20111030 EDITORIAL: Protecting employees in downturns

EDITORIAL: Protecting employees in downturns

Everlight Electronics Co’s plan, made public on Wednesday, to ask its workers to take eight days of unpaid leave next month and in December caught many people in Taiwan by surprise. What surprised the public even more was that the LED company canceled the plan less than 48 hours later amid strong criticism — and perhaps under government pressure, because of the approaching presidential election next year.

Notebook computer maker Inventec Corp last week also announced that it would slash 400 jobs to cope with the cancelation of a tablet computer production project for Hewlett-Packard Co. However, the announcement raised concerns among local labor affairs authorities about the legality of cutting jobs, with the government deciding to levy a fine of up to NT$150,000 (US$5,025) on the company if it doesn’t reverse the decision.

Both these issues underline recent concerns about the re-emergence of unpaid leave and layoffs by local companies last seen during the 2008 to 2009 global financial crisis, leading some to fear they will again threaten wage earners and the nation’s economy as a whole.

The government’s effort to protect workers’ legal rights is an understandable response to this kind of worry. However, the government needs to strike a balance so that its regulatory approval process does not become too bureaucratic and its administrative power does not interfere with companies’ decision-making abilities.

Moreover, even though companies have touted the unpaid-leave scheme as a better option than laying off employees, saying that at least furloughed employees have a job to return to, unpaid leave might eventually prove no better than layoffs because the possibility of losing a job grows the longer a worker goes without pay. Some employees on unpaid leave might even wind up doing unpaid work for companies to impress their bosses in the hopes of getting their jobs back.

The bottom line is that unpaid leave and layoffs are among the cost-control measures that companies will adopt during economic downturns. The government must respect companies’ decisions, but that does not mean that companies can abuse their power to furlough workers, especially if they are not experiencing financial and operational difficulties and are in no urgent need of pay cuts or job cuts.

Everlight’s unpaid-leave plans raised people’s eyebrows because its announcement came on the same day chairman Robert Yeh (葉寅夫) donated NT$100 million to his alma mater, National Taipei University of Technology, and the company is still making a profit. If Yeh was capable of giving that much money to his alma mater, why couldn’t he pay his workers?

However, the controversy cannot hide the fact that certain industries such as the LED, solar power, flat-panel and DRAM sectors are now facing weak end-market demand, low factory utilization and excess inventory.

Another LED company, Huga Optotech Inc, which began sending its workers on unpaid leave early this month, is just one of several companies in the nation’s science parks that have sought to adjust work hours or encourage employees to take their annual leave to cope with this downturn. The number of affected companies is likely to climb in the coming months, especially after the Ministry of Economic Affairs’ latest data showed weaker-than-expected export orders and industrial output for last month.

Ideally, companies, workers and government agencies should have learned from experience what they can do to prepare for a global downturn. Everlight surely did not set the best example, but even though the company reversed its decision under intense criticism, the issue of how companies should fulfill their social responsibilities deserves renewed national attention — it is as important to protect the rights of employees as it is to safeguard the interests of investors and shareholders.