Ministry of Labor data released on Friday showed that 138,000 fresh graduates entered the workforce last year, 9,000 fewer than the previous year and about 32,000 fewer than five years ago. Moreover, the data showed that only 47.9 percent of fresh graduates were employed in small and medium-sized enterprises (SMEs), a reversal of the situation in previous years.
In Taiwan, SMEs had previously accounted for a larger share of employment than large companies. However, over the past five years, the proportion of fresh graduates working for SMEs has steadily declined: from 53.3 percent in 2021 to 50.9 percent in 2024 and 47.9 percent last year, ministry data showed. Overall, SMEs account for 98 percent of Taiwanese businesses and employ nearly 80 percent of the workforce, and have long been the unsung heroes of Taiwan’s economic progress.
The Ministry of Economic Affairs defines SMEs as companies with paid-in capital of no more than NT$100 million (US$3.18 million) or fewer than 200 regular employees. The number of such companies hit a new high in 2024, up 2.48 percent year-on-year to 1.715 million, according to an annual white paper released by the ministry in December last year.
About 80 percent of SMEs were in the services sector, with 44.79 percent in the wholesale or retail businesses, the white paper said.
They generated total revenue of NT$31.1 trillion, increasing 8.05 percent from the previous year and accounting for 51.99 percent of revenue posted by all enterprises, it said.
While larger corporations are capable of coping with unprecedented external pressures such as US tariffs and global economic uncertainty, SMEs have advantages in centralized power, rapid decisionmaking and quick market response. Even though only 19.08 percent of SMEs were in the industrial sector, they still managed to adapt and endure like larger enterprises, at a time when the global supply chain shifted from a model of high efficiency to one of high resilience in response to escalating geopolitical tensions.
Nevertheless, SMEs are facing existential challenges nowadays, including access to financial support, digital transformation, data security, adoption of artificial intelligence, carbon reduction and, most importantly, talent shortages. It comes as no surprise that the number of fresh graduates entering the workplace has been steadily declining in the past few years as the total population shrinks. Still, SMEs are hit the hardest, while large corporations, with their advantages in salaries, benefits and career development opportunities, are attracting most of the talent.
A shortage of qualified workers to fill job openings poses a structural issue for SMEs that combines external and internal factors. Those pressures have forced some SMEs to increase wages and performance-based pay to address the issue, even though their efforts often remain department-specific and provide short-term benefits rather than a long-term solution.
To support SMEs, various government agencies have offered tax incentives for firms to invest in innovation and retain talent, provided consultation and information integration when firms encounter difficulties, and assisted them in moving up the global value chain through research and development. Several state-run banks have also extended special credit services to SMEs to help them diversify export destinations and expand into new businesses.
However, the competition for skilled workers has become increasingly challenging for SMEs across Taiwan, with 75 percent of them in a survey by 104 Job Bank last year saying that being unable to find suitable talent was the biggest obstacle to their business expansion. Yet the job of attracting and retaining talent lies with SMEs themselves, and the key is to position themselves clearly, effectively and expectably in a rapidly evolving labor market, as simply increasing salaries would not prevent talent from leaving later.
Experts have suggested strategies ranging from fostering a collaborative atmosphere and communicative culture to offering flexible work schedules and from providing opportunities for advancement to promoting a good work-life balance. What truly attracts and retains talent is a company that allows employees to develop a sense of belonging, feel valued and believe in a promising future.
While SMEs might have limited resources compared with their larger competitors, they possess the advantages of flexible execution and rapid adjustment. By starting with understanding employees today, and focusing on workplace culture and corporate values, they can still attract talent and keep the business growing. Faced with declining birthrates, an aging population and an increasing number of people unwilling to join organizations, SMEs must rethink how to create workplaces people want to stay in.
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