To be actively seeking employment must be a prerequisite for eligibility for unemployment relief, no matter how poor the state of the economy. If the authorities concerned are forced to achieve immediate results because they are hard put to handle the media, this will very likely "create" unemployment. Public service jobs created by the government, for example, may attract people who are not highly motivated job-seekers. Politicians can take credit for creating jobs, but these people may become the unemployed of the future. This kind of relief has a limited effect in lowering the unemployment rate, and the group of unemployed that it creates will continue to depend on handouts from the government.
Of course, the best form of unemployment relief is professional training. Rather than creating public-service jobs, which may have many drawbacks and no benefits, it would be better to provide large subsidies for every sort of professional training.
Now, is there such a thing as a "beneficial" strategy to counter unemployment or even one that does the trick once and for all? If conditions are indeed as the above analysis suggests, current unemployment is primarily a byproduct of the structural readjustment of industry. Thus such a readjustment needs only to be completed, and unemployment will naturally be reduced.
So how can the structural readjustment of industry be completed as soon as possible? The answer is: "rely on the market mechanism," and if it doesn't work quickly, continue to refrain from thinking about how the government could get involved. This is because, taking Taiwan as an example, some traditional industries and even certain high-tech production processes have moved to China, and there is no fixed formula to indicate which industries or production processes are suitable for Taiwan. One could say that nobody knows, and those who aren't directly involved in production, including the government, usually have still less of an idea.
So what can be done? We can only make use of the market mechanism for selecting the best and weeding out the worst. The government can improve administrative efficiency and provide an even better foundation in terms of social infrastructure, including the legal system, public security, transportation, communication, information, education and professional training. Given the inadequate public works projects in the past, an effective short-term policy would be to strengthen cost-effective public works projects for which estimates have already been approved.
Finally, the media often criticizes the government, which causes people to lack confidence and hinders investment. Confidence truly does influence investment and the media really should not repeatedly report negative news and ignore the positive, considering it to be its responsibility to undermine people's confidence. This doesn't benefit anyone.
Chang Ching-hsi is a professor in the department of economics at National Taiwan University.
Translated by Ethan Harkness
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