Friday was Premier Chang Chun-hsiung's (張俊雄) birthday. He made three birthday wishes in front of lawmakers at the legislature -- "political stability, economic revival and jobs for everyone."
The same afternoon, all the evening papers reported that the country's jobless rate for February had reached a record-breaking 3.75 percent. Chang surely had ample reason if he felt less than cheerful on his birthday.
Political stability, the economy and the unemployment rate are all connected. A depressed economy leads to a surging unemployment rate, which translates into real and pressing daily problems for people, especially in a society such as this with an underdeveloped welfare system. Such problems cause such popular discontent that, upon reaching a "boiling point," causes volcanic political instability to erupt. Therefore, Chang and the entire Chen Shui-bian (陳水扁) administration have to be very concerned since the already fragile government cannot afford more instability.
The experience of other countries tell us the "boiling point" of developed nations such as Germany and France is an unemployment rate of approximately 10 to 12 percent, while that of developing countries such as Mexico and Indonesia is between 6 and 8 percent. South Korea has determined that its "boiling point" is a jobless rate of between 8 to 10 percent. Discrepancies in these "boiling points" are attributable to complicated cultural, social and political factors, but in general, developed countries generally have higher "boiling points," that is, a higher tolerance for unemployment, than developing countries because of their better welfare safety nets for those without jobs.
So, what is Taiwan's "boiling point?" After two generations of full employment, nobody really knows. This complicates assessments of the degree of urgency with which the government should be introducing appropriate measures to cool things off. Some might say that everything that can be done should be done immediately. But action costs money, eating into the government's already overstretched budget. Gauging the urgency of remedial measures is, therefore, a question of deciding by how much the government wants to bust its budget.
If two generations of full employment have resulted in an inability to answer the question of how resilient Taiwan is to high levels of unemployment, there is reason to think that such an answer may be "not much." Decades of rapid and continuous economic growth and prosperity have left Taiwanese with little idea of how to deal with rainy days. And while Taiwan may see itself as a developed economy, its social welfare system is primitive. Continuous prosperity has caused the government to pay insufficient attention to establishing a safety net for the unemployed.
On the other hand, families traditionally serve as the core economic units of society in Taiwan, making individual family members' unemployment less devastating. Also, Taiwan's enormous "black economy," covering those who work in such businesses as street vending, is not reflected in the employment figures. These factors have traditionally helped increase Taiwan's tolerance for unemployment.
In any event, we are seeing many alarming precursory symptoms of social and political instability. Last year alone, Taiwan experienced a 37 percent increase in labor-management disputes, while disputes caused by factory shut-downs increased by as much as 50 percent. A collective sense of frustration and pessimism is brewing, with 90 percent of the people dissatisfied with the government's employment policies, 75 percent concerned about losing their job and 66 percent knowing someone who has been laid off recently. Both unemployment-related suicides and crimes are hitting Taiwan hard. We therefore call on the government to stay on high alert; Taiwan appears to be moving toward its "boiling point."
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