A Bloomberg article last week about the loss of Taiwanese jobs to China has drawn mixed reactions. The article attributed the losses to the nation’s sluggish easing of investment rules and slow development of the service industry, saying these have caused Taiwan to fall behind Singapore and Hong Kong.
Some sources attributed job erosion to the government’s China policies, which they said helped domestic manufacturers relocate to China in the shortest time possible without creating jobs at home. Others said Taiwan was facing a labor shortage, rather than high unemployment, with the nation’s unemployment rate falling to 4.27 percent in May, its lowest level in 33 months, after peaking at 6.13 percent in August 2009.
One thing is clear: It is impossible to say that the nation’s unemployment problems have been solved, because the unemployment rate is still higher than pre-financial crisis levels.
An unemployment rate of 4.27 percent is indeed an improvement over one of 6.13 percent, but the government should not paint a rosy picture based on that number alone.
The public should keep in mind that the government’s definition of “unemployment” refers to people who are out of work, but ready to find jobs any time soon. “Discouraged workers,” who are not currently looking for jobs after having tried for a long time, and “non-typical workers,” such as part-time and temporary workers, however, do not fall into the government’s narrow definition of unemployment.
If the roughly 155,000 “discouraged workers” in May are added to the pool of 476,000 unemployed people for that month, the unemployment rate shoots up to 5.66 percent rather than the 4.27 percent reported by the government. In other words, just because certain people do not appear in the official unemployment statistics does not mean the labor market is improving.
Meanwhile, the nation is facing a serious problem of “structural unemployment,” an issue that Mark Williams, an economist at Capital Economics Ltd in London, rightfully pointed out in the Bloomberg article. Indeed, economists have long said that increasing structural unemployment is the main reason for rising unemployment and wage stagnation in Taiwan.
Over the past two decades, many labor-intensive manufacturers left Taiwan for other countries, causing the nation’s economy to go through structural adjustment as it shifts from traditional, labor-intensive industries to capitalized, technology-intensive industries. However, the labor force that lost jobs as traditional industries left Taiwan has failed to catch up with the nation’s industrial upgrade, with job seekers’ skills falling short of the demands of the new industries. Ironically, this has led to a skilled labor shortage and high unemployment occurring at the same time.
Structural unemployment is dangerous; it becomes more difficult to fix the longer it persists. This is because the longer people are out of work, the harder it is to find employment.
Moreover, structural unemployment not only results in a rising number of discouraged workers and shortage of skilled workers, but also restricts wage growth among salaried employees. This is because new industries lack the work force to sustain growth, while social welfare spending on the unemployed continues to expand, adversely affecting the competitiveness of the nation’s economy as a whole.
No matter what message people take from the Bloomberg article, no one should overlook structural unemployment and its implications for the nation’s economy — the paradox of high unemployment and a serious labor shortage, which we must tackle now.
Saudi Arabian largesse is flooding Egypt’s cultural scene, but the reception is mixed. Some welcome new “cooperation” between two regional powerhouses, while others fear a hostile takeover by Riyadh. In Cairo, historically the cultural capital of the Arab world, Egyptian Minister of Culture Nevine al-Kilany recently hosted Saudi Arabian General Entertainment Authority chairman Turki al-Sheikh. The deep-pocketed al-Sheikh has emerged as a Medici-like patron for Egypt’s cultural elite, courted by Cairo’s top talent to produce a slew of forthcoming films. A new three-way agreement between al-Sheikh, Kilany and United Media Services — a multi-media conglomerate linked to state intelligence that owns much of
The US and other countries should take concrete steps to confront the threats from Beijing to avoid war, US Representative Mario Diaz-Balart said in an interview with Voice of America on March 13. The US should use “every diplomatic economic tool at our disposal to treat China as what it is... to avoid war,” Diaz-Balart said. Giving an example of what the US could do, he said that it has to be more aggressive in its military sales to Taiwan. Actions by cross-party US lawmakers in the past few years such as meeting with Taiwanese officials in Washington and Taipei, and
Denmark’s “one China” policy more and more resembles Beijing’s “one China” principle. At least, this is how things appear. In recent interactions with the Danish state, such as applying for residency permits, a Taiwanese’s nationality would be listed as “China.” That designation occurs for a Taiwanese student coming to Denmark or a Danish citizen arriving in Denmark with, for example, their Taiwanese partner. Details of this were published on Sunday in an article in the Danish daily Berlingske written by Alexander Sjoberg and Tobias Reinwald. The pretext for this new practice is that Denmark does not recognize Taiwan as a state under
The Republic of China (ROC) on Taiwan has no official diplomatic allies in the EU. With the exception of the Vatican, it has no official allies in Europe at all. This does not prevent the ROC — Taiwan — from having close relations with EU member states and other European countries. The exact nature of the relationship does bear revisiting, if only to clarify what is a very complicated and sensitive idea, the details of which leave considerable room for misunderstanding, misrepresentation and disagreement. Only this week, President Tsai Ing-wen (蔡英文) received members of the European Parliament’s Delegation for Relations