June 29 marked the one-year anniversary of the signing of the Economic Cooperation Framework Agreement (ECFA). The opposition Democratic Progressive Party (DPP) has been very critical of the effects of the agreement, citing statistics to suggest the ECFA has contributed to the unemployment rate in Taiwan being the highest of the Four Asian Tigers. The Chinese Nationalist Party (KMT) government has released a report saying that in May the unemployment rate fell to 4.27 percent, and that 57,000 more people were employed than this time last year. A less rigorous defense of the ECFA is hardly possible. I find this exasperating.
The unemployment rate is often lumped together with the rate of inflation to calculate what is known as the “misery index.” In many developed countries, attention is mostly paid to the former, not only because changes in the latter tend to be less painful, but also because failure to deliver on jobs is certain to make a government less popular.
The incredible thing is that the government is dealing with a problem that essentially was not of its own making, but it is unable to explain how the problem came about. Meanwhile, it is fighting a strong opponent in an election campaign for the right to govern the nation.
Thirty years ago, when Chiang Ching-kuo (蔣經國) was president, the unemployment rate in Taiwan was the lowest of all the Tigers. In 1980, it stood at 1.2 percent — far lower than Hong Kong’s 3.8 percent, South Korea’s 5.2 percent and Singapore’s 5.8 percent. In addition, the income distribution in Taiwan was one of the most favorable in the world, within the top five.
Taiwan was feted as an economic miracle and admired for its growth and equity. Simon Kuznets, winner of the 1971 Nobel Memorial Prize in Economic Sciences, would often visit Taiwan as part of his research into income distribution. The completion of the Ten Major Construction Projects put Taiwan in front in Asia in terms of infrastructure, further contributing to Taiwanese swagger abroad. Taiwanese students overseas sat in class wearing smug expressions.
In the mid-1980s, Taiwan’s unemployment rate was the second-lowest among the Tigers, but between 1991 and 1995 it returned to being the lowest.
When the DPP came to power in 2000, the unemployment rate, 3 percent, put Taiwan back in second position — only 0.3 percentage points higher than Singapore, but still much lower than the 4.4 percent in South Korea and 5 percent in Hong Kong. However, under the DPP things went awry, the rate falling to third place within a year, and by 2007 it was a measly 0.1 percent lower than the highest. In 2008, the KMT inherited the highest unemployment rate of the Four Asian Tigers.
Between January and May of 2008, the average rate of unemployment in Taiwan was 3.8 percent, during which time the rate was only 2 percent and 3 percent in Singapore and South Korea respectively. It was 0.5 percentage points higher than in Hong Kong, where it was 3.3 percent.
The country was in a bad way when President Ma Ying-jeou (馬英九) came to power, the reason being that the DPP administration that preceded him had found itself unable to sign free-trade agreements (FTA) with other Asian nations. When the FTAs signed by South Korea and Singapore came into effect, these two Tigers were able to extend their lead over Taiwan even further. It was, consequently, very difficult for the current government to turn things around, no matter how hard it tried.
Today, the DPP is attacking the KMT, forgetting that it was on its watch that Taiwan’s unemployment rate went from the lowest of the Four Tigers to the highest.
The KMT also seems to have forgotten this and does not know how to respond. One could say that this memory lapse is another kind of Taiwanese miracle.
Both parties are implicated in this and it is not as simple as wiping the slate clean and starting over. Both parties are avoiding the truth and both are oblivious to the facts. Yet both want to govern the country. That the public must pin their hopes on them is very worrying indeed. And if academics are content to just roll out the Social Sciences Citation Index and ignore what is actually happening in the country, how is our society to improve and what hope does Taiwan have?
Tu Jenn-hwa is an assistant professor at the Graduate Institute of National Development at National Taiwan University.
TRANSLATED BY PAUL COOPER
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