Labor

As introduced by the Taiwan Yearbook 2006:

Taiwan has a diversified and skilled workforce of around ten million people. The current minimum monthly wage in Taiwan is NT$15,840 (US$474), while the average jobless rate in 2005 was 4.13 percent, down by 0.31 percentage points from the previous year. To maintain a productive and qualified workforce, the government has focused its legislative priorities on workers' rights and welfare, gender equality, labor-management relations, health, and safety.

Several significant laws have been passed to guarantee workers' rights. The Labor Standards Act (LSA) delineates the rights and obligations of workers and employers; prescribes the minimum requirements for labor contracts; and has provisions on wages, work hours, leave, and the employment of women and children. The Employment Service Act guarantees equal job opportunities and access to employment services; regulates public and private employment service agencies; and encourages employment guidance for the handicapped, indigenous people, low-income families, female heads of household, the elderly, and the unemployed. The Labor Safety and Health Act prohibits minors under the age of 16 and women from working in dangerous or hazardous environments. The act also requires certain businesses to set up an on-site medical center. These include businesses with more than 300 employees at a single location and businesses engaged in potentially hazardous operations that have more than 100 employees.

Regarding pensions, the 1984 LSA dictates that a retiree is entitled to a maximum pension equal to 45 times his or her average wage in the six months prior to retirement. To ensure that workers receive these wages should their employer file for liquidation or bankruptcy, the government set up a Wage Arrears Repayment Fund to which employers are required to contribute a small percentage of each employee's salary.

To be eligible for a pension under the LSA, however, a worker must have worked at the same company for at least 15 years and be over the age of 55 or, if younger, must have worked for the same company for at least 25 years.

Since about 98 percent of businesses in Taiwan are small or medium-sized with an average operational lifespan of only 13 years, it was feared that many employees would not be able to build up sufficient time at a company to qualify for a pension. In addition, Taiwan's workforce today is increasingly mobile, with people changing jobs several times on average during their lifetime. To resolve these problems, the Legislative Yuan passed the Labor Pension Act on June 11, 2004, allowing workers to receive a pension upon retirement regardless of the number of times they change jobs or the total number of years they work. The new pension act, which went into effect on July 1, 2005, features a portable individual retirement account (IRA) scheme obliging all employers to make regular payments into their employees' IRAs. These payments must be equal to 6 percent of the workers' monthly wages, while workers may pay up to 6 percent of their salary into the fund as well.

When employees reach the age of 60 having worked at least 15 years during which time premiums were paid into their individual retirement auounts, they will receive their pension in monthly distributions. Retirees who have worked for less than 15 years must withdraw their funds in one lump sum.

Those who opted to continue under the old LSA scheme may switch to the new scheme within five years of July 1, 2005, but they are not required to do so. Those who have taken up new employment since July 2005 are automatically enrolled in the new scheme.

According to statistics compiled by the Bureau of Labor Insurance under the Council of Labor Affairs (CLA), as of the end of 2005, more than 71 percent of all workers, roughly 3.9 million people, chose the new pension scheme.