Taoyuan Nights

Michael Turton has just written an excellent short article about Taiwan’s economy. I should probably make some comments of my own. My main concerns at present are:

• Exports. Particularly, Taiwan’s DRAM manufacturers are being slaughtered by the Korean DRAM manufacturers, because the Won is cheap. Makes me wonder if Taiwan is going to crash the TWD to try and save its industries. I keep getting a feeling that every country in the world is simultaneously trying to say ‘we’re the worst’ and competing to offer the lowest returns right now, to try and make their exports cheap, so that employment stays up.

• Surge in unemployment – locals and foreigners alike. Local unemployment is now at a 5-year high and approximately 1 in every 20 people are out of work. This statistic ignores employees who’ve been put onto ‘unpaid leave’ for the time being, which is becoming quite a problem currently.

  Taiwan is also striding into first place for sacking foreign workers right now, as they make big steps towards addressing the ‘weiguoren problem’ that was commented upon in newspaper letters earlier this year. For example, these Philipino workers. Or the hundreds of thousands of very worried Indonesian workers. There is a phrase in English that foreign workers might use to describe some local employers: ‘fair weather friend‘.

  Check out this amazing quote from an article about a huge drop in charitable giving.

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  “The results of recent surveys conducted by several online employment brokers suggest that 100,000 Taiwanese businesses are likely to lay off workers at the end of the year, and that 90 percent of salaried workers have suffered investment losses equal to six months’ pay or more.

  Meanwhile, 27 percent of workers have had their salaries cut, and 20 percent either are going to be or have been dismissed.”

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  Thankfully, Taiwanese government employees have been unaffected by the downturn. :-|

  “In contrast to a faltering employment market in the private sector, workers in the public sector have not been affected at all. DGBAS figures show that civil servants enjoy an average monthly salary of NT$63,000, which is much higher than the NT$36,000 average in the private sector. While the general public is suffering from the economic downturn, civil servants do not have to worry about their jobs. “

• Bosses showing their evil side. If you look at the unemployment numbers, you’ll note that “those who quit because they were not satisfied increased 2,000″. Now, think about that. We’re going into a recession, people are losing their jobs, yet an extra 2000 people suddenly decide – in just 4 weeks – to quit in these scary economic conditions? It suggests to me that mistreatment of employees is rising sharply. This comes as no surprise to me.

• Curious policy decisions.

• Drop in salaries. What exactly is the point in a one-off $3600 ‘voter bribe’ handout supposedly to stimulate spending, when people are getting $20000/month chopped off their salary? Even the biggest, most profitable companies in Taiwan are making giant cutbacks, for example, TSMC, the world’s biggest semiconductor manufacturer:

  “The company said manufacturing staff would take five days unpaid leave per month, starting this month, with other departments taking one day a week unpaid leave from January.”

  “Industry sources told Reuters last week that TSMC and its cross-town rival UMC were preparing to cut costs by up to 20 percent. UMC had told employees they may soon be put on a four-day week, taking the fifth day as unpaid leave.”

• Giving up children. Quite remarkable statistic this one. As hard times bite, people are downsizing their families.

• Local banks. If HSBC, UBS, Citigroup, … are in trouble – then how in heck’s name can local banks pretend they aren’t affected by the dramatic downturn in Taiwanese industry? Maybe they think they can all pretend they weren’t involved in lending huge sums of money directly into Taiwan’s insane housing bubble. I expect painful consequences.

I think I’ll close with some amusing quotes.

“The Taiwanese economy has entered into a bottom during the third and fourth quarters,” – Chen Miao, director of TIER’s Economic Forecast Center.

“I am sure that the Taiwan economic miracle has not come to an end. We are merely in a transition period.”- Taiwanese President Ma.