The government has attempted to create a holiday atmosphere by distributing NT$85.7 billion (US$2.54 billion) in consumer vouchers to every citizen and foreign spouse, as if these NT$3,600 vouchers could boost the nation’s economy.
But public excitement soon waned when figures released on Thursday showed growing unemployment. The Directorate General of Budget, Accounting and Statistics (DGBAS) reported the unemployment rate had surged to a six-year high of 5.03 percent last month. The last time the figure set a record was in September 2003 at 5.05 percent.
Following a string of gloomy forecasts made by local and foreign institutes, most people realize that the economy is headed toward its first recession since 2001. But what people don’t understand is how bad the situation is — not on the books but in real lives.
Data provided by the DGBAS shows the number of unemployed people surged to 549,000 last month, the highest level since the agency began collecting unemployment data in 1978. The DGBAS said more than 1.16 million people were affected by worsening unemployment.
The record-high unemployment has undoubtedly led to economic activity slowing significantly last month, with the nation in a deep downturn.
While the job market is likely to see some improvement this month owing to the hiring of temporary workers in the service sector for Lunar New Year promotional activities, both DGBAS officials and economists have warned that the dismal situation is likely to continue after the holiday as companies shut down or cut jobs to cope with the slowdown.
The real job situation, however, could be worse than people expect because the “official numbers” do not tell the full unemployment picture.
Under the government’s definition of unemployment, people who work less than 16 hours a week and those who are not looking for work specifically because they believe there aren’t any jobs suitable for them are not counted as jobless.
If these two groups were included, the actual unemployment number last month may have been as high as 803,000.
There is also a discrepancy in the government’s designation of the 1.21 million people who worked less than 35 hours a week last month — defined by the government as employed even though their hours were less than the standard 42-hour work week set by the government.
These people — including those who worked part-time or were asked by companies to take unpaid leave — had jobs, but what they earned was not enough to properly support their livelihoods.
If this dire unemployment situation continues, it is likely to worsen already weakened private consumption. Although that scenario could increase the odds of a second distribution of consumer vouchers in the second half of the year, that would only help boost private consumption in the short term, ignoring the unemployment problem.
The government’s recent creation of short-term job opportunities in the public sector can only reduce the jobless figure temporarily; it doesn’t solve the core problem. To increase job opportunities, the government will have to facilitate industry development and encourage businesses to invest in Taiwan.
Another thing to worry about is the fact that some government officials seem to take the vouchers as a cure-all for the economy. But when people no longer have jobs, how can you expect them to boost the economy by spending?