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.
President William Lai (賴清德) attended a dinner held by the American Israel Public Affairs Committee (AIPAC) when representatives from the group visited Taiwan in October. In a speech at the event, Lai highlighted similarities in the geopolitical challenges faced by Israel and Taiwan, saying that the two countries “stand on the front line against authoritarianism.” Lai noted how Taiwan had “immediately condemned” the Oct. 7, 2023, attack on Israel by Hamas and had provided humanitarian aid. Lai was heavily criticized from some quarters for standing with AIPAC and Israel. On Nov. 4, the Taipei Times published an opinion article (“Speak out on the
Eighty-seven percent of Taiwan’s energy supply this year came from burning fossil fuels, with more than 47 percent of that from gas-fired power generation. The figures attracted international attention since they were in October published in a Reuters report, which highlighted the fragility and structural challenges of Taiwan’s energy sector, accumulated through long-standing policy choices. The nation’s overreliance on natural gas is proving unstable and inadequate. The rising use of natural gas does not project an image of a Taiwan committed to a green energy transition; rather, it seems that Taiwan is attempting to patch up structural gaps in lieu of
The image was oddly quiet. No speeches, no flags, no dramatic announcements — just a Chinese cargo ship cutting through arctic ice and arriving in Britain in October. The Istanbul Bridge completed a journey that once existed only in theory, shaving weeks off traditional shipping routes. On paper, it was a story about efficiency. In strategic terms, it was about timing. Much like politics, arriving early matters. Especially when the route, the rules and the traffic are still undefined. For years, global politics has trained us to watch the loud moments: warships in the Taiwan Strait, sanctions announced at news conferences, leaders trading
News about expanding security cooperation between Israel and Taiwan, including the visits of Deputy Minister of National Defense Po Horng-huei (柏鴻輝) in September and Deputy Minister of Foreign Affairs Francois Wu (吳志中) this month, as well as growing ties in areas such as missile defense and cybersecurity, should not be viewed as isolated events. The emphasis on missile defense, including Taiwan’s newly introduced T-Dome project, is simply the most visible sign of a deeper trend that has been taking shape quietly over the past two to three years. Taipei is seeking to expand security and defense cooperation with Israel, something officials
RSS