Year 2 DSME Economics. Presentation on Unemployment Issue in Taiwan

Unemployment in Taiwan

Group 4

Introduction

• Why are so many undergraduate students studying abroad, especially in Hong Kong?

• What happened to the labor market in Taiwan?

• How is the unemployment situation like?

Graduated=Unemployed?

• 畢業即失業

• A university graduated student spend an average of 7 months to get a job

• With a starting salary of 24K (about 6000HKD)

Definition & Labor Market Situation

Employed (10m)

Unemployed (0.5m)

Not in labor force

Adult Population

(above 15)

*US BLS=above 16

Labor Force

1) Not employed2) Available for work3) Tried to find

employment

Under educationHousekeeperElderly

Definition & Labor Market Situation

• Unemployment Rate

= Number of unemployed / Labor force *100%

– Taiwan = 4.18%

• Labor-force Participation Rate

= Labor force / Adult population *100%

– Taiwan = 58.45%

Different Reasons of Unemployment

Unsatisfied34%

New Job Seekers

22%

Laid Off and Business

Shut down28%

Part-time Job Over10%

Others6%

Frictional UnemploymentResults because it takestime for workers to searchfor the jobs that best suittheir tastes and skills

Structural UnemploymentWhen number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one→ wages are set above the level that brings supply and demand into equilibrium

Natural Rate of Unemployment

Two Main Reasons

• Over Educated Labor

• Industry Outflow

Video

• Undergraduates and master degree holders unable to find suitable jobs

• 470 people applying for 13 vacancies of janitor, including 5 master degrees

• http://www.youtube.com/watch?v=wXUBanlXbFE

Over Education

• Labor at high technical level

• Quantity demanded < Quantity supplied– There is too much highly educated labor

• Labor with high diploma doing basic-level job is also defined as a kind of unemployment in Taiwan

Number of Graduate School

Master Doctor

2000 about 1340 14,000 (hundreds)

2010 about 3300 54,000 Over 3000

• Labor at high wages level

• Quantity demanded < Quantity supplied

– Higher education lead to higher wages

surplus Labor Supplied

Labor Demanded

Price= Wages

Quantity

Unemployment Rate in Different Level of Education

Elementary and below

Junior High Senior High Vocational school

Junior College

University and above

2009 4.35 6.83 6.07 6.23 4.96 5.98

2010 3.27 5.84 5.43 5.63 4.33 5.62

2011 2.52 4.44 4.75 4.63 3.40 5.18

2012 2.32 4.27 4.45 4.15 3.18 5.37

Highly educated labor’s unemployment rising again

Industry Outflow and Foreign Worker

• MIT (Made in Taiwan) → Made in China

• Cheap labor wages in Mainland China and South-east Asia

• Industry outflow

– Mainly those highly labor intensive

No. 1= Manufacturing Industry

• Critical Mass

– When one company move overseas, the upstream and downstream firms may move together, and eventually the whole production line moves

• Mainland China’s Policy

– Tax benefit

– Banks providing low interest

– Land licenses

• Because of lower wages with bigger market, Taiwan businessmen have increased investment in mainland China since the 70’s, resulting in Taiwan local labor market demand’s reduction.

.

Different Reasons of Unemployment

Unsatisfied34%

New Job Seekers

22%

Laid Off and Business

Shut down28%

Part-time Job Over10%

Others6%Cyclical unemployment

also known as deficient-demand unemployment, occurs when there is not enough aggregate demand in the economy to provide jobs for everyone who wants to work. Demand for most goods and services falls, less production is needed and consequently fewer workers are needed→ affect by overall economy

OverstaffedUnit (%)

Over Rely on International Trades

• Global Economic crisis– Taiwan economy relies mainly on international

trades, as a consequence, when the global economic crisis arose, the overall demand of goods decrease and therefore affect the export industries in Taiwan. When these firms made less profit, they gave non-salary rests or even laid off employees

• Taiwan function as OEM (original equipment manufacturer) supplier 代工

Unemployment Rate in the World

5.855.21

4.39 4.24

0

2

4

6

8

10

12

2009 2010 2011 2012

Taiwan

Hong Kong

Japan

South Korea

US

UK

Germany

Influence on Individual

Lack of income

Life quality ↓

PressureMental &

physical health ↓Family

harmony ↓

Influence on Society

• Society unstable (ex. protests)

• Crime in property

• Waste of social resources

Solutions ─ Government Policies

• Allowance for employment 雇用獎助津貼

– companies which employ certain unemployed people (having physical troubles or has been unemployed for more than 3 months) would get NT$8,000~12,000 per employee per month from government

• Employment Insurance 就業保險法

– The involuntary turnovered employees would get 60% of the insured average monthly salary (for at most 6 months), bearing only 20% of the insurance expenses (70% by the company and 10% by the government)

Solutions ─ Government Service

• Job Fair

• Career Service Center

• Occupational Training

• Website政府勞工委員會就業補給站

– http://www.cla.gov.tw/cgi-bin/siteMaker/SM_theme?page=499cd151

Solutions ─ Unemployed Individual

• do career plan ahead

• learn practical knowledge and skills

• refer to the relevant unemployment situation when making important choices

Solutions ─ Institution

• focus more on students' competence on labour market

• enhanced occupational training programs