HSINCHU, TAIWAN — As California and the rest of the nation stagger from massive layoffs and soaring unemployment, companies in Taiwan have largely opted to cut pay and work hours to deal with the economic crisis.
Here in Hsinchu Science Park, modeled after California's Silicon Valley, about 100,000 of its 130,000 workers are taking up to 10 days of unpaid leave a month.
Part of the reason is pressure from Taiwan's government, they say. Another may be the cost: Taiwanese laws require companies to pay severance of one month's salary for every year of service. There's also a cultural factor.
"The Western way is just too brutal," said Chang Chia-yua, 28, an engineer who supervises production for a computer memory maker in Hsinchu.
In the U.S., corporations have generally balked at across-the-board pay cuts and leaves as an antidote to a business downturn. As companies eliminate jobs at a furious pace, some managers see layoffs as an opportunity to prune their staffs and keep the strongest performers.
Their logic: "You reduce wages and you might piss everybody off, whereas if you dump some of them on the street, they're gone and you don't have to worry about them," said Jim Klein, an adjunct economics professor at Savannah Technical College in Georgia who has three decades of industrial relations and corporate experience in Taiwan.
Sharing the pain with everyone may not be the most efficient approach, people here concede, but at least everybody has a job. It gives some security to workers and also has helped curb the island's unemployment rate, which hit 5.3% in January, up 1.5 percentage points from a year ago. California's jobless figure rose almost as much in a single month, spiraling to 10.1% in January. (The U.S. rate was 8.1% in February.)
But as Chang and others in Hsinchu are finding out, the Taiwanese way can be pretty cruel too -- and may in the end prove no better than layoffs for some people.
When his company started to get walloped by the global financial crisis in November, Chang and his colleagues were told to take three or four days off without pay that month. Chang didn't mind so much at first; the single engineer used the time to volunteer at a nearby hospital, greeting and helping patients and their families with their questions.
But then, as business fell further this year, Chang's employer, whom he was reluctant to identify, told workers to take eight or nine days off a month. In February, that sliced a third of Chang's $1,325 monthly salary. Worse, he and others fear that eventually there will be layoffs.
