On Nov. 16, the Ministry of Labor published a report about “reduced work hours through consultation between employers and employees,” more widely known as furloughs or mandatory unpaid leave. As of Nov. 15, 5,292 people in 45 companies in Taiwan were on mandatory unpaid leave — 4,000 more than at the end of October. In just half a month, then, the number of people on furloughs more than tripled, setting a three-year high.
On Friday last week, the National Development Council’s economic indicator flashed a “blue” light for the fifth consecutive time, indicating that economic growth remains sluggish.
The Directorate-General of Budget, Accounting and Statistics (DGBAS) released an estimate that put GDP growth at 0.49 percent in the fourth quarter — a downward adjustment of 1.41 percentage points from its forecast in August — with continued weak overseas demand cited as the main reason for lowering the figure.
The DGBAS predicted 1.06 percent GDP growth for the whole year — down 0.5 percentage points from its August forecast.
There are several blind spots in the economic policies of President Ma Ying-jeou’s (馬英九) administration.
First, while Taiwan has controlled inflation better than some advanced countries, its growth and real salary levels have been disappointing. Nearly eight years have passed since Ma took office, so he and his team should have done some reverse thinking long ago.
The correct path is for the government to develop the economy first so that people do not have to worry about finding the wherewithal for daily necessities, and only then setting about controlling inflation. Ma is about to step down, but he has still not realized his mistake. He really is a bit slow on the uptake. No wonder people are finding it so hard to get by.
Second, in response to the global tide of liberalization, Taiwan’s industrial structure needs to be adjusted — and quickly. Anachronistic laws and regulations should be amended as soon as possible. However, why did the government move so fast to sign the cross-strait trade in services agreement with China, and why is it now in such a rush to sign a trade in goods agreement? It is putting the cart before the horse.
Third, the Ma government wants to turn Taiwan into a free economy by promoting free economic pilot zones. The problem is that Ma has still not realized that most Taiwanese businesses — 70 percent or so — are primarily service-oriented. Not only are they “free,” but there is a high degree of competition among them. The government’s emphasis should be on deciding how to guide these service providers and help them become more competitive.
Fourth, Ma’s administration has been promoting its plan for the finance sector to support creative businesses, using the financial market’s abundant capital to support the development of creative industries in a bid to stimulate economic growth. However, why should this only apply to creative firms?
The majority of Taiwanese companies — about 90 percent — are small and medium-scale enterprises that are sorely short of funding. These are the kinds of companies that really need support from the financial sector.
Year after year, Ma repeats slogans about focusing on the economy, but the same old thinking still persists. He still cannot locate the blind spots in his economic policies.
Are Taiwan’s economic problems really so difficult to grasp? Or could it be that Ma and his ministers really do not care about Taiwan and its people at all?
Kuo Chen-hero is an adjunct professor in the School of Business at Soochow University.
Translated by Julian Clegg
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