An automotive factory; Photo by BisgovUK

Proposal

We hereby propose that the government provide a legal framework for the establishment of industry self-governance in Taiwan, structured similarly to the Building Administration Division of the Condominium Administration Act, under the supervision of the Ministry of Economic Affairs. This is to allow for the establishment of standards for each industry sector and for industry sectors to establish self-governing industry committees, which would incorporate the unions, industry associations and consumer protection agencies currently in place.

Industry and Industry Governance

Every industry can be divided into buyers and sellers in terms of transactions, and sellers can then subsequently be divided into employers and employees. In each industry, buyers and sellers, and employers and employees do not necessarily prioritize the same things; employers care about the bottom line, whereas employees are most concerned with salary and welfare, while consumers value product or service quality and price. These three parties, employees, employers and consumers all have a shared interest in the continued functioning of industry, although their interests have to be balanced against each other. Conflict between any two parties will also affect the third party, so any regulatory measures adopted in that industry have to take account of the interests of and be accepted by all three parties.

Industry governance comes down to management. As each industry can be said to comprise three equal interest groups, employers, employees and consumers, only through the participation of all individuals or members that make up these groups in industry governance can they enjoy the rights and fulfill the responsibilities of industry governance; those that do not participate should be forced out of the market or should not receive the protections and benefits afforded by industry self-governance. After the launch of industry self-governance, all members of the industry associations, unions and consumer protection associations currently in place should join the industry governance committee as employers, employees or consumers, with each separate member pool putting forth committee members to engage in industry governance.

The objective of industry governance is to establish a good environment for industry operations and development, to allow for negotiation between the rights and interests of employers, employees and consumers to ensure that all three parties can derive benefits from industry, as well as having their interests safeguarded. Each industry governing committee should cooperate and support each other in achieving the objectives of national industrial development, including achieving the following objectives:
(1) Ensuring national research and development funding and educational investment is able to meet the demands of every industry, as well as providing core technology for industry development and cultivating industry talent;
(2) Establishing a comprehensive industry infrastructure in which smaller players are supported by bigger players, to enable more synergy in industry development;
(3) Adopting more positive market management measures to lower the risks of advanced investment and public investment, and allocating and sharing public industry investment fairly;
(4) Establishing a joint mechanism for the entire industry aimed at resolving the problems that come along with the advance of technology, such as equipment upgrade and reduction of workforce, in the development of each industry, allowing employers in each industry to reduce the financial and technological risks of investment in equipment upgrades and jointly resolving issues such as further educational opportunities for staff laid off as a result of the reduction of the workforce in response to the shift to automation in industries across all industries, so that operating risks for the employer or collective protests by employees won’t stall the structural advance of industries.

Figure 1: The industry governance committees would comprise representatives of employers,
employees and consumers

Structural Composition of Industry Governance Committees and Expenditure

After delimiting industry classifications, the employers, employees and consumers which are entitled to membership should then be delineated. The industry membership pool should then immediately register with the Ministry of Economic Affairs to allow the formation of a self-governing committee. Each industry should be limited to establishing one industry self-governance committee invested with public power, and those members that qualify as either of the three parties should register with the industry governance committee and after confirming that they meet the requirements, they can become a voting member. Under the industry governance committee three sub-committees should be formed: the employer subcommittee, the employees subcommittee and the consumer subcommittee, made up of a limited number of committee members selected respectively by employers, employees and consumers. The number of committee members from each party on the governance committee should be set according to demand. Each of the chairs of the subcommittees will be voted by the entire subcommittee. All committee members should have a tenure of four years, the same as the elections for legislators, and the elections should be held simultaneously with the legislative elections. The industry self-governance committee will have a chairperson and two deputy chairs. The chair of the employer subcommittee will initially serve as the chair of the industry self-governance committee, and the chairs of the employee and consumer subcommittees will serve as the deputy chairs of the industry self-governance committee. The employer, employee and consumer subcommittees can all establish standing advisory units, and hire professionals or service providers as support for the chair, the deputy chair and the committees. The costs incurred by the industry governance committees will be paid through business tax on transactions by companies within the industry.

Industry Membership Structure and Voting Rights

The voting rights of the employer, employee and consumer groups can be set according to the unique characteristics of the industry. To give an example, the influence of a member (natural person or corporation) of the employers committee can be decided based on the amount of business tax they pay in the four years running up to the election. The proportion of business tax paid by each member of the employers’ committee can serve as the proportion of their voting rights. The employee committee voting rights, however, will be calculated on the basis of one-person-one-vote for full-time employees. The consumer members’ votes can be calculated on the basis of total business tax paid in the four years running up to the election. The total business tax paid by consumers constitutes the proportion of their overall voting power. Within industry, individuals who run their own businesses can register and vote for both the employer and employee subcommittees, but they must accept direction from both the employee and employer subcommittees.  

Regulations and Resolutions for the Three Subcommittees

The three subcommittees under the industry self-governance committee can impose management mechanisms governing the routine of daily affairs as they see fit: in terms of routine management mechanisms, the management committees can decide by a majority vote; as to compulsory management regulations, rules and the model governing the management mechanisms and human resources management rules, they must be passed in advance by vote, and can only take effect after a vote by all members. As well as different rules for the different kinds of votes, there should be an anonymous majority vote.

Institution, Regulations and Ordinary Resolutions for the Industry Self-Governance Committee

If two or more parties among the three subcommittees under the industry self-governance committee back the same proposal, it should all be handed over to the main committee for debate and deliberation, this central committee will be comprised of the committee members of all three subcommittees, with a rotating chair, cycling through each of the subcommittee chairs. Non-imperative resolutions for the governance committee can be voted on separately by the three subcommittees, the total votes in each of the subcommittees must be above half of the number of members in attendance to pass. With imperative resolutions or changes to or the creation of new rules, after a vote by the central committees, it must be voted on by the entirety of the membership of the three parties, and will only take effect when it passes all three votes. It will then be enforced by the industry self-governance committee. The rules and resolutions of the three subcommittees should not contradict or conflict with those of the industry self-governance committee, and the rules and resolutions of the industry self-governance committee should not conflict with or contradict national laws.

Suggestions for the Executive and Legislative Branches of Government

• We propose that the executive and legislative branches of government carry out research into legal frameworks, organizational management and funding for industry self-governance, and then establish a legal framework for industry self-governance that industry can abide by with reference to the Condominium Administration Act Building Administration Division, to allow industries nationwide to build an organizational structure to allow for the realization of industry self-governance.
• When industry self-governance is rolled out, we suggest that industry associations, unions and consumer protection groups cooperate to make plans based on industry management needs, and build rules and management structures appropriate to industry self-governance, as well as reexamining any existing legislation or government agencies or institutions that do not meet the demand of the contemporary world, then propose suggested amendments to existing government regulations and organization to the Legislative Yuan, to allow industry governance to shift from the current government structure to the autonomous industry self-governance committees.
• After completing the establishment of the framework for industry self-governance, as well as adjusting government regulations and organization, we suggest the Legislative Yuan start to plan the privatization of all national industries and government public services, putting all national industries and government public service departments under the purview of the private industry self-governance system, with each industry self-governance committee taking responsibility for the relevant government departments, using regular open calls for tenders to provide and supervise public services previously provided by the government, and the government departments should ensure that they thoroughly divest themselves of all shareholdings, with the result that no government executive agency or the Legislative Yuan will have any control over industry or the provision of any service.
• After completing the establishment of the legal and organizational framework for industry self-governance, we suggest the government privatize the education system and publicly-run research institutes, to form educational services and research services industries, to allow these two industries to fully cooperate with other private industries, and to free them from the control and management of government executive organs (the Ministry of Education and the Ministry of Science and Technology), as well as the Legislative Yuan, allowing members of these two industries to be able to operate and innovate under a corporate model, to work and collaborate with other private industries freely, aligning them with local and international markets.
• We suggest that the government educational budget be diverted to the Ministry of the Interior, and educational vouchers should be apportioned each year based on the total income of the families of every school-age students, to ensure that all school-age students and their parents nationwide can choose educational services appropriate to their own or their child’s individual needs from privately-run educational services providers.
• We suggest that all science and technology-related research and development and industry development government outgoings are redirected to all the industry self-governance committees to establish a common management framework which would allow research and development and industry development costs to really meet the demands of industry and allow privately-run research and development services to provide the core technology and talent needed by each industry sector, and for industry development funds to go towards these areas, as required by industry.

Conclusion

The guiding principle of constitutional democracy is that the people should govern themselves, implementing constitutional democracy in industrial governance should take the form of industry self-governance. A democratic government shouldn’t use society’s or labourers’ negative impression of businesses or business people to take away the right of self-governance for Taiwan’s industrial sectors, in fact, Taiwan’s business leaders in the past have often offered advice and assistance to government policymakers, serving as an important source of counsel for policymakers. Economic governance is the core of national governance, and without an exceptional economic base, one can’t take on infrastructure; many business leaders have exceptional business management experience and an international perspective. If business leaders are excluded from a country’s economic governance, this would be disastrous for the nation, however, this is the current state of affairs in Taiwan. Currently the governance of industry is led by government bureaucrats across various government departments. For example, the patent industry is governed by the Taiwan Intellectual Property Office, whereas the tourism and tour bus industries are governed by the Ministry of Transport. As many of the elected officials and representatives lack industry backgrounds and experience, they hand over the governance of the industry to government administrative departments. As bureaucrats are mostly selected through civil service examinations and they essentially have an iron rice bowl, with job security for life, they tend towards conservatism and generally have no industry experience, so for their own interests, they aren’t willing to have too much interaction with industry or put legal frameworks into effect. This means bureaucrats are unlikely to resolve industry problems or overturn deep-rooted practices for improvements. In addition, bureaucrats promote the interests of their own department over others and protectionism is a serious problem, very few are willing to engage in cross-departmental communication or coordination, preferring rather to protect their own department’s jobs or funding allocation. They are unwilling to change the status quo of industry management, therefore industries find themselves running into walls when trying to establish new systems or when in search of breakthroughs in terms of outdated legislation or management systems, leaving industry with its hands and feet tethered in quickly developing industries. In an era where the world economy and technology are advancing rapidly, domestic regulations and limits imposed by the bureaucracy mean that Taiwan is unable to keep up with the global market and global economic development.

The essence of democratic politics is governance by the people; officials are elected by the people to lead government departments in providing services to the people, and representatives are elected to supervise how those government departments implement policy. However, this system of representation is found to be severely lacking in terms of governance of the national economy, that is, government officials and representatives lack industry knowledge or management experience in the various industries, so they have no way to grasp the complex core technical issues in each industry to address them effectively. This results in them handing this task over to unelected bureaucrats. In the national governance of industries, the representative politics that one might expect of a constitutional democracy do not exist, and all the power of elected officials and representatives to govern industry has been been handed over to government administrative staff and bureaucrats, which gives government bureaucrats the power of life and death over private enterprise, such as regulation formulation, policy promotion and law enforcement, which bizarrely makes them the leaders of industry.

The governance of industry, therefore, employs a distorted form of outsourcing: employers, employees and consumers are all citizens or natural persons of the nation, so their power should be protected by the constitution, but they are given very little say on industry governance or power over policy on neighboring industries. These are “economic rights”. Every member of every industry should lobby the government and the Legislative Yuan either in an individual capacity or through their industry association, their union, or consumer protection association, and only then will there be a possibility of a legislator or a government official taking notice. Most of the time, however, these efforts come to nothing, and industry problems continue to fester.

We should, therefore, push for the formation of autonomous industry organizations to allow for industry self-governance, to realize the economic rights of industry participants in line with constitutional democracy. The best system for industry governance is joint governance by employers, employees and consumers, establishing three-party committees to manage employers, employees and consumers, and with committee members from each subcommittee forming an industry self-governance committee to jointly lead industrial development and to create a wider environment for industrial development. We believe that this new industry self-governance structure can meet the needs of Taiwan’s industries as they exist today, to allow all Taiwanese industries to be in control of their own destiny and future path, in the face of the complex trends and challenges domestically, across the Taiwan Strait and worldwide.

Author: Winston Hsu Current Post: CEO, North America Intellectual Property Corporation Education: MSc Computer Science, University of Iowa Experience: US Patent Agent; Member of Intellectual Property Committee of the Chinese National Federation of Industries (ROC)

Facebook Follow the IP Observer on our FB Page