Termination of Employment -- Local Nationals

After President James Earl Carter's 15 December 1978 announcement that all U.S. Forces military activities were to be phased out of Taiwan by 30 April 1979, it became necessary to work out a plan for out-placing or terminating civilian employees as well. I wrote earlier about U.S. civilian employees so today I'll describe how Local National (LN) employees were processed.

Any civilian reduction in force is a difficult and emotional time for many, and such was the case in Taiwan. The Office of the Secretary of Defense (OSD) suggested that every effort be made to help Chinese national employees of the Department of Defense (DOD) find other employment. The Commander of the U.S. Taiwan Defense Command requested that someone qualified in such matters be deployed to Taiwan to facilitate this process. As a result, a U.S. Civilian Personnel Specialist from Headquarters Pacific Air Forces was assigned to COMUSTDC in late January for two months. That individual, who had previous experience in Taiwan, worked closely with host government and private sector representatives to place 300 of the 1,367 LNs employed by the U.S. government.

Within days of Carter's announcement, employee representatives from all Taiwan activities petitioned U.S. Forces with a number of demands for compensation:

• $20,000 spiritual compensation (for the loss of reputation and based on Chinese law and custom)
• Increased severance pay benefits ranging from one month's pay for 1-5 years of service to 3 month's pay for over 20 years of service;
• Payment for all unused sick leave;
• All payments in lump sum by 31 January 1979;
• No Reduction in Force (RIF) actions taken until after Lunar New Year (mid-February 1979) and the same separation date for all, preferably 30 April 1979.

The USTDC Joint Labor Affairs Committee met in emergency session on 4 January 1979 to consider these demands and other LN reduction related matters. They agreed that any changes in compensation practices should be based on the prevailing practice principle. Local Nationals had lost some of their own government benefits while employed by the U.S. because they were not covered under the Taiwan government's old age pension Labor Insurance Act (LIA), which had been in effect since 1970. In fact, U.S. Forces were in the process of subscribing their Local National employees to the plan at the time that Carter made his withdrawal announcement. Further complicating the issue was the fact that employees had been encouraged over the years to conserve their sick leave to use for major illnesses or injuries.

Recommendations were made by COMUSTDC to CINCPAC. All of the regional U.S. commands concurred for the most part, with some alternatives proposed -- most notably by the Air Force.

Ultimately, the OSD decided on 22 February 1979 that each employee separating after 30 January 1979 would receive a month's salary for each year of service since 1970, mostly because of the failure of U.S. Forces to enroll their employees in the LIA program. The accrued sick leave program was denied, at least partly because of the fear that it would set a bad precedent for relations with civilian employees in other countries.

From January to April 1979, there were a number of work disruptions and also isolated instances of employees not reporting for duty.

Because the Office of the Secretary of Defense dragged its heels in making a decision on RIF policies, commanders on Taiwan were unable to issue notices to their employees as scheduled on 1 February 1979. They complained that 270 notices should have already been issued and another 200 should be issued by 16 February. This delay was costing them excessively in funds as well as making it extremely difficult to meet activity closure schedules.

When OSD still hadn't answered by mid-February, notices were issued. This action resulted in disruption in functions, mass requests for leave without pay, sit-down strikes and refusals to work. In response, the CINCPAC Chief of Staff asked the Deputy Assistant Secretary of Defense for Civilian Personnel Policy for an early, favorable decision on the compensation proposal.

What made the whole labor issue even more difficult was the fact that there had been a number of reductions in force over the years, so that the number of Local National employees was down from a high of about 5,000 in 1970 to the 1,367 at the time of Carter's speech. Of course most of those previously cut had less seniority at the time, so the remaining workforce was made up mostly of those who had been employed the longest -- averaging about twelve years of service -- and many of them were in key positions.

Employee morale was not good during those months, but overall the civilian workforce was stable, loyal, and contributed well to the close-down operations.