the PRC.

What is the solution? The solution is for the Taiwanese people to wake up to the reality of their current international legal position. Taiwan does not belong to China, either ROC or PRC. Native Taiwanese people are not correctly classified as ROC citizens.

All relevant legal arguments have been presented to the US Court of Appeals in Washington D.C. and will be adjudicated in the near future. See

Posted by: Roger Q. Insular | November 07, 2008 at 21:45

i think the problem is the difference salary between foreign workers and taiwanese worker,so that many factory will chosse foreign worker prefer taiwanese worker,you see salary of foreign worker only NTD.15.840,otherwise taiwanese worker up to NTD.20.000,
and foreign worker is more capable if they do extra time prefer taiwanese worker.
so my opinion is keep it up to use foreign worker so that would be helping many taiwan factory make product’s to sale around the world.

Posted by: edy chang | November 23, 2008 at 23:48


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