Many middle-class people in Taiwan can and often do take a relaxed attitude towards short periods without work

China Post editorial:

Jobless rate fall is welcome but caution is still needed

Last week the Directorate General of Budget, Accounting and Statistics (DGBAS) released the unemployment figures for the previous month showing that April had the biggest single-month fall in 15 years. At a press conference held to announce the good news, the Cabinet-level directorate attributed the 0.28-percentage-point decline to the nation's growing economic recovery which caused local companies to take on additional workers.

And although 5.39 percent, around 593,000 people, of Taiwan's workforce is still officially out of work, this ongoing trend — April represents the eighth consecutive month of decline in the jobless rate — is good news indeed.

Two particularly sensitive markers — the numbers of unemployed people aged 45-60 and of people unemployed for over one year — both showed good downward movement, falling around 10,000 to 129,000 and around 1,000 to 114,000 respectively.

The government, as well as both public and private employers, should not rest on their laurels, however, and it is these last two DGBAS statistics that should be a focus of their attention. That just 1 percent of Taiwan's workforce have failed to find jobs for over 12 months might be relatively insignificant to the nation's macro-economic agenda, particularly as President Ma Ying-jeou's administration seeks to finalize a cross-strait economic cooperation framework agreement that it hopes will bring long-term prosperity to the majority of citizens. But on the micro-economic scale, in human terms, the day-by-day effects on the 114,000 people who have been without jobs for a year or more, and on their families, can be heartbreaking.

Many middle-class people in Taiwan can and often do take a relaxed attitude towards short periods without work, usually relying on extended-family support or helping out around the home. But for poorer people and over longer periods, unemployment can lead to health problems and malnutrition, is correlated to reduced life expectancy, causes lowered self-esteem and depression, as well as other mental-health issues and even suicide. It can also result in the accumulation of debt and the erosion of professional skills.

For society at large, it can lead to the deskilling of the workforce, to xenophobia towards foreign workers and protectionism in international trade, to the loss of taxation revenues and reduced consumption precipitating a cycle of yet more layoffs and further economic downturn, to a shift in the balance of power between employers and employees, thus negatively affecting workers' salaries and conditions, and even to social and political unrest.

Politicians and public officials neglect this phenomenon at their peril. Thus in the United States, Chairman of the Federal Reserve Ben Bernanke went on record last month specifically expressing his concern that more than 40 percent of the unemployed have now been out of work for six months or longer, nearly double the share of a year ago. Similarly in Europe, as their economies move toward full employment, governments expect general post-recession improvements to take care of the majority of would-be workers. It is with regard to the long-term unemployed that they pursue policy solutions. But such solutions are often seen as expensive and, due to often being branded as socialist or “a tax on success,” as politically sensitive.

But such rhetoric is unhelpful, and having a large pool of decreasingly employable people is not just a blemish on the face of any civilized society but also hinders its efficient functioning, perhaps even becoming a factor hindering the nation's recovery from the current downturn or even causing future recession.

Unfortunately certain sectors of the workforce are particularly susceptible to long-term unemployment, and getting them back into work will take efforts by the government and open-mindedness among employers.

Especially at risk are less-educated and lower-skilled workers, the middle-aged, single parents, disabled people and those in rural areas, all of who are represented by higher percentages of long-term unemployed than of unemployed in general.

So employers need to overcome their bias towards youth, and opt equally for experience instead. They should also consider investing in the retraining and the provision of facilities that assist people with special needs in re-entering the workforce. But this is primarily the role of government agencies, led by executive policy and legislative initiative.

Thus the government has subsidized firms taking on newly graduated students, which targets the most inexperienced members of the workforce. There are also payments made to workers who lose their jobs through no fault of their own.

But these are usually viewed as temporary measures — band-aid policies to help the worst off. The most dangerous attitude, with the economy improving, unemployment figures falling, and the carrot of increased cross-strait trade dangling, is complacency. It is precisely at this time, with a major shift in the nation's balance of trade expected, that susceptible sectors of the workforce — as well as employers — will become excluded from the macro-economic benefits.

So while celebrating the latest DGBAS figures, let a close eye be kept on those key indicators, and let preparations be made for the inevitable changes ahead.