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Beyond Degrees: Taiwan’s Youth Unemployment Crisis

Beyond Degrees: Taiwan’s Youth Unemployment Crisis

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Beyond Degrees: Taiwan’s Youth Unemployment Crisis

Taiwan is currently facing a problem with high youth unemployment. While most advanced economies are facing similar challenges, the issue is considerably more severe for Taiwan. As the global community grapples with the repercussions of a shifting job market and technological evolution, Taiwan’s unique circumstances make its efforts to combat youth unemployment a topic worthy of discussion. This intersection of broad economic trends and Taiwan’s specific challenges underscores the critical need for targeted strategies and innovative solutions to unleash the untapped potential of its youth workforce—thereby ensuring not only individual prosperity but also safeguarding the resilience and competitiveness of Taiwan’s economy on the world stage.

At the heart of Taiwan’s struggle with youth unemployment is a complex set of factors that have contributed to college graduates consistently struggling to find jobs that either relate to their field of study, or else pay the equivalent of the average wage in Taiwan. These factors include educational structures, industry demands, and Taiwan’s place in the broader global economy. The growing mismatch between the skills of college-educated workers and the needs of Taiwan’s domestic economy have resulted in an overeducated workforce lacking the skill sets necessary to compete in the labor market. In this context, Taiwan—known for its innovation and technological expertise—faces the challenge of aligning its workforce with the demands of an ever-evolving global economy. As Taiwanese policymakers work to chart a path toward maintaining the island’s sustained competitiveness and prosperity in the years ahead, it will become increasingly imperative to tackle this growing issue. 

The Current Situation

For the purpose of employment statistics, Taiwan’s government defines the youth demographic as workers aged 15 to 29. Currently, that group has an unemployment rate at 11.42 percent. Since the expansion of education in Taiwan to a universal system in which anyone who wants to can go to college, there has been a massive supply of graduates flooding into Taiwan’s domestic labor market. Given the island’s relatively small size, the labor market is simply unable to meet the needs of these incoming workers. Currently, over 95 percent of Taiwanese high school students enter the university system after graduation. To meet this skyrocketing demand, the number of universities has also increased dramatically since 1995, rising from 60 to 149 universities, colleges, and junior colleges. 

Taiwan’s intended goal of broadening the university system has led to an over-saturation of college-educated workers. As of 2022, nearly 82 percent of people aged 25 to 29 in Taiwan had at least a bachelor’s degree. Compared with other countries such as the United States (40 percent), Canada (67 percent), or the United Kingdom (56 percent), Taiwan’s educational attainment among young people is significantly higher than that of most other advanced economies. With such an oversupply of college graduates, companies in Taiwan are reluctant to offer graduates high salaries when they know that there will be a large number of applicants for any job position. In addition to this, employers also complain about the lack of suitable skills among college graduates. 

Every year, the Taiwanese government sends out a survey to young people to gain insights into the labor market. Per the 2022 survey, the average salary per month was NTD $34,000 (~USD $1,051), with more than 60 percent of those surveyed receiving a raise that year. Although more than half have participated in education training and 60 percent have certificates—which are essential to showcase one’s skill set—the average salary for young people is barely enough to scrape by in Taiwan. Notably, the average salary of young people is significantly lower than that of the general population, which stood at NTD $57,718 (~USD $1,785) in 2022. In addition, about two thirds of young people are continuing their job while planning to switch jobs in the near future, due to their salaries and benefits not being up to their expectations. 

Compounding this problem is the fact that most Taiwanese—around 80.37 percent—work for small and medium enterprises (SMEs). In Taiwan, SMEs generally have lower profit margins than large enterprises, averaging 5.01 percent for the former versus 6.63 percent for the latter. This suggests that, on average, these SMEs have less capital to invest the needed resources into their employees. In addition, with SMEs deriving a larger share of their revenue from the domestic economy than large enterprises—87.37 percent and 60.19 percent respectively, SMEs tend to be much more reliant on Taiwan’s domestic economy. However, Taiwan’s economy is highly dependent on the global economy, with a trade-to-GDP ratio of 71.64 percent. This high ratio highlights Taiwan’s reliance on export oriented growth rather than on domestic growth. Due to SMEs being the backbone of the Taiwanese economy, the government should help direct more investment into the domestic economy to make it less reliant on the global economy. This would allow Taiwan to have a more reliable source of growth coming from domestic consumption and be less dependent on ebbs and flows of the global economy. 

Screenshot 2024 01 04 at 2.30.09 PMImage: Young job seekers attend the “2023 South Taiwan Job Fair” at National Cheng Kung University in Tainan (March 12, 2023). (Image source: Cheng Kung University)

What is the Taiwanese Government Doing to Help Solve This Problem?

In response to this crisis, the Taiwanese government has implemented various strategies. While previous efforts have involved providing subsidies in order to encourage Taiwanese youth to seek employment, the latest initiative—dubbed the Youth Employment Investment Program (投資青年就業方案) —is a whole-of-government approach. Started in 2019, the aim of the program is to increase youth employment, provide industry-specific job training, and help young people make a smooth transition into the workforce. The first phase, lasting from 2019 to 2022, had three main goals: increase employment ability in response to industry trends; strengthen career foundations and thorough development of career services; and integrate service resources to assist young people obtain employment. 

To achieve the first goal of the program, the National Development Council (NDC, 國家發展委員會) was tasked with researching and publicizing the annual supply and demand for industrial talent in response to future industry trends. In order to develop a baseline understanding of these trends, the Ministry of Labor (MOL, 勞動部) was tasked with using this data to build a functional benchmark to evaluate whether this policy is achieving its stated goals. Meanwhile, the Ministry of Education (MOE, 教育部) worked to promote career exploration and preparation by having high schools organize workplace visits. The goal of this program was to allow high school students to gain greater understanding of the employment environment and begin career preparation. 

The second goal of the first phase centered around skill development. Various government ministries, such as the MOL, MOE, and the Ministry of Economic Affairs (MOEA, 經濟部) collaborated to give Taiwanese high school students access to workplaces across different industries, where they could see for themselves what types of skills are in-demand. Finally, the third part of the program was intended to provide employment services. Just as in the last part of the program, various government ministries worked together to expand job opportunities, strengthen employment matching services, and eliminate employment barriers.  

The second phase of the Youth Employment Investment Program began in 2023 and will run for the next three years. The program addresses five areas: career development, the gap between the supply and demand of industrial talents, youth unemployment, low youth salaries, and atypical youth employment. The first part of the program will help high school students with career preparation, with the MOL and MOE encouraging high schools to host events during which students can visit workplaces. This would allow students to see what kind of careers they would be interested in and also begin to make preparations for building a career. 

Building upon that, the government will also encourage students to pursue career paths that are related to in-demand professions, particularly those included in the “Six Core Strategic Industries.” (六大核心戰略產業) These industries, which were first laid out during President Tsai Ing-wen’s (蔡英文) first inaugural address, consist of: information and digital services, cybersecurity, health, green and sustainable energy, national defense, and strategic stockpiles. The government is keen to promote these industries to high school and college students to facilitate their future development. The third part of the program focuses on promoting youth employment. In pursuit of this, government agencies are encouraging young people to obtain employment and strengthening employment services. The next part of the program centers around efforts to increase young people’s salaries. As mentioned earlier, there is a considerable gap between the average salary of young people and the general population in Taiwan. The government’s response to this challenge is to have young people strengthen their skill sets and implement vocational development programs. 

The last part of the program is intended to help young people find steady, full-time employment. A recent survey by 104 Job Bank, a Taiwanese staffing company, found that the average age of delivery drivers is 26 and that 45 percent of them have a university degree or higher. The Taiwanese government wants to reverse the trend of young people working for delivery companies such as Foodpanda or Uber Eats and transition them to professional employment. By promoting industries that have a high demand for full-time employment and providing young people with the opportunity to learn and readapt to the workplace, the Taiwanese government hopes to provide more meaningful employment opportunities for young people.

Conclusion

Taiwan’s struggle with high youth unemployment is not unusual compared to other advanced economies. However, Taiwan’s youth unemployment rate is significantly higher than that of most other countries. Taiwan’s unique economic and geopolitical position underscores the urgency and complexity of finding effective solutions. The Taiwanese government’s commitment to solve this issue is evident through its whole-of-government approach and complementary policy initiatives. These policy initiatives include strengthening vocational education, promoting industry-academia collaboration, and encouraging a mindset shift toward entrepreneurship. While all of these are crucial components, solving such a complex, multifaceted issue will likely need complementary initiatives coming from the private sector that will add value to the government’s policies. Taiwan’s challenging demographics and universal college system will need to be addressed as well. By combining policy measures with a collective commitment to adaptability and innovation, Taiwan has the potential to not only conquer the current challenges of youth unemployment, but to emerge as a model for sustainable economic development in the years to come.

The main point: Taiwan’s youth unemployment rate is significantly higher than that of most other advanced economies. While the government is taking steps to address this problem, it remains to be seen whether the structural and cultural factors causing this problem can be fixed.

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