Due to Taiwan’s declining birthrate over the past 20 years, a bill passed by the Legislative Yuan in April to retire private high schools and colleges is a death knell for many private universities in Taiwan.
In the first half of this year alone, four private colleges have announced the suspension of new student admissions.
According to estimates by the National Development Council, assuming most students continue to prefer public universities to private ones, 10 years from now, only 24,000 students would enroll in private universities, meaning that only five or six private universities would survive.
The teaching and research quality of private universities in Taiwan is generally inferior to that of public universities, because the latter receive much more government funding than the former.
In addition, the government has set a universal tuition fee cap in the name of safeguarding students’ interests, making it impossible for a private university to uplift itself by charging a higher price to enhance quality, instead sinking into the negative spiral of lowering prices and reducing quality.
The prognosis is even more dire for private universities established or upgraded during the 1990s, when the government policy of encouraging university buildup was all the rage.
However, against all odds, some of them, particularly technical colleges, have managed to train high-quality engineers who have made substantial contributions to Taiwan’s industries. Leaving such colleges to hang out to dry is not only unfair, but is also a significant waste of hard-earned societal resources.
On the other hand, factors including the declining birthrate, a persistent Sino-US trade war, increased foreign direct investment and COVID-19 have caused Taiwan’s manufacturing industries, especially ones not related to semiconductors, to face an unprecedented shortage of personnel.
According to the Directorate-General of Budget, Accounting and Statistics, 119,000 jobs in Taiwan’s manufacturing industry were left unfilled last year, with the shortage of mid-level skilled labor being the most serious. In other words, the labor required by Taiwan’s next-generation manufacturing industry, at home or abroad, must have solid basic engineering education to quickly adapt to a rapidly changing industrial evolution and compete globally.
The two problems — how to help private technical colleges survive and how to address the shortage of skilled workers in the manufacturing sector — could be solved by encouraging large manufacturers to take over private technical universities.
So far, there have been two success stories: CITIC Group took over Xingguo School of Management and turned it into the CTBC Business School; and Minth Group took over Dahua University of Science and Technology and turned it into the Minth University of Science and Technology.
Specifically, a manufacturing company could immediately boost the competitiveness of a technical college in four ways:
First, the company could inject additional funding to attract higher-quality students and reward faculty members who perform well, thus leveling the playing field to compete with public universities
Second, the company could promise ample internship opportunities for in-school students and full-time positions for graduates. Such favorable employment prospects would greatly increase the college’s appeal to students, domestic and foreign.
Third, the company could engagein the college’s curriculum planning and course content design, and provide access to industrial-grade engineering labs and manufacturing equipment, so as to ensure that the courses address theory and practice, and emphasize hands-on experience.
Graduates with such training tend to become productive more quickly after entering the workforce.
Finally, the company could channel a large number of foreign students from countries where it has set up manufacturing plants, so as to produce management talent who are solidly trained and eventually return to their home countries to run factories there.
However, how expensive is it to take over and run a private technical college? Since the government forces all properties of a private university after liquidation to be returned to the public, “acquiring” a private university is essentially free.
The next question is: How much funding is needed to sustain a private technical college? Suppose a manufacturing company has 10,000 employees and the annual turnover rate is 10 percent, with half of them being mid-level skilled laborers. Assuming that recruiting and training each new employee costs NT$200,000 (US$6,668), or about one-third of an annual salary, the company needs to spend about NT$100 million every year to refill these positions.
If, instead, the company redirects this recruitment and training budget to a private technical college whose student count is 3,500 and has a budget of NT$404 million (of which NT$98 million is funded by the government), the injection of funds would significantly enhance the college’s financial fundamentals and recruitment appeal.
In return, the company could secure a constant supply of 400 to 500 students per year who are tailored-trained and of known quality. Overall, this business model would make sense.
To encourage large manufacturers to take private technical colleges under their wings, the government should first interview both sides to get a sense of their willingness and concerns, establish conversation between them, identify the differences in their interests and, if necessary, revise related regulations.
Then, the government should assist manufacturers in personnel management, and curriculum and course content design, to strike a balance between the specific training needed by the industry and the level of education expected of a university.
Finally, the government should formulate a clear and meaningful financial incentive policy to lower the effective cost of acquiring worthwhile technical colleges for manufacturers that embark on the endeavor.
Chiueh Tzi-cker is a joint appointment professor in the Institute of Information Security at National Tsing Hua University.
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