Friday, March 27, 2015

Commercial Times: Potential worries despite improved jobless rate

Commercial Times: Potential worries despite improved jobless rate

2015/03/27 18:56:07

Taiwan's jobless rate in February dropped to 3.69 percent, falling for the sixth consecutive month and reaching the lowest monthly level in nearly 15 years.

It was almost at the same level as in 2001 during Taiwan's first change of government. Despite the improvement, however, few people were elated, and the reasons for that should be explored.

Prior to 2001, Taiwan's jobless remained under 2 percent, often below that of the other three Asian Tigers -- Hong Kong, Singapore and South Korea -- and Japan.

Many local people might have forgotten the good old days because over the past decade, Taiwan has had the highest unemployment among the four Asian Tigers.

Shortly after Taiwan's first change of government, the Internet bubble burst and unemployment in Taiwan surged to over 5 percent.

After the country's second change of government in 2008, Taiwan's jobless rate rose above 6 percent due to the global financial crisis.

Although unemployment dropped to 3.96 percent last year in Taiwan, it was still the highest among the four Asian Tigers.

While Taiwan's job market has improved, wage growth is lower than a decade ago and job quality has also changed.

We must point out four potential areas of concern in Taiwan's job market.

First is the high percentage of people unemployed over the long term. Prior to 2001, the number of people who were out of work for more than a year in Taiwan remained around 30,000, but the number has been climbing every year since then due to changes in the industrial structure.

Last year, the number of long-term jobless people was 75,000, accounting for 16.4 percent of the total number of unemployed and a 10 percent increase from a decade ago.

Second, the number of people affected by unemployment in households has increased sharply. Prior to 2001, no matter how the economy performed, the number of people affected by unemployment in households was about 600,000 at most.

Now, even with a jobless rate of under 4 percent last year, and the lowest monthly rate in February in 15 years, some 800,000 people are affected by unemployment in their households.

Third, the labor participation rate in Taiwan is lower than in neighboring countries, a situation that is attributed to lower participation rates among middle-aged and older men.

For example, among Taiwanese men 50-54 years old, the labor participation rate is 82 percent, compared with 90 percent in the other three Asian Tiger economies.

In the 55-59 age group, the labor participation rate in Taiwan is 68 percent, compared with between 80 and 90 percent among the other three Asian Tigers.

Taiwan's low labor participation rate could be attributed to enterprises forcing workers to retire and the government offering civil servants generous retirement packages.

The fourth worry is the widening gap between the wages of blue- collar and white-collar workers over the past two decades.

For example, white-collar workers in Taiwan received an average monthly salary of NT$44,777 in 1994, about 1.55 times of NT$28,990 earned by blue-collar workers. In 2014, however, the average white-collar wage was NT$63,432 per month, or 1.7 times that of blue-collar workers at NT$37,858.

This is because the jobs created over the past years have been mostly in the service, wholesale and retail, hotel and catering industries, which generally offer lower wages.

The Executive Yuan should assemble a task force to address the above problems. (Editorial Abstract -- March 27, 2015)

(By Lilian Wu)

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