Tue, May 27, 2003 - Page 11 News List

SARS could lift jobless rate above 5%

PESSIMISTIC FORECASTS Analysts say they do not agree with the government's optimism that its job plan will be enough to offset the epidemic's impact

AFP , TAIPEI

The SARS outbreak could push the nation's unemployment rate above 5 percent despite the government's efforts to create more temporary jobs, analysts say.

The jobless rate fell to 4.92 percent last month, down from 5.08 percent in March and 4.98 percent a year earlier, as fewer people lost their jobs due to layoffs or company closures.

The Directorate General of Budget, Accounting and Statistics has even suggested unemployment might further ease to 4.5 percent next month as a special government scheme creating jobs should offset the impact of the SARS outbreak.

Analysts, however, sounded less optimistic.

"The April data has offered little indication that the local job market was improving. The worst is not over yet as the SARS impact remains in place," said Hermes Yang (楊聖璋), an economist with KGI Securities Co (中信證券).

"The disease has slowed down our economic activities and the job market is expected to fall as a [result]," Yang said, adding he expected the jobless rate to rise to more than 5 percent again this month.

"Including the factors of new school graduates, the unemployment may peak at 5.2-5.3 percent in August," he said.

China Airlines Co (華航) has asked its staff to take unpaid leave, while many travel agents have either suspended operations or given their staff longer vacation without pay.

So far this month, the number of passengers at CKS International Airport has dropped more than 80 percent.

"Travel agencies here are suffering. It is likely that 5,000 to 6,000 employees will be laid off in three months if SARS impact continues," said a spokesman with the Taipei Association of Travel Agents.

There are more than 2,000 travel agents hiring about 12,000 employees.

According to a survey conducted by the Ministry of Economic Affairs, revenues of local wholesale, retail, international trade and restaurant businesses could be cut by NT$64.3 billion (US$1.8 billion) in the second quarter of this year.

Yang's comments run in contrast to the government's target of pressing down the jobless rate to 4.5 percent next month on a NT$78.4 billion job-creating budget.

And Chen Chih-chiang (陳志強), a researcher with the Taiwan Institute of Economic Research (TIER) think tank, also said he remained cautious about the local job market.

TIER had previously expected this year's unemployment to fall to below 5 percent if SARS was put under control by the end of next month.

"But the epidemic has created new problems for the local economy. Private consumption has been hurt a lot," Chen said.

He cast doubt over the impact of the unemployment scheme, saying it only provided temporary relief rather than a long term restructuring of the job market.

Earlier this month, authorities cut their growth projection for this year to 2.89 percent from an earlier forecast 3.68 percent due to SARS.

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