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Commercial Times: Explaining Taiwan's stagnant economy

Commercial Times: Explaining Taiwan's stagnant economy

The number of births in Taiwan has been decreasing since the start of this century, falling from 300,000 births in 2000 to 167,000 in 2010. Although the number increased to 210,000 in 2014, it was the result of a high marriage rate that year and did not represent a reversal of the downward trend. The problem is partly related to the changing concept of childbearing in the country, but a more crucial issue is about the worsening finances of families in Taiwan. Taiwan used to record 400,000 births per year in the 1960s and 1970s. During those years, housing prices were low; high school graduates could easily find a job; and university graduates were very popular in the job market. Young people were not highly paid, but they could expect pay hikes every year. The average regular salaries of Taiwan workers, for example, more than doubled from NT$7,760 in 1980 to NT$19,885 in 1990. In more recent times, however, salary levels have been declining, with the starting salaries of bachelor's degree holders falling from an average of NT$28,551 in 1999 to NT$26,915 in 2013. Housing prices, on the other hand, have been skyrocketing. Over the past decade, the home price-to-income ratio in Taiwan has soared from 4.7 to 8.3, with the loan-to-value percentage rising from 20.7 percent to 35.3 percent. In Taipei and New Taipei, the home price-to-income ratio reached 14 in 2014, while the loan-to-value percentage rose to around 60 percent, higher than Tokyo's 40.8 percent and Seoul's 39.3 percent. How can young people raise a child when they do not have much left to spend after paying their mortgage? Unless salary levels increase and housing prices drop to reasonable levels, it will be difficult to turn around Taiwan's declining birth rates. The drop in births will not only lower the demand for education but also result in a shrinking labor force. It will cause the economy to lose its dynamism and lead the country toward a fiscal collapse. Although President Ma Ying-jeou has identified the falling birth rates as a threat to Taiwan's national security, the government has not adopted any serious policies to deal with the problem. Unless something is done quickly, Taiwan's economy will gradually begin declining starting next year, when Taiwan's working-age population begins to slide. (Editorial abstract -- Jan. 23, 2015) (By Y.F. Low)


Updated : 2021-09-21 14:17 GMT+08:00