Despite Taiwan’s per capita GDP forecast to top US$40,000 this year amid the artificial intelligence (AI) boom, an economist warned of “K”-shaped industrial growth, which would result in low wages in certain domestic demand-oriented industries.
Dachrahn Wu (吳大任), director of National Central University’s Research Center for Taiwan Economic Development, said that Taiwan’s economy is largely driven by exports in the AI era, but the performance has diverged in a “K” shape.
“K”-shaped growth refers to a divergence of performance of different sectors with some moving higher, but others lower, in a graph of the economy resembling the arms of the letter “K.”
Taiwan’s GDP per capita is expected to hit US$40,951 this year, up from US$38,748 estimated for last year, according to the Directorate-General of Budget, Accounting and Statistics (DGBAS).
The local economy is expected to have grown 7.37 percent last year, a 15-year high, boosted by robust exports, and would grow an additional 3.54 percent this year, the DGBAS’ forecast in November last year said.
Among the 11 million people employed in Taiwan, the services sector employed more than 7 million in relatively low-paying jobs, while the electronics industry, the major AI beneficiary, employed only 1 million, including 300,000 in the semiconductor segment, which tended to offer higher pay, Wu said.
The DGBAS data indicated that average aggregate earnings, which include regular wages and nonregular wages such as bonuses, in the electronics industry hit NT$1.12 million (US$35,447) from January to October last year, while the figure for the computer/optoelectronics industry reached NT$939,550.
In the service sector, average aggregate earnings of the hospitality and food-and-beverage industry stood at NT$391,440, and the figure in the support services industry, which is comprised of travel agencies, was NT$414,710 during the same period, the data showed.
As the service sector serves as the largest employer in Taiwan, with the “K”-shaped development continuing, the impact on the sector would run deeper, Wu said.
The first priority is to turn the service sector around, he said.
The government should try hard to create business opportunities for the sector by boosting demand to solve the low wage problem and improve Taiwan’s wage structure, he added.
National Development Council Deputy Minister Kao Shien-quey (高仙桂) in a recent legislative hearing said that while the government would maintain Taiwan’s lead in the global AI and semiconductor competition, it would also take advantage of AI to help old-economy industries and the service sector to upgrade their operations.
Such efforts are needed to support domestic demand-oriented industries to have the entire industrial development tilt toward a balance, Kao said.
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