Taiwan should brace for more job losses than during the SARS epidemic in 2003, as the COVID-19 pandemic continues to wreak havoc on the service sector, and export orders shrink amid worldwide lockdowns and a weakening global economy.
Hidden unemployment numbers had already climbed to 160,000 in February — the highest in about nine years — while restrictions on people’s movement at home and abroad have curtailed industrial production and commercial activities, a Directorate-General of Budget, Accounting and Statistics (DGBAS) survey showed.
Hidden unemployment, which is excluded from the official unemployment numbers, affects people who still have a job, but face reduced working hours or pay cuts, such as workers who are forced to take unpaid leave because of disruptions to production lines or temporary store shutdowns.
Unemployed people who are looking for work are also not counted in official unemployment statistics.
If the hidden categories were included, Taiwan’s unemployment rate for February would have jumped to 4.95 percent — the highest in three years — compared with the official figure of 2.7 percent, DGBAS data showed.
The Ministry of Labor expects the number of furloughed workers to soar to more than 20,000 this year, from 8,000, after the figure last month surged 26 percent year-on-year to its highest in eight years.
As the COVID-19 outbreak is likely to last longer than the SARS epidemic, which in Taiwan lasted for about four months in 2003, it is possible that its economic impact will magnify over time.
The service sector, restaurants and the hospitality industry have been hit the hardest, with occupancy rates at hotels plunging by 80 to 90 percent. Formosa International Hotels Corp chairman Steven Pan (潘思亮) has warned that the number of people on unpaid leave could reach an unprecedented scale as tourism grinds to a halt.
More than half a million Taiwanese work at restaurants and hotels, according to the DGBAS.
The virus might soon hit the manufacturing industry, which has not yet reported dramatic declines in revenue and profit, as the global economy has fared relatively well over the past few months, although it is expected to contract 1.9 percent this year due to the pandemic, Fitch Ratings said last week. Taiwan cannot be immune to this, given its export-oriented economy.
Local electronics supply chains might be the next to fall victim to the pandemic, as consumers become more conservative about spending on non-essential products such as smartphones, TVs and other electronics. Taiwan supplies key components and assembles hardware for well-known electronics vendors such as Apple Inc and Huawei Technology Co. Huawei has forecast a 20 percent annual decline in smartphone shipments this year, the first drop in the company’s history, news Web site The Information reported last month.
Taiwan has been doing well in controlling the spread of COVID-19, but there is no guarantee that it will continue to do so. The US is an example of how badly and quickly the pandemic can hit the labor market. About 6.65 million Americans claimed unemployment benefits in the first week of this month.
Taiwan’s government has earmarked NT$81.6 billion (US$2.7 billion) in an attempt to save 1.92 million people’s jobs. As the unemployment rate might worsen, the government should be prepared to expand the budget and provide supportive measures to help those in need.
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