The government said last week it plans to create 99,000 short-term jobs next year to bring down the unemployment rate, which hit an all-time high of 6.13 percent in August and was still at 5.96 percent in October.
That will make it two years in a row that the government has proposed a short-term job creation scheme to contain unemployment after it adopted a plan to create 102,000 short-term jobs at government organizations and agencies this year.
The administration should be praised for making unemployment a top priority for its economic agenda. This problem was reflected at the most basic of levels: A study released by the Taiwan Society of Sleep Medicine on Friday showed that nearly 5 million people in Taiwan suffer from chronic insomnia, primarily because of job concerns. Compared with a similar study conducted three years ago, chronic insomnia sufferers have almost doubled, the study said.
However, the government’s job-creation scheme will have a limited impact on the labor market considering the number of openings, the potential targets of these public-sector jobs and the short-term duration of the plan.
This year’s scheme was launched without considering how temporary public workers would return to the private sector once their contracts expired. The government needs to take this problem seriously in next year’s job-creation program, or the scheme will only serve to drag the unemployment rate down by a small margin while not solving the real problem of job losses.
Moreover, even though the unemployment rate peaked in September, it will take months for the labor market to absorb the pool of unemployed workers and to satisfy those who plan to shift from part-time jobs to full-time jobs.
The key is how long it will take private businesses to start hiring again now that the economy seems to have bottomed out.
Recent government data show that the number of newly laid-off workers and people who applied for unemployment benefits have both dropped in recent months. While these indicate that job losses have started to drop, we have yet to see signs that the market is ready to start hiring afresh.
An immediate question facing companies is whether they are willing to hire new people rather than squeeze output from their current work force. A lot of companies will be hesitant to hire if they do not see solid signs of recovery.
Another challenge for the domestic labor market is the emergence of a new wave of corporate mergers and acquisitions, or similar consolidation moves within respective industries, that could prompt companies to shed excess workers.
Moreover, even if demand for some jobs picks up as the economy recovers and businesses expand, companies won’t necessarily hire local workers — particularly those belonging to traditional industries — after Taiwan and China sign an economic cooperation framework agreement, or ECFA. Increasing cross-strait economic and trade integration may lead to the availability of Chinese workers and spur companies to move to China out of cost considerations. The result will be more job losses in Taiwan and stagnant wages.
Taiwan’s economy is emerging from the recession, but the fight against unemployment is far from complete. A cruel reality is that middle-aged workers and those in traditional industries are no longer the main people suffering from job losses. The unemployment problem has seen a structural change, with young, highly educated workers in high-tech industries losing their jobs.
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