Written by Chin-fen Chang.
As confirmed cases of COVID-19, and its ensuing death toll, have continued to increase in the U.S., Brazil and other countries, it seems that controlling the pandemic’s impact has taken priority over economic concerns, with the closing of restaurants and plants. While in Europe, there has been a gradual recovery from the coronavirus outbreak, the less-affected countries have reached a stimulus agreement to provide financial aids for hard-hit EU members. Furthermore, in countries like Taiwan, which has been praised as an effective model for combatting the pandemic, the focus has mainly been on revitalising the economy and restoring employment capacity. As an export-driven economy, Taiwanese manufacturing has suffered a sharp drop in demands overseas during the first half of this year. Local businesses in Taiwan have also been affected by a lack of foreign tourists. Moreover, Taiwanese have been self-restrained in their consumption, suffering from income loss or concerning worse financial conditions to come in the near future. Labour markets also show significant job losses along with cutting regular earnings for those fortunately still on the payroll.
Even though the production and service were not entirely closed as in most other countries, since the outbreak of the pandemic, Taiwan’s economic performance was still generally weak. According to the Directorate-General of Budget, Accounting and Statistics (DGBAS) in Taiwan, growth rate of GDP in the first season is 1.59% and predicted to be -0.73% in the second season this year. The subsequent drop of economic growth rates for two seasons in a row shows that Taiwan is also experiencing an economic recession during the pandemic.
Naturally, as a result of the recession, the unemployment rate increased as firms and stores downsized their workforce after severe cuts of sales and revenues. It kept increasing and reached to 4.07% in May, which is the highest so far this year and higher than the monthly average in the last year. Concerning how many unemployed, these statistics relay that about four hundred and eighty thousand workers are out of work. Furthermore, if taking into account those on forced unpaid-leave—who are paid only a basic wage (NTD 23,800 or GBP 617)—individuals and families experiencing income hardship are likely in their millions. However, the unemployment rate has reduced somewhat back in June (3.96%), while the labour force participation rates have been steadily decreasing since January. This means that the number of labour force withdrawn from markets has, ultimately, increased.
Those still holding jobs were not exempt from experiencing the impact of economic recession. According to DGBAS, average monthly earnings were about NTD 49,000 (GBP 1,271) in May, which was 1.4% lower compared to the amount in the same month last year. Furthermore, according to the same announcement publicised by DGBAS, about one-fifth of the employed class earned equally or lower than NTD 49,000. For instance, the working class in the service and catering industries were rewarded lower than NTD 40,000 (GBP 1,038) per month. Work in the transportation industry seems to be faring better than the personal service sector, as the monthly earnings were about NTD 57,000 (GBP 1,478) for the former, which is higher than the national average.
The Evergreen Group is a multinational corporation based in Taiwan. Worldwide, it owns well-known companies, such as Eva Air and Evergreen Marine. Recently, the conglomerate posted a recruitment ad in local newspapers, including United Daily News, in early July this year. One of the 14 jobs listed—the office-marketing staff, a female-dominant occupation—listed basic requirements including knowing the English language, having two to three years of work experiences, and having a college or more advanced degree. With such high standards of qualifications, holders of this particular job category will be paid NTD 37,000 (GBP 959) as a starting salary. Questions arise as to how many years are needed for job holders in the Eva group to be able to earn the national average (NTD 49,000), along with the average level of earnings in transportation (NTD 57,000). The wage gap among workers with different occupations and other statuses cannot be ignored within the industry.
The wage gap among the employed does not appear only within industries such as the transportation industry. Indeed, the average monthly earnings of NTD 119,000 (GBP 3,086) in the banking and insurance industry indicate a considerable gap in work outcomes among other industries. Thus, it is the higher income earned by the upper white-collar class, which lifts average earnings to NTD 49,000. Summarising the statistics and analyses above, many working-class people, in general, were suffering from either job losses or low salary during the Taiwanese pandemic. Young college graduates were paid only somewhat more than the basic salary if finding work at all. Income equality would likely deteriorate in the next few years because of dismal prospects of job opportunities and low starting salary for new entrants. This relates primarily to those with only high-school or lower education, the newly graduated, or those losing jobs in their middle-age.
The Taiwanese Government has already implemented a ‘Special Act’ to assist firms, the self-employed, as well as workers suffering from the economic downturn earlier this year. For instance, the Ministry of Economic Affairs has provided subsidies to enterprises having equal to or more than one-half loss of total revenues compared to the same period last year. Furthermore, if qualifications are met, the Ministry of Labour will provide affected individual workers and the self-employed with 10,000 cash (GBP 260) per month for three months. Recently, the Central Government has also implemented a stimulation package, which asked to trade 1,000 cash (GBP 26) for a 3,000 consumption coupon (GBP 78) for every citizen in the country, with the hope that, to some extent, it may revitalise local businesses.
In conclusion, the state has successfully put the pandemic under control, and it has also kept most businesses in operation. Furthermore, besides providing compensations to affected firms and individual workers—along with giving vouchers to citizens—the Ministry of Labour Affairs, and other agencies, should be more active in tracing laid-off workers and helping them to return to labour markets as soon as possible. Furthermore, paying attention to the social and economic impacts of the pandemic from a class perspective would also help prevent a further decrease in labour force participation rates, the increasing number of households in poverty, and deteriorating income equality in the post-COVID-19 era.
Chin-fen Chang is a Research Fellow/Professor, Institute of Sociology, Academia Sinica, Taiwan.
This article is part of a special issue on poverty in Taiwan.