The Directorate-General of Budget, Accounting and Statistics just released the unemployment figures for last month. With new graduates inflating the figures, the monthly rate increased to 5.16 percent. Now many new graduates are thinking about what they should do next. There is a saying in Taiwan that goes “higher levels of education lead to higher levels of unemployment.” Why has higher education taken on such a negative connotation, especially when applied to new graduates at the beginning of their professional careers?
New graduates complain that jobs are scarce and prefer to put the job-hunting off for a while. Some have a rest, others go abroad to study and improve their foreign language skills, whilst others still opt for overseas working holidays so they can gain a more international perspective. New graduates’ apathy and disorientation should actually be viewed as a mark of youth and not something negative.
This generation has grown up in relative wealth compared with their parents and finding a job after graduating is not necessarily a priority for them. Their youth is a time for dreams, when they can pursue their academic interests, think about what job they want, look at what is around and try to find their ideal vocation. When it seems they are idling away their time, they are actually honing their skills and gaining experience. The time for making mature decisions comes later, in their 30s, by which time they may even have become parents, with all the responsibilities that entails. It’s at this point that the employment rate actually becomes significant.
In Taiwan, unemployment rates for the 15 to 24 age range have always been higher than those who are over 25. In terms of the level of education, there was conspicuously higher unemployment among those who left school before high school, regardless of age. The lowest rate of unemployment, again regardless of age, is seen amongst those who have attended specialized colleges and higher.
We see the same patterns in the US. Its overall unemployment rate reached 9.3 percent last year, as high as 23.2 percent for 16-to-19 year-olds and 15.1 percent among those aged 20 to 24. For the 25-to-54 age group, the figure was 8.5 percent. High unemployment rates, then, are normal among the younger generation. This does not mean we should ignore how much money needs to be injected into the economy to increase demand for labor and lower these figures.
At the end of the 1960s, hippies were known for their peculiar ways, strange dress and habit of getting into groups to sing and dance and talk about the ideals of love and peace. At the time, these hippies were referred to as the “Lost Generation,” but they did contribute to what was to become the culture of rock and roll. More importantly, they later worked hard at their careers and have led fulfilling lives. By the time they reached middle age, many of them had become members of the social elite they opposed when they were younger.
There are certain similarities between the experience of unemployment and love, in that they are both challenges, painful and troubling at times, from which one can grow. One learns the true value of something and moves on. University education is a long-term investment and should not just be about lowering unemployment rates: It is more about the accumulation of skills that one can use throughout one’s life.
The idea that higher levels of education lead to higher levels of unemployment suggests that younger generations have progressively more access to higher education. Higher levels of unemployment among younger generations is normal and the employment and labor participation rates level out as these generations get older. We shouldn’t be too preoccupied with the youth unemployment rate, as this would lead us to focus on the wrong aspects of Taiwan’s current unemployment situation and could result in a misallocation of government resources.
Data about the overall state of the labor market should also include information like the employment growth rate — opportunities for work — and the labor force participation rate — demand for labor. This will help us see the true picture. Isolated, one-sided statistics are temporary and we should focus on keeping average lifetime unemployment rates low and increasing the employment growth rate and labor force participation rates. People should pay more attention to the average unemployment rate over the course of a whole lifetime and the government should make minimizing the average unemployment rate over a lifetime one of its major policy priorities.
Kuo Nai-fong is an associate professor of finance at Shih Hsin University and Hsieh Hsiu-yi is an associate professor of finance at Jinwen University of Science and Technology.
TRANSLATED BY DREW CAMERON
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