PACIFIC REPORT : Laboring Over Workers : Rich Asia Nations Struggle Over How to Deal With Imported Help

Faced with severe labor shortages, industries in Taiwan, Singapore and Hong Kong--three of Asia’s economic tigers--are relying increasingly on foreign workers from less-developed countries such as the Philippines and Indonesia.

As a result, Asian labor is becoming a more mobile, transnational human resource--making the labor-poor and labor-rich nations of the Pacific increasingly interdependent and creating new opportunities for firms engaged in engineering, construction and labor contracting. It’s also creating conflicts in places such as Taiwan and Hong Kong because some Asian labor unions oppose the importation of non-union foreign labor.

“It’s important that these labor issues be resolved,” said Malcolm Dowling, an economist at the Asian Development Bank, a Manila-based 49-member-nation institution that provides funds and technical assistance to Asia Pacific nations. “Without the necessary labor, economies don’t grow, and everyone loses.”

The Philippines and other less-developed Asian nations with huge, job-hungry populations could be among the losers also.

How Asian nations address the labor issue is important to American firms that have--or expect to get--lucrative contracts to repair or build Asian roads, railways, airports and seaports.

Foreign labor is becoming a bigger political and economic issue in Asia because the number of illegal Filipino and Indonesian workers in Taiwan, Singapore and Hong Kong is increasing rapidly.

Taiwan’s situation typifies the dilemma facing those trying to resolve the differences between labor unions (fearful of losing jobs) and business leaders (concerned about stalled growth) in the newly industrializing economies of Asia.

Taiwanese industrialists contend that the nation, with a negligible unemployment rate of about 2%, needs more foreign laborers.

Taiwan’s labor problems stem from its successful economic development efforts. The Taiwanese textile, consumer electronics and computer components industries have had great success selling their goods abroad.

As a result of the economic growth, wages began to rise in Taiwan. To remain competitive, the Taiwanese have been shifting some production plants to low-wage centers such as China in recent years. This has prompted structural changes in Taiwan’s economy, said Clarke Ellis, Washington-based deputy director at the American Institute in Taiwan, a private organization that provides embassy and consulate services for Americans with economic interests in the country.

“People who once worked on the assembly line began to move into more technical, skilled positions at their company,” Ellis said. “Others have been taking jobs in Taiwan’s expanding financial services sector. . . . It’s difficult to find Taiwanese who want to take positions as maids or ditch diggers.”

Taiwan’s labor needs are becoming more acute as it prepares to make massive infrastructure improvements--a staggering $300 billion in projects in the next six years.

Some U.S. firms have a stake in the development plans. San Francisco-based Bechtel Corp. and Oakland-based Kaiser Engineers International have contracts to serve as general consultants for the construction of a $6-billion rapid transit system in Taipei. Bechtel may have to shift staff from the Philippines to meet its rapidly growing personnel needs in Taiwan, company executives say.

“Labor shortages are likely to be a major obstacle to the implementation of the new six-year development plan,” said a recent Asian Development Bank report.

Taiwanese economists estimate that 50,000 to 60,000 additional workers may be needed to help rebuild the infrastructure for Taiwan’s 20 million people.

Among those planning to help Taiwan meet its labor needs is Norman Green, president of ASEC International, a Los Angeles-based firm with data entry and computer software programming facilities in the Philippines. ASEC, which has provided computer services to clients around the world, has been diversifying in an effort to provide a broader range of labor services on a contract basis.

Working with a labor recruitment firm in the Philippines and a Taiwanese labor contracting company, Green plans to place about 2,000 workers--mostly Filipino--in construction-related jobs in Taiwan the next 12 to 24 months. Green said he already has an agreement to find and hire 150 foreign workers for a French firm that has a contract to build a high-speed rail transport system in Taipei.

Green’s company will have competition. He said there are at least 100 companies in the Philippines that specialize in placing Filipino workers in jobs abroad.

“We’re looking at a business trend because there will be more and more labor contracting in Asia,” Green said. “There is not enough labor in Singapore and Hong Kong, and these areas will open up to foreign labor, but--like Taiwan--they’ll do it very carefully.”

Taiwan has adopted strict regulations to ensure that incoming labor does not displace natives or lead to social disruptions. Contractors must prove that they cannot find Taiwanese workers before hiring foreign labor, and they must build separate housing for imported workers. In addition, contractors must post a financial guarantee comparable to a bond with the government--a payment the contractor forfeits if the hired foreign workers do not leave Taiwan when the work is completed.

The Taiwanese government has good reason to be concerned about illegal “holdovers,” workers who enter the country under legal contracts but remain after their jobs are completed, said Michael Ding, a researcher and professor at the Chung Hua Institute for Economic Research, a think tank that provides research to the Taiwanese government. For example, Filipinos in Taiwan can sometimes earn 10 times the pay they would get for comparable jobs in the Philippines, Ding said.

Economists say foreign workers--particularly Indonesians, Filipinos and citizens of Mainland China--already have a substantial presence in Taiwanese manufacturing and in Taiwan’s chemicals and textile industries. Estimates of the number of illegal workers vary. Ding says there are at least 500,000.

“Many local people are not willing to do this work for the wages being offered,” he said.

While some industry leaders are urging the government to relax barriers to foreign workers, labor unions are criticizing the government for not cracking down on illegal labor. Taiwanese labor unions contend that it is more difficult to win wage increases because companies are relying more and more on non-union foreign labor.

The government recently did move against illegals in the country--stepping up deportations and imposing fines on employers that tried to keep foreign workers past their contract dates. However, Taiwanese industries have appealed to the Taipei government, which recently indicated that it may allow some illegal workers to remain.

While Taiwan imposes fines on employers using illegal foreign labor, Singapore recently made it more expensive for its companies to use legally documented foreign workers. In an effort to slow the flow of foreign workers into the country, the government last April raised the levy that companies must pay for using non-native labor by about 16%.

It said it boosted the levy because demand for foreign workers grew so strongly last year. The increases were designed to encourage industry to “reduce their dependence on foreign workers,” it said. The levies are expected to affect Singapore’s shipbuilding and ship repair industry, which relies heavily on foreign workers.

The government has not disclosed the number of foreign workers in Singapore, but it is estimated at about 150,000--about 10% of the work force.

While Singapore is beginning to discourage use of foreign labor in some industry sectors, Hong Kong has begun to welcome semi-skilled foreign labor--workers who have experience as factory workers. The government, which is also making major infrastructural improvements, plans to allow 2,000 foreign construction workers to settle in the colony.

The government has long had a policy of encouraging professionals to settle in Hong Kong. It denied such permission to the semi-skilled until July, 1990, when it announced that it would allow 10,000 to such take jobs in the territory because of labor shortages.

CROSSING BORDERS Asian Nations Export Labor Countries with labor shortages: Japan Taiwan Hong Kong Singapore Countries with a labor surplus: China Thailand Indonesia Philippines