Unemployment on the rise in Taiwan

By Lawrence Chung, The Straits Times, 27 September 2000

Experts say the problem threatens the island's development as more industries move production to countries where labour is cheaper.

TAIPEI—Taiwan is being hit by unemployment even as white-collar Taiwanese patronise high-class karaoke clubs, eat at expensive restaurants and buy costly imported items, officials and experts said yesterday.

In a warning to Taiwanese who seem oblivious to the problem, they said that unemployment, if left unchecked, would hinder Taiwan's development and could worsen after the island joins the World Trade Organisation.

The island's jobless rate rose to its highest level in a year last month—3.16 per cent—as a number of traditional industries moved their production bases out of Taiwan, statistician Chen Chin-cheng said.

The number of traditional industries moving their production bases out of Taiwan has been increasing, he said.

It is particularly obvious in central and southern Taiwan, the home bases of industries like ship-breaking and petrochemical production businesses.

A faltering stock index, which has slipped more than 23 per cent since President Chen Shui-bian's government took office in May, was another reason for rising unemployment, he said.

Slumping share prices had forced some companies to cut personnel expenses or even close down factories.

Figures released by the Directorate-General of Budget, Accounting and Statistics show that Taiwan's unemployment rate has started to creep up during the past few months.

The figure stood at 2.89 per cent in June, 3.06 per cent in July and 3.16 per cent last month.

Mr Chen expects this month's jobless rate, due to be released on Oct 25, to be higher again.

In January, the unemployed numbered 267,000 but swelled to 311,000 last month. Most noteworthy was the increase in the number of unemployed middle-aged workers.

According to the Taiwan Labour Front, only 1 per cent of 72,000 jobless middle-aged workers were able to find new jobs. Some executives even had difficulties finding jobs as waiters because they were over-qualified.

But Mr Chen said the number of unemployed in Taiwan was small compared with Western and neighbouring Asian economies.

Unemployment is 4.9 per cent in Hongkong, 4.7 per cent in Japan, 3.7 per cent in South Korea and 3.5 per cent in Singapore.

After all, our economic conditions are still good and our exports are still active, Mr Chen said.

Taiwan has registered double-digit growth in exports and imports since January, with exports swelling 24.3 per cent to US$97.01 billion (S$164.91 billion) in the January-August period, and imports rising 32.6 per cent to US$93.55 billion.

The island has forecast its gross domestic product growth to rise to 6.6 per cent this year from 5.4 per cent last year.

Nonetheless, finance professor Norman Yin, of National Chengchi University, said export growth did not necessarily reflect the true situation in Taiwan as more companies were keeping their money abroad and shifting their production bases to other countries, including China, Malaysia, Thailand and Vietnam, where labour was cheaper.

Unemployment will turn bigger when Taiwan joins the World Trade Organisation as cheap foreign goods start entering the domestic market, he said.