The latest export orders and industrial production figures released on Thursday show that Taiwan is gradually building momentum in export-oriented growth. Economists said a much narrower decline in export orders last month from a year ago, together with solid improvement in industrial production, suggested that domestic manufacturers are increasing production as the economy appears to bottom out.
Other data released on Wednesday show that domestic trade also posted signs of recovery in all three categories — retail, wholesale and food/restaurant services — implying that the impact of the recession has begun to ease.
The latest data are not all promising, however. The recovery in export orders, industrial production and wholesale trade last month was hurt by a weakening rebound in retail sales and food/restaurant services.
In other words, while export-reliant manufacturers — especially in consumer electronics, information technology and machinery production — may be beginning to celebrate the green shoots of recovery, domestic-oriented firms are still finding themselves struggling with weak consumer demand.
The latest data present a picture of uneven development across the nation’s economic fundamentals and cast doubt on the sustainability of any recovery. Furthermore, consumer demand, which is necessary for sustainable recovery, is likely to remain subdued now that the latest unemployment figures, released on Wednesday, show the rate continuing to climb — to a record 5.94 percent last month.
With graduates entering the labor market, the jobless rate is certain to rise further in the next few months. Although government officials have said the labor market has started to stabilize because local companies are cutting fewer jobs, the fact is that the same companies remain reluctant to increase staff.
The situation has led the government to create short-term public sector jobs for the unemployed. It has also coordinated with private businesses to provide internships for college graduates.
But these are short-term solutions for stabilizing the labor market — and there are downsides to temporary offers. Companies need to see more concrete evidence of recovery and real growth in sales before they will want to hire new people. If there is no such evidence, then they will squeeze more work from existing employees as part of cost-cutting efforts.
Another downside is the persistence of long-term unemployment if job creation remains weak — even in the event that the economy begins to recover this year. Certain age groups are more likely to suffer, especially older age brackets.
Then there is worsening youth unemployment. Data suggest that one out of every six unemployed is a first-time job seeker, and that it took about eight months for fresh graduates to secure a job last month — higher than the average of six-and-a-half months in the first half of the year.
Even graduates who are fortunate to secure temporary jobs or internships this year will face uncertainties once their contracts expire. If they cannot find a job for an extended period of time or need to obtain new skills to survive in a more difficult job market, many will believe that the extra time they have devoted to their education will have been for nothing.
It will take some years for the job market to stabilize. In the meantime, long-term unemployment poses a real challenge to the nation’s economic competitiveness — and policymakers.