Nonstandard Work As a Counterbalance to Employment Institutional Change – the Case of Taiwan

As a highly export-oriented economy, Taiwan has been integrated in the global production chains and has faced great international competition. While flexibilization and externalization of employment relations have been considered as a timely solution by employers, workers have succeeded in expanding certain social and employment protections by participating in a series of labor law reforms in recent years. The reforms, however, has arguably strengthened a rigid employment model, often termed the “standard employment model”, which excludes people who are not in full-time and open-ended employment relations from social protection to varying degrees. Drawing on sociology of labor markets, I take up Taiwan as a case where employers counterbalance changes in employment institutions, which are meant to raise their responsibilities, by changing employment practices – opting for nonstandard work. Based on the perspective of organizational stratification, I argue that by studying practices and decisions of organizations can we close the theoretical and empirical gap between institutional changes and their effects on the outcomes of individuals.

A representative organization survey (N=2632, the majority are private firms) was conducted in order to investigate how institutional, organizational and Taiwan-specific industrial factors affect the decision of adopting nonstandard work. The survey takes into account the heterogeneity within nonstandard work and examines part-time, fixed-term, dispatched, and contract workers as specific employment strategies and outsourcing as a general organizational strategy. While nonstandard work is considered empirically and theoretically associated with social inequality by researchers, its incidence and intensity within a firm, especially the latter, are conceptualized as firms’ attempt to evade the standard employment model and the related social protections. Logistic and tobit analyses show that outsourcing, as a general organizational strategy, serves as the major way to evade the institutional factors (rising employment regulation and mandates), but this is not the case when nonstandard work is considered as an employment strategy. In contrast, organizational factors (needs for staffing and production flexibilities) are widely related to the use of nonstandard work as both employment and organizational strategies. As for Taiwan-specific industrial factors, firms that are located at lower positions in a subcontracting system (being a subcontractor to other firms), which has been practiced since the first take-off of the Taiwanese economy in the 1960’s, are overwhelmingly in favor of all forms of nonstandard work. The result suggests that when institutional factors are the concern, employers tend to opt for a complete externalization of employment relations. Moreover, organizational factors and the legacy of the Taiwanese industrial structure are the major forces that drive employers to alter their employment practices and consequently counterbalance the changes in the employment institutions.