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Living on the Edge

The Age of Precarious Employment


Up to 20 percent of Taiwan's work force is part-time or temp, and more vulnerable than ever in the current recession. Can the government help them? And can they do anything to improve their own competitiveness?



The Age of Precarious Employment

By Sherry Lee
From CommonWealth Magazine (vol. 416 )

Ravaged by the global economic downturn, most of the world's governments are currently focused on boosting employment. Taiwan's government is no exception, having initiated a number of measures, including expanding public works spending, to try to keep this year's unemployment rate below 4.5 percent.

An even more serious challenge faces Taiwan, however, because from north to south, from urban centers to rural communities, there are up to 1 million vulnerable workers engaged in "precarious employment."

Flexible but Weak Labor Market

According to the European Union, "precarious employment" refers to jobs with low wages, unsafe working conditions or environments, and insufficient security. Retail clerks, casual workers, some part-time workers, and the growing ranks of temporary or "dispatched" workers comprise the majority of those considered to be precariously employed.

Figuring the number of precarious workers in Taiwan depends on how they are defined.

According to Taiwan's Directorate General of Budget, Accounting and Statistics (DGBAS), which counts any individual working fewer than 35 hours per week as a precarious worker, the average number of such workers rose dramatically in the second half of 2008 to 760,000 from an average of 510,000 in the second half of 2007. (Table 1)

But if estimates were to include workers with regular working hours but scant job security, such as contract workers, outsourced workers and temps, the total number of precarious workers would balloon to between 1.5 million and 2 million, or between 15 percent and 20 percent of the work force, says Lee Chien-hung, an assistant professor in Chinese Culture University's Department of Labor & Human Resources.

The concept of a more flexible labor market was first proposed by management expert Charles Handy in his book The Elephant and the Flea. He argued that the onset of a knowledge-based economy would lead to increasing numbers of "small office/home office" workers or people who are self-employed.

Andy Yang, general manager of executive headhunter Ozific International Career Consulting, says the more flexible labor market has given job seekers a wider range of options that allows them to find a suitable job that caters to where they are in their lives, their physical and mental capacities, and their family and economic situation.

But while the flexible labor market may indeed possess several advantages, it also has its downside. The world economic recession and a decreasing number of job opportunities have created a buyer's market, forcing many job seekers into the flexible labor market to join the swelling ranks of low-income precarious workers.

For this group of vulnerable workers, wages and benefits are often squeezed, especially during tough economic times.

The DGBAS found in a survey that the average income of precarious workers is only 47.6 percent that of full-time employees. Of the 250,000 part-time employees who form the single largest segment of this non-standard worker group, 46 percent do not have labor insurance.

This precarious worker tempest has even extended from blue-collar to white-collar jobs and is growing at a rapid rate.  

Many white-collar service jobs, such as bank tellers, 24-hour customer service agents, and administrative secretaries, are now being outsourced. Some scholars estimate that high-tech companies in Taiwan's science parks outsource about half of their tasks, with only their production lines and design, marketing and sales departments staffed in house.

More Vulnerable in a Recession

The temp revolution is nothing new. It was launched by American and European companies years ago to reduce their operating costs, but Yang believes the practice has been magnified by the global economic downturn.

According to Mao Chen-fei, president of the Taoyuan County Confederation of Trade Unions, which has 60 member organizations and represents 20,000 workers, the latest trend is for companies to encourage, and to some extent even coerce, middle-aged and older employees to accept preferential early retirement packages and then rehire them as contract workers. The practice, in effect, allows companies to hire their most experienced workers at half the cost.

Chih-yu Cheng, a professor in National Chengchi University's Institute for Labor Research believes that the current economic slowdown has made more companies aware of the "last in, first out" advantage of flexible manpower, which they are using as a tool in these difficult economic times.

Long resistant to flexible labor practices, the public sector has joined the private sector in expanding its reliance on precarious workers. An estimated 41 percent of the work forces of Taiwan's state-run enterprises are now temp-agency employees.

Flexible labor markets are not only widespread in Western economies, but also increasingly commonplace in nations neighboring Taiwan, such as Japan and South Korea.

In response to the 1997 Asian Financial Crisis, Korea enacted laws that permitted short-term temporary or outsourced hiring, making it easier for companies to hire workers. Japan undertook similar measures in order to rebound from its "lost decade." Part-time workers account for 33 percent of Japan's work force (about 18 million people) and 55 percent of South Korea's work force (about 12 million people).  

Facing the challenge of high unemployment, Taiwan's government has begun to consider the Japanese and Korean examples. San Gee, deputy chief of the Council for Economic Planning and Development, believes that in comparison to those two countries, "Taiwan's rapidly rising unemployment rate reflects the insufficient flexibility of the local labor market."

Becoming a "Part-time" Country

Two years ago, Japanese broadcaster NHK produced a series called "Working Poor – A Disease Eroding Japan." It described how because of the economic restructuring and division of labor imposed by globalization, 4 million Japanese households were unable to enjoy good lives no matter how hard they worked.

Taiwan may be facing a similar fate. The number of long-term unemployed (defined as being out of work for over a year) rose from 62,000 to 84,000 from the beginning to the end of 2008, the biggest one-year climb in the past decade, according to DGBAS figures. Middle and long-term unemployment (being out of work for 27 weeks or more) rose from 137,000 to 182,000 over the same period (Table 2).

In his research on labor issues, Chinese Culture University's Lee has even come across quite a few super long-term unemployed who have been out of work for more than four years.

"Long-term unemployment is already occurring. The government and public opinion are overlooking this more than anything else," Lee warned, suggesting that if the government does not move even more quickly to reshape Taiwan's industrial structure, an increasing number of workers will be pushed to the fringes of the labor market.

This group of people is the most likely to fall into poverty and become society's marginalized class.

According to the calculations of labor groups, a worker needs to earn NT$23,870 a month to support a household's minimum living expenses. But there were 1.138 million people in Taiwan last year who were making less than NT$20,000 per month, DGBAS figures show. With unemployment on the rise, an even greater number of people are expected to fall below the poverty line.

Taiwan's Youth Shy Away from the Challenge

Aside from older workers, the biggest segment of the population feeling the impact of the trend toward precarious employment is Taiwan's 20-30 year-old age bracket.

Huang Jing-wen, a 27-year-old graduate of Soochow University's Department of Social Work, provides a cautionary tale for many young job seekers. She landed a full-time job with a social welfare group soon after graduating two years ago, but the group's financial woes forced it to let her go after just five months on the job. She then submitted dozens of resumes to prospective employers but in the end was only able to find a part-time job at a fast food restaurant. Living on NT$7,000 per month in wages not only distracted her from looking for full-time work but also left her worried about her ability to simply survive.

"I never expected I would be out of work for a year. Originally, I was confident, but I grew less assured over time of the types of jobs I could do," Huang says.

"I'm beginning to feel scared of interviews, even panicked. I interviewed for many jobs, but I was not hired. Some of those who interviewed me even told me, ‘You look like you don't have any confidence – how can anyone else trust you with a job?'" Huang says, admitting that her negative experiences have sapped her will.

She is even wondering whether she should apply to graduate school to avoid the despair of unemployment, or continue battling it out in the weak job market.

Huang's experience is not an aberration. Taiwan's youth comprise the population segment with the highest unemployment rate (Table 3), a rate that is rising rapidly.

Chen Po-chien, the executive director of the Youth Labor Union, which is dedicated to protecting the rights of young workers, says most employers today want to hire individuals who have already been trained, and generally require applicants to have one to three years' working experience. Graduates without work experience who have trouble finding a job tend to return to school, but that only postpones their confrontation with the competitive job market.

Unemployed Youth Hurt Social Stability

Long ensnared in the uncertainty of short-term employment, Taiwan's youth seem afraid of growing up and are scared of getting married or starting a family. In Europe, timidly unambitious youth are already challenging social stability.

Minister of State Jin-fu Chang grows pensive when talking about Taiwan's unemployed young adults. "We are worried that there aren't enough job opportunities and that too many young people without work will lose their will and give up. Some households make it through; some don't."

The fear among young adults of facing up to the job market has contributed to two trends at universities. One is the tendency in recent years for students to graduate late, avoiding the unemployment lines or low pay. The other is that some students come to believe that a diploma is worthless, and they take a break to support themselves. Ministry of Education statistics show that in the past few years, the percentage of university students taking time off from studies or completely dropping out has risen from 9 percent to 11.5 percent. (Table 4)

The Government Cannot Sit on the Sidelines

During this wave of rising cyclical and even structural global unemployment, few workers have tried on their own to adjust their values to survive. The vast majority of precarious workers are waiting for the government to provide a stable long-term employment environment.

The main theme of the National Affairs Conference held by the opposition Democratic Progressive Party and Taiwan Solidarity Union on Feb. 21-22 was "unemployment." DPP chairwoman Tsai Ing-wen warned stentoriously, "The biggest crisis today is unemployment and hidden unemployment. It has become a tinderbox ready to explode."

The government has introduced a spate of job-creation measures since November, most of them emergency short-term plans. But can they solve the long-term unemployment problems facing Taiwan's workers, and if so, how?

Yet long-term unemployment is not the only challenge facing Taiwan. Precarious workers, with their low wages and lack of security, comprise an economically disadvantaged group not reflected in unemployment figures.

Taoyuan County Confederation of Trade Unions chief Mao observes that Taiwan's government only inspects the working conditions of about 10 percent of the work force, and only 20 percent of workers belong to unions. The test for the government will be to see if it can provide a last line of legally mandated protection to the precariously employed.  

In this era of the flexible labor market, ensuring that workers can enjoy the benefits of a flexible job without being sucked into a world of low wages and poor working conditions requires new thinking and new policies. Only with innovative ideas can Taiwan face the massive social challenges posed by the brewing storm of long-term joblessness and precarious employment.

Translated from the Chinese by Luke Sabatier