The Global Economic Crisis brings new Challenges

Related by staff of the Philippines Offices in Taiwan in Taipei, Taichung and Kaohsiung

The global economic crisis that overwhelmed us in the latter part of 2008 and which continued into 2009 presented us with new challenges that involved not only our labour and welfare attachés but which engaged the entire office as we sought to ensure that our Filipino migrant workers in Taiwan were protected to the extent possible and that those that laid off from their work because of the economic downturn either found new jobs or were repatriated back to the Philippines.

Global crisis, local impact

The global financial crisis that started in the US economy in mid–2008 and which built to become the largest global economic crisis in 60 years hit Taiwan more severely than any other country in Asia.

Taiwan is a small economy of 23 million people. Highly dependent on exports for 65 percent of its GDP, these exports plunged by 41.67 percent year-on-year in January 2009 and by 22.27 percent in February. As a result of falling demand for Taiwan’s high-tech exports, the economy contracted by an estimated 8.36 percent in the fourth quarter of 2008 and was expected to decline by a historic 2.97 per cent over the course of 2009. Around 624,000 people were out of work, the highest ever recorded and representing almost six percent of the workforce.

Hardest hit was the manufacturing sector, the foreign exports of which accounted for around 70 percent of Taiwan’s gross domestic product. Because of this, the government began implementing a stimulus programme to boost domestic consumption and prevent the economy from falling into a depression.

Before the financial crisis, the manufacturing industry of Taiwan employed 160,000 foreign workers of which around 100,000 were in the electronics industry. Taiwan electronic factories assemble components for onward export to the US, Europe and other foreign markets. Many of its factories supply electronics component parts to the China mainland, which re-exports them as finished products, such as computers, flat panel screens, televisions and mobile phones to major world markets.

Facing abrupt cancellation of orders, huge maturing debt obligations, cash flow problems and a bleak future in the face of a prolonged downturn, many of those factories started downsizing their operations in order to survive the crisis. Some even opted to shutdown their operations entirely thereby displacing both local and foreign workers. Measures adopted by local companies included the compulsory introduction of flextime, forced leave, abandonment of overtime and, in extreme cases, the lay-off of workers.

Effect on the Filipino community

Among the foreign workers badly affected by the crisis were the Filipino migrant workers (FMW) in Taiwan. Around 63,000 of them worked in different factories and most of them in the electronics sector. Jobs in such factories are considered high-end jobs because the minimum wage is higher compared to the other occupational groups and, workers in factories have, traditionally, enjoyed unlimited overtime work. 1

The total number of Filipino workers in Taiwan per official government statistics as of Feb 2009 was 71,164 of which 25,044 were male and 46,120 were female. Of the female workers, 22,360 worked in households and 23,760 were in factories. Most of the female Filipino workers in the manufacturing sectors are in the electronics industry where they outnumber male workers by a ratio of almost three to one. The average age is below thirty, and all have at least two years of (and many have completed) tertiary education.

Worker displacement in Taiwan started in the mid 4th quarter of 2008 and was almost exclusively from the manufacturing sector. From October 2008 to
31 March 2009, a total of 4,857 FMWs were retrenched from 98 manufacturing companies across the Island. Of this total, a disproportionate number 3,060 (63 percent of the total displaced) were women.

However, during the same period the statistics show that the deployment papers of 5,597 new workers to Taiwan were processed from the Philippines, resulting in a net job gain of 740. Of the new deployments, 3,664 were women of which 1,585 were employed in factories and 2,079 in households.

These numbers suggest that there is a net job loss for women in factories and a corresponding increase in the number deployed for household services. This comes about despite the fact that the Philippines is seeking to encourage the migration of higher skilled workers rather than lower-skilled ones. The demographics of the Filipino workforce is shown in the table below.

Table 1: Demographics of Filipino Workers in Taiwan

As of Feb 09

MALE

FEMALE

Subtotal

Number

% of male

Number

% of female

Manufacturing

23 543

23 760

47 303

Food

1 251

1.76

359

0.50

1 610

Textile/Garments

2 579

3.63

1311

1.84

3 890

Fabricated Metal

3 037

4.27

348

0.49

3 385

Electronics

7 315

10.51

20 230

28.42

27 545

Other Manufacturing

9 199

36.71

1 860

4.03

11 059

Caretaker

436

0.61

21 307

29.84

21 743

Domestic Helper

11

0.02

1 053

1.48

1 064

All Others

1 054

1.49

1 054

Source: MECO, Taipei

Starting February 2009, there was a lull in workers displacement that gave us a breathing space to work on the problem. But there is no assurance that displacements would completely stop as many financial analysts and government regulators predict that there might be a 2nd round of worker displacements in factories if the free fall of exports continues unabated. They likewise predict that the second round would affect more foreign workers since most local workers have been terminated already.

Cautious optimism

When asked about their expectations of the employment outlook in the near term, Taiwanese labour agencies hedge by saying that the situation differs from industry to industry. Those factories catering mainly to the domestic market are doing reasonably well while there are those in the export sector – particularly the electronics and IT sectors – who are in danger of bankruptcy because they are overly dependent on credit. Many of them, if they are to survive are banking on a resurgence of demand by the second semester.

In recent days there have been signs that this resurgence may have in fact begun. There are reports of new rush orders for component parts for various electronic devices including cellular phones and computers. This boost has come about due to two factors: in part it is in response to mainland China’s economic stimulus programme aimed at boosting domestic consumption in China; and in part it reflects the drawdown of inventories in Taiwan’s other markets. All appear to agree, that the situation will need to improve by the final quarter of the year in order to avoid irreparable damage to the economy which may see the closure and relocation of entire industries.

Fortunately, so far, caregivers and domestic helpers have not been affected by the crisis. The pattern of layoffs and new deployments are shown in October and October.

Table 2: Layoff of Filipino Migrant Workers in Taiwan

October 2008–April 2009

Category

Male

Female

Total

Factory

1 797

3 060

4 857

Caretaker

0

0

0

Nursing Aide

0

0

0

Household Worker

0

0

0

Fisherfolk

0

0

0

Construction Worker

0

0

0

TOTAL

1 797

3 060

4 857

Source: Department of Labor and Employment (DOLE), Philippines

Table 3: New Deployments of FMWs in Taiwan

October 2008–April 2009

Category

Male

Female

Total

Factory

1 301

1 585

2 886

Caretaker

0

0

0

Nursing Aide

0

0

0

Household Worker

0

0

0

Fisherfolk

0

0

0

Construction Worker

0

0

0

TOTAL

1 301

1 585

2 886

Source: Department of Labor and Employment (DOLE), Philippines

Conditions of Filipino migrant workers

Those hardest hit by the crisis are of course those who were retrenched, but more particularly those who have worked for less than a year. Taiwan is unique in the sense that while foreign workers are guaranteed the same basic minimum wage as domestic workers, they have to pay for their board and lodging as well as monthly service fees to the local brokers.2 This is in addition to the placement fees charged by these same brokers, which can go as high as NTD 200,000, and is either paid in advance or, more often, recorded as loans. The placement fees, while in principle are not allowed by Taiwan’s Council of Labor Affairs (CLA), are recognized if the worker agrees to it via a side contract.3 Foreign workers tolerate these impositions because they have little choice and reason that with overtime pay (which in many cases amounts to as much as double the minimum wage) they can afford to pay it off.

However, the financial impact on those who have worked less than a year can be severe and many end up with heavy debt burden, since often it takes more than a year for a worker to repay the money they owe to the broker.

While the CLA has guaranteed that foreign workers will receive not less than the minimum wage applicable to their occupational class even if they have not met the minimum number of hours worked stipulated in the contract, it has allowed companies affected by the crisis to adopt flexible work schedules provided workers agree before their implementation.

In these companies, overtime pay has been practically eliminated. Even workers who are still in a job find that they are unable to repay the money they owe without overtime.

Programmes to assist retrenched workers

The Philippine Representative Office in Taiwan maintains fully-staffed labour offices in Taipei in the north of Taiwan, in Taichung in central Taiwan and in Kaohsiung in the south. Each office is staffed by a labour attaché and supporting staff including a welfare officer. These are busy offices at any time and now they have the additional burden of looking after retrenched workers and those in danger of entrenchment. Certainly, in the present climate, most foreign workers are suffering from fear and anxiety over the possibility of losing their jobs.

On the ground, the Philippine labour representatives intervene in any retrenchment action by companies acting on behalf of workers to assure that they receive their unpaid wages and separation benefits due them as well as their return air fare back to the Philippines.

Upon returning to the Philippines, displaced workers are received by the Overseas Workers Welfare Administration (OWWA), which provides a range of services including employment profiling, employment facilitation, both local and overseas, business counseling, skills retooling orientation, and livelihood orientation with the corresponding awarding of Certificates of Eligibility to those who had signified their intention to pursue livelihood projects after their repatriation. Those with Certificates can avail of no-collateral loans of up to PHP50,000 to engage in livelihood activities under supervision from the local OWWA offices where the workers reside.

Patterns of work

Perhaps, the work of our labour attachés can best be explained by outlining a typical working day. For this I am indebted to one of my Taipei staff who explains his day in the following terms.4

“A typical working day of a labour attaché often starts with the phone ringing in the early morning. It is not unusual to be woken with a call from a distressed worker as early as 6:30 am. Typically, the callers are asking for assistance on work related concern. For this reason, even when sleeping I keep a writing pad and pen close at hand. If the call is about a routine matter or simple inquiry, it can be dealt with over the phone by giving advice to the worker. However, often the problem will be more complex and will involve meeting with the employer, broker or third party to solve the matter. When this is needed, I will write down the details of the problem and inform the worker of the procedure that will be followed in dealing with his complaint. Once this is out of the way and after having a quick breakfast, I will leave for the office, which fortunately, is only a few blocks from my residence.

By 8:30 am, which is the official start of our day at the office work, I will have received a minimum of five such calls. Firstly, I will check my e-mail for urgent messages, and then any letters faxed overnight as well as those endorsed by the Office of the Ambassador or Resident Representative. Before I answer the messages and other letters, I make it a point to confer with the Welfare Officer who is next in rank, and who needs to be involved in urgent matters, in logging the status of cases, and in organising field trip schedules.

By mid-morning, this routine work is usually out of the way and I try to complete this by 10:30 am at the latest. By this time, I will have answered the email messages, routed the letters and verified the job orders submitted during the previous day. Now I am free to attend meetings and any legal counselling sessions that have been scheduled for the day.

This takes us to lunchtime. But even here, there is no chance for a break. This is a busy time of day when calls from workers resume. They are also on their lunch break and this is their opportunity to use the phone. Often I take a working lunch at my desk or, if I do manage to slip out for a few moments break, one of my staff need to be on hand to continue to take the calls.

By 1:30 pm at the latest, I am back at my desk preparing for the afternoon schedule. Often this involves preparation for an engagement before the Council of Labor Affairs (CLA), or arranging coordination meetings with other social partners. On those afternoons where there are no scheduled meetings planned, my time will be spent with workers who have come to our office. Sometimes work related problems need a legal solution although we will always counsel the workers to resolve matters amicably if they can before seeking legal assistance. However, sometimes we will be asked for advice domestic problems back home. Afternoons are also the time for hospital visits, inspection visits to worker’s dormitories or a time to conduct rescue of distressed workers. With so many calls on my time, I have to prioritise and justify every action I undertake. Sometimes I will be called upon to attend court hearings or proceedings before the Prosecutor whenever a Filipino worker is involved.

By 5:00 pm I must be back in the office to meet with the Ambassador or Resident Representative in order to brief the latter on the status of the various cases being dealt with, on other vital issues, and explain any new policies of the host government on labour matters that may have implications for the employment of Filipino workers.

My work continues into the evening. Firstly in the office, verifying employment contracts and job orders and seeing to it that the processed documents comply with local labour laws, as well as the rules and regulations of our home office as well as international labour standards for the social protection of migrant workers.

Before leaving the Office at around 6:30 pm, I check with the staff on the welfare of those workers housed at the Filipino Workers Resource Center (FWRC). We need to ensure they have enough food to eat during the week and if their personal needs have been adequately met. The FWRC is operated by the POLO as a shelter facility for distressed Filipino workers who are victims of maltreatment or physical abuse and those that have pending cases in courts or waiting for transfer to another employer.

Even after leaving the office, work-related matters continue to occupy most evenings. Often I receive calls through my mobile phone until 11:00 pm. Often at this time, these calls will come from household service workers, such as caretakers, domestic workers and those working in nursing homes who can only make calls after their in the evening once they are off duty.

Weekends provide little respite. These are special days for meetings with the communities or taking part in other interactive activities such as induction programmes, sports and cultural events, as well as other activities initiated by the Filipino communities. On these occasions, the Ambassador usually joins especially whenever he is invited to grace the affair. The labour attaché likewise, interacts with trainees and trainers of reintegration programs initiated by the Mission or Representative Office to ensure that they are running fully and that the training objectives are clearly meet.

Only after the last event of the day, am I able to return home to rest and to prepare for the next working day. With the onset of the present financial crisis, workers are feeling even less secure than ever and while the pattern of work has hardly changed, there is a new urgency to many calls with workers needing reassurance that their labour officers are available to help them if a crisis occurs.”

Endnotes

1 Minimum wages are guaranteed at NT$17,280.00/mo. for factory, construction, fisherfolk, and nursing aides, and NT$15,840.00 for household service workers and caretakers, even if the prescribed working hours in their employment contracts are not met.

2 Foreign workers pay monthly service fees of NTD1,800 in the first year, NTD1,700 in the second year and NTD1,500 in the third year. The fees are for services such as medical examination, police clearance, etc. In addition, workers pay a maximum of NTD4,000 monthly for board and lodging.

3 Philippine laws regulate placement fees to a maximum of one month’s pay. However, Taiwanese brokers charge placement fees in excess of the maximum through the use of side contracts. The CLA does not provide for the charging of such placement fees.

4 Rodolfo M. Sabulao is presently assigned as Labor Attache’ in the Philippine Overseas Labor Office (POLO) based in Taipei, one of three agencies attached to the Manila Economic and Cultural Office (MECO) which is the Philippine Representative Office in Taiwan.