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Plan for the jobless is really no plan at all

The Legislative Yuan has passed the NT$20 billion budget plan for expanding public services and creating jobs. But it has postponed the review of the NT$50 billion budget plan for expanding infrastructure until its next session. The effectiveness of such programs, however, is unpredictable.

From the workers' perspective, the government's NT$20 billion budget can save a number of them from unemployment -- although no specific plan or evaluation method has yet been made. They certainly have no reason to object. Legislators dare not block the plan either.

In fact, not too many people really believe that the plan was proposed to enhance public services. Nor do they believe that the government can solve the unemployment problem by directly hiring about 10 percent of the more than 700,000 unemployed workers.

In my opinion, the NT$20 billion is simply hush money to silence about 70,000 or 80,000 of the unemployed, those who demand the government solve the unemployment problem,and those who criticize the government's performance.

The key to the matter lies in the unemployment rate. Think about it. Instead of paying the NT$20 billion to the unemployed directly, why would the government hire a small fraction of the them to carry out public services that have not yet been planned?

One reason is that giving NT$20 billion directly to the jobless would give each person just a little bit of money. A more practical reason is that direct subsidies are unable to help reduce the unemployment rate.

The government's goal is only to lower one-tenth of the unemployment rate, which at more than 5 percent, is the highest ever.

President Chen Shui-bian (陳水扁) has vowed to lower the jobless rate to 4.5 percent. The government can accomplish this goal if one-tenth of the unemployed workers return to the workplace. Clearly, the new policy was proposed to solve the unemployment rate problem, rather than the unemployment problem.

To solve the unemployment problem, the government has to tackle both cyclical unemployment -- which is caused by the recession of market and production -- and structural unemployment -- which is caused by workers' lack of appropriate professional skills for industrial transformation.

To tackle the cyclical unemployment problem, we have to stimulate the economy, improve the investment environment and expand our effective demand as well. Tackling structural unemployment means assisting the jobless to learn new skills.

The NT$20 billion plan will solve none of these problems. Not to mention that providing public services and classes have a very limited effect on the unemployed. After finishing these services a year later, it will only be more disadvantageous for them to find their ideal jobs. This will further worsen the unemployment problem in the future.

According to the logic of the government's policy, the unemployment rate will immediately drop after one-tenth of the jobless take the hush money payouts and are employed -- albeit temporarily.

In that case, a policy aimed at keeping people quiet will be considered a successful one, since we can no longer blame the government for the problem.

However, the unemployment problem will not be solved even if the unemployment rate drops. I'm afraid that the nine-tenths of the unemployed population will be ignored. This will make the jobless even more disadvantaged than they were before.

Liu Ruey-hua is an associate professor in the department of economics at National Tsing Hua University.

TRANSLATED BY EDDY CHANG
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