Mon, Oct 19, 2009 - Page 12 News List

Taiwan ponders China trade pact amid job fears


Taiwanese who back a planned trade pact with China and those who oppose it agree on one thing at least — the agreement will have a major impact on the nation’s labor market.

While those in favor of the much-anticipated deal with Taiwan’s giant neighbor say there will be massive gains, others fear it will wipe out jobs on a huge scale.

No one knows for sure what the consequences will be but the uncertainty unsettles those whose livelihoods may be at risk from the mainland’s millions of underpaid workers.

“I’m in the dark and I’m afraid my job will be affected,” said a Taiwanese auto worker, who only wanted to be identified by his surname Wu.

“I don’t know what the agreement is about at all, because the government has failed to give the full details,” Wu said.

During Taiwan’s boom years from the 1960s to the 1990s, unemployment was seldom on the agenda, but now it has emerged as a decisive political issue.

So far this year the jobless rate has been 5.82 percent, nearly double the 2.99 percent recorded as late as in 2000.

The government insists the trade pact with China, referred to as an economic cooperation framework agreement (ECFA) will boost the flow of goods and personnel, raising annual economic growth by more than one percentage point.

Taiwan and China will reportedly hold informal talks this week on the trade pact — the fourth such meeting, which will aim for a timetable for formal negotiations.

Ahead of the talks, the Taiwanese government has suggested that more than a quarter of a million jobs will be created by the agreement on a net basis.

“It’s like a rose,” Premier Wu Den-yih (吳敦義) said on Friday. “Optimists see the flower, while pessimists see the thorns. The government has to look at both the flower and the thorns.”

The flower, according to Wu, is 350,000 new jobs, especially in chemicals, machinery and textiles, while the thorns are more than 80,000 jobs at risk in industries such as tiles and home electronics.

“The estimate of 80,000 affected workers is the worst-case scenario,” an official at the Council of Labor Affairs said.

“They won’t necessarily all lose their jobs. Some will just receive on-the-job training and their employers will have to streamline to enhance competitiveness,” the official said.

However, some analysts called the 80,000 figure unrealistically low, given the country’s labor force of more than 10 million.

“What if more industries relocate to China for lower production costs once the pact is signed? That will really hit the job market here,” Mega Securities (兆豐證券) analyst Lucas Lee (李志安) said.

Kenneth Lin (林向愷), an economist at National Taiwan University, said the flow of Taiwanese investment to China — up from 0.5 percent of the GDP in 2000 to 2.6 percent last year — had a clear impact on jobs.

“With more investors moving to China, our jobless rate has averaged 4 [percent] to 5 percent between 2000 and 2008, up from two to three percent in the 1990s,” he said.

“I expect 150,000 to 200,000 workers will lose their jobs due to the pact,” he said.

Chinese Nationalist Party (KMT) legislator and management professor at Chengchi University Lai Shyh-bao (賴士葆) said the focus on the relationship with China was too narrow, pointing out the pact’s potentially beneficial impact on ties with other economies.

“The pact is likely to attract foreign investors to Taiwan as they expect to benefit from the integration with China,” he said.

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