Taiwan Unemployment At All-Time High In 1999

Inside China, Wed 26 January 2000 at Prague 03:38 pm, N.Y. 09:38 am

TAIPEI, Jan 24, 2000—(Reuters) Taiwan's unemployment rate reached a well-anticipated 2.85 percent in December, which was below the November rate but brought full-year 1999 joblessness to a record high 2.92 percent, the statistics directorate said on Monday.

The figures fell squarely in line with a January 21 Reuters poll of 10 economists, which yielded an average forecast of 2.85 percent for December.

The Directorate of Budget, Accounting and Statistics said full-year joblessness hit a record in part because of a powerful September 21 earthquake, which idled most industries for several days and hurt central Taiwan's labor-intensive tourism sector just as the economy was recovering from Asia's financial crisis.

Structural changes in the economy away from labor-heavy smokestack industries and towards capital-intensive high-technology sectors also kept unemployment high, said the directorate's chief forecaster, Luh Du-jing.

High-tech exports were very good, but employment in traditional sectors was poor, Luh told reporters.

Luh forecast the full-year 2000 unemployment rate would average 2.8 percent, a somewhat more optimistic view compared to the directorate's November forecast of below 2.9 percent.

Luh said his 2000 forecast took into consideration jobs created by major construction projects such a high-speed railway and a T$600 billion petrochemical complex, but also factored in Taiwan's expected entry in the World Trade Organization.

WTO accession is expected to erode employment in traditional sectors, whose production may be supplanted by newly liberalised imports, but Luh said the full impact of joining the trade body would not be felt until 2001 and 2002.

He declined to give specific estimates for the WTO's impact on Taiwan employment.

Taiwan anticipates WTO entry in mid-2000 if rival China, which has persuaded WTO members it should accede first, manages to overcome final hurdles to its own accession.

Luh said he expected joblessness to linger above 2.5 percent in the next five to 10 years as firms shift more production lines - and manufacturing jobs - to cheaper labor markets overseas.

If gross domestic product growth is above six percent, then an unemployment rate of 2.75 would be pretty good, Luh said. If the economy grows by less then 5.5 percent, then unemployment would be above three percent.

Taiwan's economy is believed to have grown about 5.5 percent in 1999 and is expected to grow six percent or more in 2000, well recovered from a relatively dismal 4.7 percent rise in 1998 that was blamed chiefly on Asia's recession, which hammered trade. The economy grew a more characteristic 6.8 percent in 1997.

Luh said Taiwan's growing Internet commerce sector would create jobs in 2000, but these employment opportunities would not keep pace with the numbers leaking out of traditional industries.

He estimated that Taiwan's 1999 jobless rate would have been 2.9 percent if the September 21 quake, which killed 2,400 people and slowed industry for weeks, had not occurred.

This would have resulted in 1999 joblessness a shade below the previous record of 2.91 percent, set in 1985.

November's unemployment rate stood at 2.94 percent.

The following table gives year-on-year and month-on-month comparisons for Taiwan's unemployed and employed:

	December 1999	November 1999	December 1998
Jobless rate (pct)	2.85	2.94	2.8
Unemployed	279,000	287,000	269,000
Employed	9,498,000	9,478,000	9,342,000
Average duration of joblessness (weeks) [data missing]