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July 2007, Volume 14, Number 3

Taiwan: Migrant Policy Evolution

The Council of Labor Affairs announced in May 2007 that the number of foreign workers allowed into the country would be based on the unemployment rate. There will be two categories of guest workers: foreign laborers for industry and workers in welfare service. Different rules will govern admissions of each type of worker. Migrant workers will be able to stay in the country up to nine years; the previous limit was six years.

Taiwan has established a quota of 391,926 foreign workers, but only 347,172 were in the country in May 2007.

Taiwan began to import foreign workers in 1989, giving one-year permits (renewable once) to manufacturing employers and for migrants hired for infrastructure construction projects. The 1992 Employment Service Act established the Council of Labor Affairs to determine Taiwan's foreign worker policy. The CLA required employers to prove that they needed to hire foreign workers by, for instance, advertising for local workers for at least one week.

The CLA limited guest workers to 30 percent of a firm's workers, and allowed initial entries for two years, with a one-year extension possible. Manufacturing firms seeking foreign workers were required to develop plans to reduce their need for foreign workers over time until 1997, when the requirement was dropped. CLA policies aim to reduce family formation by deporting pregnant women and foreigners who commit crimes in Taiwan. Guest workers are tied to one employer and may fill production but not supervisory jobs.

Guest workers were originally aimed at helping Taiwan finish infrastructure projects and to serve as a bridge to a more automated manufacturing sector. By 2007, half of the foreign workers were being admitted to fill service jobs. Some economists say that Taiwan's guest worker program has shifted from providing supplemental production workers to admitting cheap workers.

For example, guest workers are entitled to Taiwan's minimum wage of NT$15,840 ($480) a month but, at the behest of employers, NT$4,000 a month can be deducted for room and board. A 2006 survey found that almost 60 percent of employers were deducting room and board, an average N$2,300 a month.

The number of foreign workers has continued to increase, reaching 339,000 in 2006. Foreign workers were divided into production and service workers, and the government imposed a 300,000 ceiling on production workers. Foreign workers can stay a maximum five years.

There are problems with procedures for admitting foreign workers and with excessive brokerage fees. There is a formula for determining the maximum number of migrants on construction projects, but industries, sectors and occupations were added in response to pressure from employers.

Over 90 percent of newly arrived foreign workers come via private employment agencies, with migrants paying as much as the equivalent of nine months of their Taiwanese earnings in fees. Since 1992, the CLA has set maximum fees, limiting them in 2007 to a maximum NT$60,000 ($1,8390) over three years. It recommends that sending-country agency fees be limited to one month's Taiwanese earnings, or NT$15,840. About 10 percent of the Vietnamese migrants have abandoned their jobs in Taiwan, as have five percent of Indonesians.

Taiwanese employers can hire workers directly in Thailand, the Philippines and Vietnam, but most prefer to hire migrants via brokers. In 2007, the CLA began an effort to evaluate agencies and rate them A, B, or C, with C agencies having to upgrade within two years or lose their right to operate. Inspections of dormitories housing 100 or more migrants have begun.

Economic studies of the effects of migrants found that more migrants were associated with higher unemployment rates and that concentrations of migrants in production occupations were associated with lower wages for local workers in those occupations.

In addition to foreign workers, Taiwan has imported 388,000 foreign spouses, usually mainland Chinese women who marry Taiwanese men. Since 2003, the government has required an interview with the foreign spouse. As a result, the share of marriages that involve a foreign spouse dropped from a third to a sixth.

"CLA changes rules for foreign worker quotas," Taipei Times, May 27, 2007.