An Island Paradise with a Cruel Underbelly

This story is based on an interview with a member of the Trade and Economic Office of Thailand in Taipei. While the story is based on his experience with Thai workers, the lessons equally apply to other overseas workers in Taiwan, especially Filipino and Vietnamese.

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Much of my working life as a labour attaché has involved operating in the Middle East. Before my posting to Taiwan, I had served in Saudi Arabia, Kuwait, Bahrain, Qatar and the United Arab Emirates (UAE). Often it proved to be a tough job; Thai and Arab cultures are so completely different to one another and by the time I left the area I thought I was pretty much battle-hardened and prepared for any challenge.

When I heard that I had been assigned to our Taipei Office, I breathed a sigh of relief. This was a culture not dissimilar from our own in many ways and I thought that at last I was being rewarded with a “soft” assignment. How wrong I proved to be!

True, living conditions were good. Taipei is a modern, cosmopolitan city. Despite being very “Chinese” in many ways, it is also a city that is “foreigner friendly”. Most street signs are in English as well as Chinese and the Taiwanese are a friendly and tolerant people, with whom it is easy to get along. They are extremely focused when it comes to business; but they also know how to enjoy life.

I was living in an area of the city that is well known to the foreign community. Within it are the American, Japanese and European schools, fashionable boutiques and department stores as well as a wide variety of restaurants catering to all tastes and budgets. Not more than a five-minute drive away was the northern mountain belt that rings Taipei – Yang Ming Mountain or “Yangmingshan” in Chinese. This is a vast national park that becomes Taipei’s recreational area on weekends and holidays. There you will find plenty of fine walks, breathtaking vistas back over the city or the Straits of Taiwan (depending on which way you faced of course), hot springs and mud pools in which you can relax (the smell of sulphur from the fumaroles that dot the area was never far away) and of course the ubiquitous restaurants which become so crowded at the weekends but which during the week stand there largely ignored and devoid of customers. Yes, if you wanted attentive wait staff, it was best to go mid-week.

All of this was a far cry from some of the more austere places in which I had lived and worked in years gone by and I was ready to settle into what I thought would be an easy way of life.

My contentment and my happiness were both short-lived. There are by our estimates around 90,000 Thai workers living in Taiwan and, without a doubt, I quickly came to understand that the conditions under which they worked were the most miserable and wretched I had ever seen. Only then did I realise that this posting was not a reward for past success but that I had been given my assignment because it needed someone with experience and who was ready for any situation.

A modern success story

Taiwan, despite its political ambiguity, is one of the world’s great economic success stories of the latter part of the Twentieth Century. In the space of 50 years, it has gone from an impoverished colony of Japan (at the end of the Second World War) to a country that in normal circumstances would qualify for admission to the OECD. Taiwan’s economic transformation was built around land reform and while for many years, political activity by the local Taiwanese population was heavily circumscribed, and the Taiwanese (who, for the most part, are people of Chinese ancestry and culture) were able to channel their energies into building economic success. Family businesses of all types sprang from the rice paddies once the land could be used as collateral for business loans. From canneries carrying Taiwan’s agricultural produce to world markets to small family-owned foundries making plumbing supplies for the Walmarts of the world, Taiwan’s variety of small business appeared endless.

Per capita GDP on the island jumped from around USD 200 in 19521 to more than USD 16,000 by 2009. (By 2016 it had reached $22,598 and in Purchasing Power Parity ranked 19th in the world) It was the very first of Asia’s dragons that so many countries (Thailand and South Korea included) have since sought to emulate.

However, Taiwan’s economy has changed over the years. Many if not most of these early businesses have disappeared. They have not collapsed but rather changed location. Taiwan has gone “up market” and is now better known for its computer chips and flat panel screens than it is for wiring harnesses or chrome-plated sanitary ware. With the opening of China’s mainland to enterprise, many small businesses have relocated to China where labour is less costly and where there is the lure not only of continuing to serve export markets but also of China’s billion plus domestic market as well. In fact, the Taiwanese are the largest overseas investors in China’s mainland.

Those small enterprises that remain, especially those that are in manufacturing, are caught in a cost-trap. They can only survive by using low-cost labour and more often than not, this means hiring foreign contract workers. Local Taiwanese do not want these jobs. Most young people are attracted now either to the service sector or, for the more adventurous or those that have little choice, would prefer to work in China.

Indeed, for Taiwan’s younger generation China is a lure for many who want to experience the adventure, if even for only a short time. Besides, for Taiwan’s young men, finding a wife on the mainland may be a better (or at least, cheaper) option than taking a local woman who will undoubtedly be much more demanding in wanting the comforts of life at her disposal.

There are (2009) at the present time around 350,000 foreign workers in Taiwan;2 their presence sanctioned by the Council of Labor Affairs (CLA) that seeks to regulate the market for the benefit of both workers and employees. Since the shucking of martial law more than 30 years ago, Taiwan has emerged as a modern democratic state that seeks to abide by international norms of behaviour despite its anomalous political status in the eyes of many in the the world community.3

Of the Thai worker population in Taiwan, there are more female workers than male and the preponderance of work is in the manufacturing sector where language skills in either English or Chinese are minimal. Many are lured to Taiwan because it is within Asia and because it is perceived to be a modern economy with a predominantly Buddhist culture not too dissimilar from our own. This is true as a generality but for the workers that choose to go there to work, the reality many find is that life in Taiwan is almost medieval.

Exploitation takes many forms

The exploitation of Thai workers begins even before they leave Thailand. Brokers are needed at both the Thai and Taiwan end of the pipe and it is my experience that the cost of obtaining a work contract through a broker is unnecessarily high. My estimate is that, not including airfare or visa fees, the intermediaries take between USD 2,700 and NTD 3,600 from each worker. These estimates are shown in Error: Reference source not found below.4In Thailand, the brokers, mostly based in Bangkok, operate through a network of agents or sub-brokers in the rural areas who identify potential applicants for work and provide the introduction service. The broker may pay a small fee to the agent for the introduction but the agent also charges the worker as well. In my experience, this fee ranges between 3,000–5000 Baht (THB).

Next, the worker must pay the Thai broker that handles the paperwork. This fee ranges typically between THB 30,000–THB 40,000.

Table 1: The burden of broker’s fees

low

High

Thailand

1

Sub-broker

3 000

5 000

2

Agent

30 000

40 000

Taiwan

3

Broker

30 000

40 000

4

Personnel Dep’t

30 000

40 000

Total deployment fee

93 000

125 000

IN USD (approx.)

2 700

3 600

But it does not stop there. There are charges too at the Taiwan end of the pipe and these fees are even higher. Firstly, the Taiwanese broker who is liaising with the employer must be paid. The charges here are similar to those paid to the Thai broker. Finally, and this is perhaps the most outrageous charge; the “personnel” departments of the companies claim a similar fee for handling the paperwork within the company. As far as I am aware, this fee is illegal but has become common practice. Often the “personnel department” will in fact be the wife of the business owner.

Of course, to these charges must be added the cost of visas, medicals and attestation fees plus the cost of the air ticket once the application is approved. It is no wonder that most workers are already heavily indebted before they even leave Thailand.

There is more. Even after arriving in Taiwan, the charges continue in the form of deductions from salary. Taiwan prescribes a legal minimum wage and foreign workers must be paid the same as domestic workers – that at least is in theory. Of course, the minimum wage is so low that few Taiwanese will accept employment at the minimum. By contrast, most, if not all, foreign workers, are paid the minimum wage irrespective of skill level. When I arrived in Taiwan, the minimum wage was set at NTD 15,840 (USD 452 approx.) per month. Later it was increased to NTD 17,280 per month (USD 524) and remained at that level for the bulk of my posting. For a country with relatively high living costs, this is really a paltry amount.

Even so, the worker has to pay an ongoing service fee to the Taiwanese broker, which is deducted from the worker’s salary. Typically, this amounts to
NTD 1,800 per month. There is also a “food contribution” paid to the employer plus worker’s contributions to compulsory social and labour insurance. These contributions are paid to the government by the employer. In total, such deductions amount to around NTD 2,500 per month.

The net amount an employee receives before tax is therefore reduced by around 15 percent because of these deductions (Error: Reference source not found). In addition to these monthly fees, new workers have to undergo a medical check twice in their first year of employment and annually in each subsequent year. These medical fees are also paid by the worker and each medical costs around NTD 1,500.

Table 2: The burden of compulsory salary deductions

Minimum wage (NTD)

17 280

Monthly salary deductions

Broker commission

1 800

Food contribution

250

Social insurance

200

labour insurance

225

Total deductions

2 475

Net wage

14 805

Tax @ 20% of gross

3 456

Net wage after tax (<180 days)

11 349

Tax @ 6% of gross

1 037

Net wage after tax (>= 180 days)

13 768

IN USD (approx.)

406

Then comes the income tax. Taiwan’s taxation year runs from 1st January to 31st December. For those who have been in Taiwan for 180 days or more in any tax year, the minimum rate of taxation prescribed under law is six percent or
NTD 1,037 a month for those earning the minimum wage. If an individual has worked for less than 180 days (which is often the case in the first year for a worker arriving from July onwards), a flat tax amounting to 20 percent of gross income is applied. This regulation was introduced initially to capture a portion of the earnings of high net worth individuals, especially performing artists who may come to Taiwan for a week to perform concerts and who in turn earn very high appearance fees. The effect, however, is to add a disproportionate burden of those at the bottom end of the social pyramid, which especially effects foreign workers since many of them do not understand the system.

Mechanisms exist to claim back overpaid tax but the process is cumbersome and not easy to follow for a low-skilled or semi-skilled worker with no understanding of Chinese. As a result, many workers fail to claim back their due and remain out of pocket by the system.

With all these deductions, it is little wonder that many workers spend their entire income during the first two years, simply paying off their debts and it is only in the third year that they are able to save a small portion of their salary to make the experience worthwhile.

Wait, there is more to come. On top of all these deductions, many employers require their workers to pay a “bond” to prevent them from running away. The so-called “bond” ranges between NTD 3,000–5,000 a month and is also deducted from salary. The bond is repaid (without interest) at the end of the contract period but even here, workers are often short-changed by scammers before they leave the country. These bonds are also handled by the HR departments of companies who advise workers that the bond money will be repaid at the airport at the time of their departure. This ruse prevents their workers using the banking system to convert their savings back to the currency of their choice. It also stops them from complaining if they are dissatisfied with the level of payment returned.

The money is carried to the airport by the escorting broker who will deduct a “service fee” of at least NTD 1,500. Instead of using registered exchange booths or the banks, workers are then directed to individual agents on the ground who operate in cahoots with the broker and who offer to change the worker’s Taiwanese money back into baht but at a rate of exchange that is tantamount to usury. These brokers also handle the check-in procedures f

or workers and often claim that the worker is overweight and being charged an excess luggage fee when in fact, most workers have so few belongings that they are well within the weight limits allowed by the airline. This is just one last ploy to milk the migrants of their cash.

Exploitation of migrant workers in this situation is total. It starts before they even have a job offer and continues until they leave the country. In my entire work experience overseas, I have never experienced a system as pernicious as this one.

A need to focus

As the newly assigned labour attaché at the Thai Cultural Office (in the absence of formal diplomatic relations with Taiwan, it is this office that performs many of the functions that would normally be handled by an embassy or consulate), it was my job to try to rein in the excesses within the system.

I started by concentrating on the tax refunds due to workers since this would put money directly into their pockets without interference from either the employers or the brokers. In many instances, this follow-up work was done only after the workers had returned to Thailand. I estimate that we had a success rate of between 30–40 percent but even at this rate, we were able to collect between 60 and 70 million baht a year to be returned to the workers. This was well in excess of what other labour-sending countries were achieving.

What gave us the edge in this was the establishment of a three-person working group within our office who made it a full time job to go after these tax refunds. We knew the tax law, we knew the individuals within the tax office with whom we needed to coordinate and, fortunately, we generally received good cooperation from the Taiwanese authorities. This was a small success but a significant one.

The second area of operational concern to me, and which caused me equal anguish, was the living and working conditions of many Thai contract workers in Taiwan. Many of the factories within which they worked were located in the central part of Taiwan in the counties adjacent to Taichung and Chiayi. These places were beyond our immediate horizon and had I stayed at my desk in Taipei I may never have grasped the extent of the wretchedness in which many (if not most) of these workers lived.

Living conditions were in many instances squalid and working conditions hazardous. Employers paid scant attention to worker safety. In this, they were in open defiance of Taiwan law, which sets stringent safety standards under its Industrial Code.

Workplace injuries were of especial concern; in part, because there appeared to be a disproportionate number of them. When we were informed of an incident, time was of the essence since we needed firm evidence of the nature and extent of the injury if we were to be successful in seeking compensation from the employer, many of whom would rather cover up such incidents.

Our standard operating procedure was to visit the worker and, if possible, the place of work as quickly as possible. Fortunately, Taiwan is a relatively compact island and with a good network of freeways and highways so that we were able to make the journey from Taipei (in the north) to the central area in less than two hours when this was necessary. We took photos and, where possible, interviewed the injured worker as well as those who had witnessed the incident.

Once we had documented the case, we forwarded the information to the local prosecutor who reviewed the evidence presented. If the prosecutor found that a violation of the industrial or safety code had been committed, the case would proceed to Court. In this regard, we were fortunate in that the Taiwan legal system supported enforcement of the codes on a non-discriminatory basis and foreign workers had the same rights under law as native Taiwanese workers.

Another initiative I introduced with help from the CLA was a weekly one-hour radio programme in Thai and designed to inform workers about their rights, obligations and benefit entitlements while working in Taiwan.

The programme included a section devoted to local Taiwanese news as well as news from home. We also included a segment on developments and trends in the labour market as a way of keeping workers up to date. It was very successful and proved to be a valuable channel for communication with the émigré population. It also alerted them as to our presence, how to contact us and what support we could offer for distressed workers.

One incident that made a lasting impression on me occurred after the minimum wage had been increased by NTD 1,440 a month to its present level. Most employers abided by the letter of the law and paid the increased amount but I received word that one employer in Taichung was refusing to pay, claiming that he had high political connections and that this absolved him from the need to follow the law of the land. I investigated the problem and filed a report with the Taichung Branch of the Labour Office. There the case sat for five months without any movement. Evidently, the employer had been using his connections to deny any progress. The workers were agitated and came to see me in Taipei asking, not unreasonably, why the labour office was not enforcing the law since the evidence was clear.

Our only recourse was to take the matter to the local Court in Taichung, which ruled that the employer and employees should meet together and settle their differences through negotiation. It appeared to me a strange ruling since the issue was in my view a matter of black and white and there was little on which to negotiate, but we respected the decision and followed the recommendation. This was a futile exercise and rather than settle the matter, the employer brought in the local police to intimidate the workers. A number of them were assaulted and injured in the process.

At this stage, having failed to solve the problem at the local level, we took the matter up with both the Council of Labour and the Ministry of the Interior and asked that the matter be investigated. The local labour office, the court and the police had all demonstrated partiality and had not provided equal treatment before the law to the workers. Clearly, they were all siding with the employer.

Once the ministries in Taipei became aware of the problem, we started to see some action but it took 10 months before the case was successfully resolved and the workers received their proper pay. One consequence was that we had to move the workers to another factory for their own safety but in this, we also had the full cooperation and understanding of the ministries. It was not a pleasant time but the outcome, in the end, gave the workers what they wanted.

I was fortunate in that we were able to forge close relationships with the Taiwanese government departments on whom we depended to enforce the law. Our problems were not with the government which, when alerted to a situation, acted swiftly to remedy the complaint within the law, but with employers and brokers who connived with one another to exploit the workers as well as lower level officials who we suspected had been bribed to look the other way. It was a study in opposites and the attitudinal shifts between the two were extreme.

While I left Taiwan with many happy memories of an island and a people that had much to commend it, the image in my mind will be forever tarnished by the knowledge that beneath the surface there was a dark underbelly that had no understanding of, or interest in, the concept of decent work and human dignity. For this situation, we Thais are partly to blame for our own agencies are part of the problem. We must first seek to get our own house in order before blaming others