Last year, the Taiwanese economy benefited from a slight revival of the US economy. In addition, increasing consumer prices were offset by falling international oil prices. Domestic unemployment also dropped slightly, and the TAIEX remains above 9,000 points.
These are clear indications that the difficult situation faced by the general public clearly is improving. However, behind the calm, a storm is brewing. Disasters, political conflict and unexpected events keep occurring on a regular basis, and society remains in a state of anxiety. The most worrying of all these problem is the future facing our young generation.
Two or three decades ago, the Taiwanese economy was taking off. As long as young people were willing to work hard, opportunity beckoned. The sayings that “a hard worker is a winner” and “move forward” were on everyone’s lips. Many of today’s industrial leaders grew up in extreme poverty, but that did not mean that they hung their heads or gave up. They studied hard, worked on the side or even took time out to do hard manual labor. In this way, they paved the way for the golden age of their lives and they helped create an economic miracle for Taiwan.
However, today, as per capita income has reached US$20,000, the young generation is also a lost generation. Youth unemployment is now three times higher than overall unemployment. This is also the highest figure among the four Asian Tigers. Most people’s salaries are between NT$20,000 and NT$30,000 (US$633 and US$949) and these are the “poor young” and the “working poor.” In particular, some young people work under bad conditions in a bad work environment, and they end up as temporary workers or in other untypical jobs. Due to the restrictions inherent in that environment, these jobs often become permanent, and these workers never get a steady job.
The tragedy is that the problems for these young people are mostly structural problems and long term issues, and without thorough and decisive reform, it will be very difficult to turn the situation around. The question is why the overall environment has resulted in such a tragic situation for the young generation.
First, Taiwan has joined the ranks of welfare states and national debt is growing rapidly because the retirement pension for military personnel, civil servants and public school teachers is much too generous, offering a high rate of salary replacement, an 18 percent interest rate on a portion of savings and other benefits that are rarely seen anywhere else. National debt today stands at about NT$6 trillion, which is very close to the legally stipulated ceiling.
Add to this the NT$17 trillion hidden in the benefits for military personnel, civil servants and public school teachers as well as the Labor Insurance pension, and the NT$1 trillion in local government debt, and national debt stands at NT$24 trillion. This is 160 percent of Taiwan’s GDP, the same level owed by Greece at the time of its default.
Furthermore, due to the aging society, falling birth rates and the expected bankruptcy of the pension system in 10 or 20 years’ time, the debt burden will fall on the shoulders of today’s young generation. Dividing NT$24 trillion by the 5.3 million people that are 19 years old or younger works out to about NT$4.5 million per person. In addition to being young, working poor people, they will also have to shoulder all this debt.
Second, Taiwanese companies have been moving overseas for the past 20 years or more, in particular to China. This has gutted domestic industry and it is causing job opportunities to dwindle. Overseas production now stands at more than 50 percent of Taiwan’s industrial production, and that ratio will continue to increase. The GDP figure is turning into dry numbers on paper that have little or nothing to do with people’s daily lives, and it does nothing to help solve the domestic unemployment problem. As globalization and Internet technology continue to develop, competition will become increasingly international, and young Taiwanese will have to compete with young people all over the world, which means that the challenge from the outside world is increasing on a daily basis.
The negative impact of the overall situation on the young generation must be addressed and solved by ambitious reform jointly initiated by the government and the opposition. The main issue is pension system reform aimed at making pensions more reasonable and lowering national debt in order to avoid a national default.
Another issue is to change the government’s pro-Chinese economic and trade policies and improve the domestic investment environment so that the manufacturing industry can return and develop here. This is the only way to bring about a fundamental restoration of the structurally distorted Taiwanese industry.
In addition to all this, the education system should be reformed to raise the skill level and competitiveness of Taiwan’s young. In particular, an end should be put to the current policy of turning technical and vocational high schools into universities.
The deteriorating quality of Taiwan’s educational system began with the educational reform in 1995. As many technical and vocational high schools have been promoted to university level, the number of universities in Taiwan has increased from 23 universities 20 years ago to 122 today, and the number of university students has increased from 245,000 to 1,245,000 — a four-fold increase. Not only has this resulted in a deluge of university degrees, it has also weakened technical and vocational training, so that there is now a great gap between the skilled personnel required by industry and what is actually available on the market. The upshot is that young people have difficulties finding jobs because they do not possess the expertise and technical skills required, while companies cannot find the workers they need.
However, it cannot be denied that some young people take a dim view of the overall situation and lack the willingness and ambition to work hard, and some even enjoy their unemployment and are simply unwilling to work. They would rather rely on and live off their parents.
This is why, in addition to improving the overall environment, the young themselves also need to revive their willingness to work hard and maintain an optimistic and enterprising attitude and a desire to learn and develop their skills and knowledge. If they fail to do so, it will not be possible to turn around the tragedy facing the young generation.
Translated by Perry Svensson
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