Several rather alarming trends are starting to show up in the distribution of income in Taiwan. Last year, for example, the top 20 percent of incomes amounted to 6.34 times that of the bottom 20 percent.
Although figures such as this do not show the impact on income distribution of structural changes in the family over the long term, if one also factors in generation-based unemployment figures and data on sources of household income, a clearer if troubling picture of what is happening begins to take shape.
What we find are some extremely worrying social phenomena, including high youth unemployment and low income levels, stagnating household incomes for young people at one end of the demographic spectrum, senior citizens living alone on the other and increased reliance on income from investments and savings as a percentage of total household income.
These problems touch on a number of issues, including tax revenues, social welfare and even the current model of economic development.
In terms of government policy, we can identify a number of urgent priorities based on the potential financial repercussions of these problems.
First and foremost, young people and especially young families represent two large sections of society with their whole future ahead of them. In other words, if unemployment and low income levels in these groups become structural problems in our society, social welfare costs and losses in terms of productivity and tax revenue could spiral out of control.
Unfortunately, at present the government has chosen to address the problems of older generations by throwing money at them. Also, it has yet to come up with a comprehensive solution to address the problem of unemployment and low income levels among the youth.
This leaves them vulnerable to exploitation by employers, who label young people the “Strawberry Generation,” implying that they are work-shy and soft. The underlying mentality behind this label is that if the young generation don’t drive themselves into the ground for their employers they are poor workers.
Compare this with what is happening in advanced countries like Japan, which have now struck the right balance between work and family, encouraging smaller families and stimulating domestic consumer demand. Seen from this perspective, the government’s “youth economic security package” is no longer just about population, education and industrial development, though these remain important: It is also about corporate social responsibility, about companies seeing beyond their own immediate self-interest.
As far as the issue of employment is concerned, the government, in the short run at least, could extend joint university/industry schemes and offer job training courses leading to internships, so that some of this corporate social responsibility will benefit the younger generation.
Another way it can contribute is to help young people get one foot on the property ladder. In addition to the idea of social housing which is currently popular, it could also consider renting to young families, rather than offering housing for sale. A portion of this rent could actually be paid into a long-term fund, partially subsidized by the government, that would enable the tenant to eventually own the house.
The ratio of rent paid relative to subsidy would be calculated according to the number of children in the household and the number of years worked, artfully combining government policy on population and employment.
Tristan Liu is a consultant for Taiwan Thinktank.
TRANSLATED BY PAUL COOPER
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