Traditional Chinese culture has a great impact upon the development of the ethical labor relation in Taiwan. Familism, pao concept, and tendency to avoid conflict characterize the nature of the relation. The development of SMEs dilutes labor's class identity. Relative to SMEs, large enterprises are regulated by law in forms. The growing unemployment due to industrial restructure may consolidate labor's class identity, which will reshape the ethical labor relation. Socio-cultural causes of employers' ethical decision making as well as the shift of work ethics are discussed. New challenges are to be confronted due to socical change. After examining the control mechanism of the ethical labor relation, suggestion is made to maintain the dual approach--market-and-governmental-intervention approach to substantiate the goals for economic development as well as labor protection.