Sun, Nov 02, 2008 - Page 8 News List

EDITORIAL: Job-creation plan misses the point

On Friday, the Cabinet approved a plan to create 102,000 short-term jobs from this month through the end of the first half of next year to contain rising unemployment amid an economic slowdown.

Under the new plan, the government will first provide 46,000 short-term jobs at various government organizations and agencies before year’s end, and then another 56,000 jobs in the first six months of next year.

The Cabinet’s plan, coupled with a recent Council of Labor Affairs program encouraging private companies to offer 5,000 jobs for a maximum period of six months, came after government statistics showed the unemployment rate unexpectedly rose to a three-year high of 4.27 percent in September, with the number of unemployed climbing to 464,000 people for the month.

These efforts also came amid mounting evidence that Taiwan was feeling the pinch from the global economic slowdown, with September export orders growing at their slowest pace in six years, retail sales declining for the fourth consecutive month and consumer confidence hitting another record low last month.

Unemployment is likely to grow after a number of listed companies reported lower-than-expected quarterly earnings for the July to September period last week. Companies gave cautious or even pessimistic outlooks for the first quarter next year, and some announced cutbacks of expansion plans to better align themselves with the slowdown.

This all hints at a reversal in workforce demand next year. Job experts have warned the unemployed that this economic downturn will be more serious than the 2000 to 2001 recession.

Already, the number of people unemployed for more than one year surged to a three-year high of 66,000 in September, government data showed. Those below the age of 34 accounted for nearly 60 percent of this segment.

Moreover, the range of those with faltering job security has expanded to white-collar workers, with several local high-tech companies, airlines and financial service providers reportedly considering workforce downsizing, hiring freezes, salary cuts or unpaid leave.

In light of the recent data, the central bank on Thursday yet again held an unscheduled press conference to announce an interest rate cut by another 25 basis points.

Including this latest cut, the bank has lowered rates three times in five weeks, decreasing its discount rate by a total of 62.5 basis points to 3 percent. Such a large reduction in the rate in so short a time has not been seen in 17 years.

Policymakers are gravely concerned about the effect of the global financial crisis on the domestic economy. But the effectiveness of the central bank’s eased monetary policy will only begin to take shape after two quarters, not immediately. The Cabinet wants to act like Santa Claus, but its job-creation gift will have a limited impact on the job market, considering the number of openings, the potential targets of these public-sector jobs and the duration of the plan.

The key to lower unemployment is strong growth momentum in the private sector. This would demand the government come to the rescue of the nation’s small and medium-sized enterprises (SMEs), which are the major providers of jobs in this country. The government should strive to help SMEs avert business closure or bankruptcy amid a bleak economic environment.

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