Bloomberg News

Taiwan’s Ma Proposes Shorter Work Week and New Laws on Leave

November 30, 2011

(Updates with comment from KMT spokesman in 10th paragraph.)

Nov. 29 (Bloomberg) -- Taiwan President Ma Ying-jeou announced plans to reduce the work week and restrict unpaid leave as he battles slower economic growth, in a move the opposition said was a campaign ploy ahead of January elections.

The government proposed cutting the work week from 84 hours every two weeks to 40 hours a week, according to a statement posted on Ma’s website after he met representatives from 10 labor unions yesterday. The proposal would also make it harder for companies to put employees on unpaid leave.

Ma, whose lead in opinion polls over opposition candidate Tsai Ing-wen has disappeared in recent weeks, aims to stimulate a slowing economy and lower unemployment that rose for the first time in five months in October, to 4.3 percent. Taiwan’s weekly work hours are high compared with other nations and the moves are a logical response to slower growth, said Cheng-mount Cheng, a Taipei-based economist with Citigroup Inc.

“The proposed changes to the labor policy are reasonable and beneficial to both employees and employers,” Cheng said. “Any political party in government would have to come up with such strategy if faced with similar issues.”

The 61-year-old president, who leads the Kuomintang party and faces voters on Jan. 14, joins politicians from Hong Kong to Thailand who have sought to boost pay to alleviate the impact of price pressures. Countries including Singapore and South Korea introduced a five-day work week in the last decade.

Election Promises

A Nov. 22-Nov. 24 poll by the China Times News Group said Ma had support of 40.7 percent of voters compared with 40.3 percent for the Democratic Progressive Party’s Tsai. The poll, which had a margin of error of 2.9 percentage points, gave People First Party’s James Soong 10 percent support.

A spokeswoman for the opposition Democratic Progressive Party said that by introducing new plans Ma is trying to divert attention from unfulfilled promises.

“Ma hasn’t met his election pledges on employment and is now bringing up new policies and this is clearly an attempt to get votes,” spokeswoman Kang Yu-cheng said in an e-mailed statement.

KMT spokesman Charles Chen said such criticism isn’t valid because the vows were made before a global economic slowdown took hold.

“The president has already apologized for not being able to achieve the target of a jobless rate of lower than 3 percent as pledged,” Chen said.

Labor Benefits

Ma’s proposal would make it easier to apply for unemployment benefits, according to the statement, while the government plans to increase subsidies for people under 45 to learn a second skill, as well as retrain older workers.

Under the Labor Standard Act, the legal number of work hours every two weeks is 84, meaning employees often work six days on alternate weeks. Government workers have been on a five- day work week since 2001.

“The impact will be very marginal to the employees, though it will affect employers’ flexibility in arranging work schedules,” Francis Cheung, a senior strategist at Cred Agricole CIB in Hong Kong, said in a telephone interview. “There won’t be a negative impact on the business environment or increased costs for employers.”

The new rules will add restrictions on companies looking to put workers on unpaid leave. As of mid-November, 48 companies had asked 5,021 workers to take time off as demand falls, according to Ma’s government.

Unpaid Leave

Lin Ming-che, secretary-general of the Trade Union of Electrical, Electronic and Information Workers in Taiwan, said the government data didn’t accurately reflect the true number of employees put on unpaid leave and the new regulations could help make such practices a last resort.

“The government can help ensure that unpaid leave won’t be abused by some firms trying to cut costs,” Lin said in a telephone interview.

Taiwan’s economy expanded 3.42 percent in the third quarter from a year earlier, the worst performance since the third quarter of 2009. The government said in July it will increase the minimum monthly wage for the second straight year on Jan. 1, by 5 percent to NT$18,780 ($617), and the hourly wage to NT$103 from NT$98.

Taiwan raised minimum pay by 3.47 percent for 2011, the first increase since 2007, after the island’s income disparity widened to the most in almost 10 years.

--Editors: Nicholas Wadhams, Patrick Harrington

To contact the reporter on this story: Janet Ong in Taipei at jong3@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net


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