It is a welcome sign that the nation’s unemployment rate dropped to less than 4 percent last year — the best performance during President Ma Ying-jeou’s (馬英九) tenure — as the steady recovery of the global economy offered continued support to the domestic labor market. If the government can utilize more resources to encourage Taiwanese businesses to hire, or the global economy can show a much more solid footing than last year, it would increase the likelihood of pushing unemployment even lower this year.
The unemployment rate fell to 3.79 percent last month — a 14-year low — the Directorate-General of Budget, Accounting and Statistics reported last week, citing modest decreases among first-time jobseekers and business closures nationwide. This brought the average joblessness rate to 3.96 percent for all of last year, the lowest level since 2007, when it was 3.91 percent, agency data showed.
In the face of this steady improvement in the labor market, what is especially worth noting is that the number of people who lost their jobs due to factory closures or shrinking business fell to 118,000 last month, from 140,000 people at the beginning of last year, with the whole-year figure averaged at 128,000 people.
That is nearly one-third of the 337,000 people who lost their jobs due to factory closures or shrinking business during the global financial crisis in 2009, indicating that an improved GDP has healed the job market and the situation of involuntary unemployment has improved significantly over the years.
As savings from transportation expenses due to falling global oil prices — which have dropped by more than 50 percent since the middle of last year — will leave consumers with more money to spend, domestic demand is expected to lend greater support to economic growth this year, with the agency’s latest economic growth forecast expecting the nation’s GDP to expand by 3.5 percent this year. Most economists believe that GDP will increase by between 3 percent and 4.5 percent this year.
However, there are still worrisome signs and the government faces real challenges if it wants the public to feel better off. For instance, real wages after adjustment for inflation for the first 11 months of last year rose by just 0.5 percent year-on-year to NT$36,690 per month and regressed to the same level they were at 16 years ago, agency data showed.
When renowned management strategist and Harvard University professor Michael Porter visited Taiwan late last year, he felt puzzled by the discrepancy between local salaries, which ranked 60th in the world, and the nation’s competitiveness, as it ranks 14th in the World Economic Forum’s survey of 144 nations.
Some pundits have said things will get better if the economy continues to grow, followed by meaningful improvements in the labor market, but others believe the issue of low wages reflects not just the economic structure of Taiwan today — where the high-paying manufacturing base is shrinking while the number of low-paying retail and food service jobs are increasing at an unbelievable speed — but also the impact of public policy, which seeks to compensate for low wages with minimum-wage increases, shorter work hours and other labor insurance and pension subsidies, rather than developing an environment where companies can stay profitable and are encouraged to offer high wages.
Indeed, there are companies in Taiwan that are willing to pay their employees enough so that they can afford to buy the products they need and enjoy a better standard of living. However, if more companies can raise wages as the local economy gains steam, they will likely see lower employee turnover, higher employee productivity and a better corporate image, which in turn would make a major contribution to the nation’s economy.
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