Globalization & Changing Industrial Relations in Taiwan's Banking Industry

By Lee, Joseph S. | Indian Journal of Industrial Relations, April 2010 | Go to article overview

Globalization & Changing Industrial Relations in Taiwan's Banking Industry


Lee, Joseph S., Indian Journal of Industrial Relations


Changing Industrial Relations System

Over the past two decades, Taiwan's economy has become more open and liberalized due to the influence of globalization of the world economy. The opening up and liberalizing of Taiwan's economy has not only affected its industrial structure but also the composition of its workforce and industrial relations system. In terms of the industrial structure, Taiwan's labor-intensive industries quickly relocated their production facilities abroad during the late 1980s, mainly to mainland China and other Southeast Asian countries, in order to take advantage of the low labor costs. Those that stayed behind rapidly upgraded themselves into high-tech or other high value-added industries as well as knowledge-intensive service industries. Accompanying these changes were major shifts in employment from the agricultural and manufacturing sectors to the service sector and from blue collar production work to white collar professional, technical and clerical work. For example, the share of workers in the manufacturing sector declined from 32% in 1990 to 27.15% in 2009 while that in the service sector rose from 46.32% to 68.87% within the same period (Table 1). The share of workers employed as professionals rose from 5.15% of the overall workforce in 1990 to 8.88% in 2009, while those of technical workers and clerical workers rose from 11.63% to 21.10% and from 7.98% to 11.08%, respectively. Conversely, the share of production workers in the total workforce fell from 41.11% to 30.84% over the same period (Table 2).

As workers have moved from manufacturing jobs to white collar and service jobs, the pattern of industrial relations in Taiwan has also changed. Human resource management (HRM) and high performance HRM practices have become more and more popular in Taiwan while trade unions and collective agreements have been fading away. As the figures in Table 3 show, the number of industrial unions has fallen from 1,354 in 1990 to 982 in 2007, and union density in terms of industrial union members as a percentage of the total labor force has declined from 31.0% to 17.4% in the same period (Table 3). As the number of trade unions falls, the number of collective agreements will also be reduced. Thus, while in 1990 there were a total of 283 collective agreements drawn up among industrial unions, this number declined to 282 in 1995 and further to 236 in 2005, before falling sharply to 73 in 2006 and 69 in 2007. Collective bargaining is rapidly becoming a thing of the past in Taiwan. This is understandable because white collar and knowledge workers do not like to join unions since their employment, level of pay and benefits are determined based on their individual performance and innovative and creative abilities, and not by collectivism.

It is, however, interesting to see that while the number of union members is declining in manufacturing industries, the number of union members in the banking sector is in fact rising. For example, while in 1997 only 22,849 banking employees were members of unions, by 2004 this figure had risen to 54,782 and is still continuing to increase. In western industrialized countries, school teachers and government employees are the major sources of white collar union members. This is not the case in Taiwan, however, because while teachers and government employees may form their own associations, they have no legal right to engage in collective bargaining and work stoppages.

This article investigates the reasons for the rapid rise in union membership in the banking industry as well as the role played by trade unions when technologies and the work environment have been drastically changing in recent years. A study on the increase in union membership in the banking industry is also important in the sense that one of the major causes of the lack of union influence in Taiwan is the fragmentation of trade unions. This is because the Taiwan economy is dominated by small and medium-sized enterprises (SMEs) so that most of the unions are small in size and lack economies of scale.

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