Ahead of the release of last month’s unemployment figures today, pundits predicted the jobless rate may hit a record high and rise in the coming months, despite the recent announcement of a consumer voucher plan and other stimulus measures by the government.
Ryan Wu (吳睿穎), chief operating officer at 1111 Job Bank (1111人力銀行), said he expected last month’s unemployment rate to be 4.4 percent as more businesses cut costs or exited the market amid the global economic downturn.
“The unemployment rate is likely to hit 4.4 percent and is bound to climb higher in the months ahead,” Wu said by telephone. “I see no reason for optimism in light of the drab economic outlook.”
Unemployment reached a four-year high of 4.27 percent in September, up 0.13 percentage points from a month earlier, defying a seasonal drop normally seen at the end of summer, the Directorate General of Budget, Accounting and Statistics (DGBAS) said. The seasonally adjusted jobless index gained 0.19 percentage points to 4.12 percent — also the highest in four years — prompting the agency to sound the alarm for an ominous structural change in the labor market.
On Thursday, the DGBAS raised the specter of recession by reporting the nation’s GDP contracted 1.02 percent in the third quarter and may decline another 1.73 percent and 0.3 percent in the final quarter and first three months of next year respectively.
Wu said most newly laid off people were middle-aged or older, while young college graduates continued to top the unemployment list.
“Falling profit margins have led companies to lay off senior employees whose wages are relatively higher,” Wu said. “The trend promises no opportunity for young jobseekers, as companies are trying hard to survive and have no appetite for new staffers.”
Exports, the mainstay of the nation’s economic growth, are expected to drop 8.28 percent in the fourth quarter, after gaining 18.07 percent in the first half and 8.05 percent in the third quarter, the DGBAS said last week.
Shrinking export orders have caused the private sector to tighten its belt, with private investment expected to drop 11.4 percent in the last quarter, putting the annual figure at minus 2.87 percent this year, the agency said.
Unlike their counterparts in the US and Europe, Taiwanese employers tend to retain glut workers until the Lunar New Year out of sympathy, Wu said, making it premature to speculate on when the jobless rate will peak.
Economists at Citigroup Taiwan shared the gloomy sentiment and predicted in a client note on Friday that the seasonally adjusted unemployment rate for last month would reach 4.2 percent, the highest level since April 2005.
Cheng Cheng-mount (鄭貞茂) and Tina Liao, who coauthored the client note, attributed the rising jobless rate to weaker domestic demand and deteriorating exports.
Norman Yin (殷乃平), a money and banking professor at National Chengchih University, said the voucher plan and other stimulus measures would provide some short-term relief, but were not strong enough to reverse the economic downturn.
“Attempts to expand domestic demand will prove evasive,” Yin said by telephone. “The manufacturing industries are bound to suffer amid the global economic recession. The government cannot avert the scenario without ridding the nation of its dependence on exports.”
Yin said the government was overoptimistic in predicting the economy will start to recover in the second quarter of next year, adding that the impact of the financial crisis would last for at least a year or two.
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