Tue, May 01, 2012 - Page 8 News List

The Liberty Times Editorial : Economy’s link to China is ruinous

According to information released by the Directorate-General of Budget, Accounting and Statistics (DGBAS), Taiwan still has the highest unemployment rate of the four Asian Tigers. The data also showed average wages had fallen by 2.1 percent from January to February compared with the same period last year.

After accounting for a rise in commodity prices, real wages experienced negative growth of 2.34 percent. This was the fourth-largest drop in real wages in history — after the 1973 oil crisis, the burst of the dotcom bubble and the recent global financial crisis. Average wages are now lower than they were 14 years ago.

Singaporean Deputy Prime Minister Tharman Shanmugaratnam recently commented about the brain drain Taiwan is experiencing because of its refusal to allow foreign skilled workers to work here, saying it has led to a drop in average income. Shanmugaratnam said Singapore cannot afford to become another “Taiwan story.”

Regardless of whether his remarks were correct, the country’s stagnant wages are indeed a very serious problem. When President Ma Ying-jeou’s (馬英九) administration comes up with its industrial and economic policies, it must realize that the crux of the problem is the relocation of Taiwanese industry and that this situation must not be allowed to deteriorate further.

What cannot be denied is that after four years in power, Ma has devoted himself to linking the national economy to China’s. This will not change over the next four years. According to Ma’s “advanced thinking,” linking Taiwan’s economy to China’s will spur economic growth, job creation and income increases.

Unfortunately, the truth is the exact opposite. Numerous trade agreements — such as the Economic Cooperation Framework Agreement — with China have already been signed. The vast majority of the public have had to endure the problems caused by these agreements instead of reaping any benefits. The only people who have gained from these agreements is perhaps a tiny minority of corporations. Taiwan is now a country increasingly divided between the wealthy and the poor.

Because the government has pinned all its hopes on China, its industrial and economic policies are not aimed at improving the domestic investment environment to make small and medium-sized enterprises (SMEs) want to stay and develop, which would attract foreign investment and create job opportunities.

Instead, the Ma government’s policies seem to be aimed at achieving the exact opposite — encouraging the industries still here to go to China or shut down.

For example, the rise in production costs caused by the recent gasoline and electricity price hikes have resulted in loud complaints from struggling SMEs and small shop owners. The resulting increase in costs will cause many business to close down, which means unemployment increases will soon follow. Is this the “golden decade” Ma keeps talking about?

Regardless of whether it is the salary increases for the military, government officials and public school teachers or the gasoline and electricity price increases, mistaken government policies have caused private enterprises to lose their competitiveness so there is no more room to offer their employees wage increases. It is not that private companies do not want to pay their staff more, they just cannot afford to because they do not have taxpayers’ money to spend.

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