Young workers face bleak future under '22k curse'

Taiwan President Tsai Ing-wen, who was sworn in last Friday, acknowledged that young people "still suffer from low wages" and pledged to do something about it.
Taiwan President Tsai Ing-wen, who was sworn in last Friday, acknowledged that young people "still suffer from low wages" and pledged to do something about it. PHOTO: AFP

Hoping to avoid the rough-and-tumble of Taiwan's anaemic economy after the 2008 global financial crisis, Mr D. Chen left for Singapore in 2010 in search of a better life.

Mr Chen, now 35, was a portfolio manager in Taiwan's largest insurance firm. But after working for five years, his monthly salary was just NT$70,000 (S$2,900), barely enough for him to get by even though he was living with his parents in the capital, Taipei.

"The financial industry was shrinking due to the 2008 crisis and prospects were poor," he said. "I felt I needed to look elsewhere."

In Singapore, he found a job as an investment adviser in a Swiss bank, which paid him triple his last-drawn pay in Taiwan.

Also in Singapore, he met a fellow Taiwanese, who became his wife. The couple, now Singapore permanent residents, have a two-year-old daughter.

Mr Chen would be the first to say that life is tough in Taiwan, especially for young people.

Many live under the so-called "22k curse", which refers to the NT$22,000 starting salary that a university graduate gets.

Introduced by former president Ma Ying-jeou in response to the 2008 financial crisis, the move was aimed at boosting employment with the government subsidising companies that hired fresh graduates.

The quantum has not been adjusted even as the cost of living has gone up, which means a fresh graduate can hardly support himself on his starting pay.

Taiwan President Tsai Ing-wen, who was sworn in last Friday, acknowledged in her speech that these young people "still suffer from low wages" and pledged to do something about it.

"Their lives are stuck, and they feel helpless and confused about the future... When its young people have no future, a country is certain to have no future," Ms Tsai said.

But it will be tough going for the new President. Taiwan has been grappling with growth that has slid from an average of 8 per cent in the 1990s to 2 per cent in the last eight years. This is attributed to slow exports and sluggish investment in Taiwan as more local companies took their production lines to cheaper labour markets in China and South-east Asia.

The bleak market has dimmed job prospects and shrunk pay cheques - monthly wages have inched up only about 3 per cent since 2005 while housing prices have tripled.

Government figures released earlier this week showed that the unemployment rate rose from 3.92 per cent in March to a 23-month high of 3.97 per cent last month. Not helping is the youth unemployment rate, which was 11.78 per cent.

Economics professor Kenneth Lin of National Taiwan University noted that while Ms Tsai has outlined her priorities, she has been too cautious and not talked about concrete measures. "How do you convince people that you can create jobs and raise wages when the business community is not even sure how to go about investing in the emerging industries?" he said, referring to Ms Tsai's plan to focus on five key areas, including defence and green technology.

Professor Chen Been-lon, a research fellow at Academia Sinica's Institute of Economics, believes the public sector will have to raise salaries before private businesses follow suit.

"If companies see talent moving to the public sector, they will definitely scramble and dig deeper to keep the talent," he said.

Mr Steven Hsieh, 30, who makes NT$46,500 a month as a private tutor, is considering moving to cities like Tokyo or Bangkok.

"The new government can try to do something but it may take time, given the political instability. I might as well go overseas, earn more money and then return when things improve."

A version of this article appeared in the print edition of The Straits Times on May 26, 2016, with the headline 'Young workers face bleak future under '22k curse''. Print Edition | Subscribe