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Graduate degree holders face increased unemployment

A recent survey by Taiwan’s Directorate General of Budget, Accounting and Statistics (DGBAS) shows that the number of PhD and masters degree holders is expected to top one million this summer. However, the demand for employees with PhDs and masters degrees has not kept pace with supply and the unemployment figures for these degree holders surpassed the number of unemployed college graduates for the first time in the first half of 2012. In the Commercial Times, Hu Sheng-cheng of Academia Sinica said that unless Taiwan’s businesses increase the demand for research and development professionals, the unemployment rate among graduate degree holders will continue to rise.

The paper reported that in recent years the number of graduates with a PhD or masters degree surpassed 60,000 a year. In early 2011, the number of higher degree holders reached 909,000 in the civilian population, and this figure jumped to 970,000 by July 2011. With this past graduation season, the number by June 2012 will easily have surpassed one million.

With the rapid increase in the number of graduate degree holders in Taiwan, the chances of them finding suitable employment becomes ever more difficult. The statistics recently compiled by the DGBAS indicate that in the first half of this year, the unemployment rate of PhD and masters degree holders, who previously enjoyed better job prospects, now stands at 3.32 percent. Although this figure is lower than the 5.66 percent unemployment for university graduates, 4.29 percent for high school and vocational school graduates, and 3.45 percent for middle school and elementary school graduates, it is higher than the 3.17 percent unemployment among junior college graduates.

As a result of nearly a decade of restructuring, the number of junior college graduates has fallen year on year, according to DGBAS statistics. Trained in vocational fields, junior college graduates enjoy an advantage when it comes to finding employment. As such, the unemployment rate of this category of graduate is much lower than for people with other types of degree.

The Commercial Times reported that the reason why PhD and masters degree holders were previously more employable was because of a boom in R&D departments in both the private and public sector, combined with greater research demand at public and private universities, according to Hu Sheng-cheng. With the current saturation in private sector and university R&D, the unemployment rate of graduate degree holders has inevitably increased.

The rising unemployment rate for graduate degree holders is caused by an over supply of such degrees and by the widening gap between graduate school disciplines and the business world, according to analysis conducted by Lin San-kuei, director general of Employment and Vocational Training at the Council of Labor Affairs. While people with PhDs and masters degrees have received academic training, they are not necessarily equipped with transferable skills that employers are looking for. This mismatch needs to be addressed by restructuring the educational system, according to Lin.

Lin’s recommendations are that the government should carefully review whether the distribution of educational resources is properly balanced, and take action such as reducing enrollment or increasing the threshold required for students to graduate.

Hsin Ping-lung, a professor at National Taiwan University, warns that the high unemployment rate of advanced degree holders will only get worse in the future if there is no structural review of Taiwan’s higher education system, the Commercial Times reported. It does not cost much for universities to set up graduate schools, especially in the arts, humanities, law and business. With lower operating costs, these faculties are seen as money making centers. In contrast, these graduates have less competition to enter graduate school in comparison with the fierce competition required to enter university. The government should respect the natural adjustment of the market mechanism, but should not take measures such as “subsidizing the salaries of those with higher degrees”, which will distort the market, according to Hsin.

The Commercial Times noted that the government funds invested in higher education in 2007, 2008 and 2009 accounted for 4.47 percent, 4.49 percent, and 4.26 percent of Taiwan’s annual budget, respectively. However, 2007 spending was higher than for South Korea (2.1 percent), Japan (1.7 percent), the US (3.3 percent) and Germany (2.6 percent).

Taiwan’s government invests vast sums of money into higher education each year, which has yielded impressive results in terms of the quantity of graduate degree holders, but due to a severe imbalance between the supply and demand in the workplace, and a severe gap between university training research institutes, and industry demands, it is imperative that Taiwan reforms its higher education policy. If this issue is ignored, not only will talented young people suffer, but Taiwan’s economic competitiveness will also be negatively impacted, according to the paper.

No simple stereotype of Taiwan’s young people

Taiwan’s twenty somethings have long been known for being self-centered, reluctant to engage in hard work and short on employment loyalty. This generation has been nicknamed the “strawberry generation” for their characteristics of being easily “bruised” and for their lack of resilience.

The term was originally coined in 1993 by Christina Ongg, the chairperson of Career Consulting Co. to describe the great care parents took with children born in the 1960s and 1970s. Later the phrase took on a more negative connotation.

The ‘cared-free’ generation

In 2011, Wealth magazine and 104 Job Bank, the largest job website on the island, tried to redefine Taiwan’s youth (in their 20s) as the “cared-free” generation. In a survey conducted by 104 Job Bank, 47.5 percent of the respondents chose happiness over other objectives, including family and health, as the ultimate goal in life.

Serena Chen, a manager with 104 Job Bank said, “We found the ‘cared-free’ generation made decisions mostly based on their feelings, including their job choices. ‘Cared’ means they have been extensively cared for, but ‘free’ means they love having lots of personal freedom.”

Regis Chen, 104 Job Bank’s marketing director, said young people are very self-focused, which can be interpreted as either being selfish, or more positively, as being more willing to express themselves. The study found that the younger generation’s selfishness can be reflected in their willingness to live with their parents before marriage in order to save on expenses, while the older generation cites the reason for them to stay with their parents as being to take care of family members.

More competitive and less optimistic

Ongg told Taiwan Review that for today’s youths, aged 18-30, “mass-produced cherry tomatoes” is a better phrase than “strawberry,” as “they appear to have fewer distinguishing personal characters” due to the changes in the education system over the past decade, where so many universities were created to give a general education rather than specific workplace skills.

According to the Ministry of Education, out of Taiwan’s total population of 23.1 million, nearly 2.9 million people over the age of 15 had earned a bachelor’s degree by 2010. This figure is almost three times the 1.1 million from just 10 years earlier. Regis Chen noted the prevalence of people with tertiary degrees, which makes the job market much more competitive.

Other polls have shown that younger members of the strawberry generation lack confidence in their future. According to an online survey conducted in 2011 by Pollster Technology Marketing Ltd., of nearly 1,100 respondents aged 18 to 30, over 50 percent responded “unlikely” or “very unlikely” when asked about their chances of success in the next 20 years. Part of that despondency is career-related, as Ongg estimated that about 80 percent of those in that age bracket agonize over finding a profession that suits them.

Careers are less imperative

Taiwan’s younger generation is far from monolithic, however, and some members are much less concerned about careers. Wu Chih-in, a research fellow in the Institute of Sociology at Academia Sinica, Taiwan’s top research institute, said that the country’s economic development means that today’s young people are able to draw on greater financial resources, making a career less imperative. ”They don’t have to feed a family. If they lose their jobs, they can still survive by going home to live with their parents.”

Their parents provide them with everything they need as soon as they ask, or even before they ask for it. Over time, such young people start to see no reason to make an effort when they can get everything without trying. Likewise, they see no logic in moving out and paying rent, or in taking on work pressures for a job earning a salary of NT$20,000 (US$667) a month, reported Taiwan Review.

Despite the difficulties faced by today’s youth, Regis Chen believes they have the potential to be just as successful as their forebears. “They are better-rounded than any of the older generations and far more creative.”

No one-size-fits-all stereotypes

The key to motivating youngsters to commit to their works is to create an environment with which they can identify. When they do, they will be willing to take on a heavy workload. Huang Jian-teng, a full time employee and management trainee at a Family Mart convenience store in Taipei, is such an example.

After a 9-hour graveyard shift, he stays to restacks plastic storage bins he sees carelessly thrown on the floor on his way out. Though officially off duty, he said, “I want to see the business thrive from our efforts and I’m also learning how to run a store well.” He added, money is not the first priority for his generation and that he would keep working for an organization as long as he sees a positive outlook for the job.

When talking about members of the strawberry generation, two very different pictures emerge. The first is that they are self-centered, weak and reluctant to engage in hard work. The second is that they are creative, passionate and willing to work hard for the things they believe in. So which description, if either, is accurate? As always, it depends on whom one asks, reported Taiwan Review.

Psychologist Huang Hsin-yi believes that attempting to define individuals according to perceived characteristics of their age group is an overly simplistic approach. He said “I personally won’t use a specific name to label a generation because I think all generations produce both hard-working and lazy people.”

Taiwan faces brain drain as China lures island’s talent

China has been copying Taiwan’s development model by setting up industrial technology research institutes to nurture scientific and technological growth. Along with China, Taiwan’s neighboring countries like South Korea, Hong Kong and Singapore are also actively luring  talent away from the island. Concerned with this issue, President Ma Ying-jeou called a National Security Council (NSC) meeting in early April to hear from scholars and experts. In summary, they warned him that Taiwan is encountering a talent deficit crisis.

According to the United Daily News, the NSC special group found that the influx of foreign workers arriving in Taiwan are mainly non-professionals from the Chinese mainland, but there is a gradual outflow of Taiwanese professional talent. In particular, Singapore is attracting medical professionals, Hong Kong is recruiting professors, and South Korea is poaching scientific and technological personnel. Hence,  Taiwan’s Industrial Technology Research Institute (ITRI) is facing a significant drain. ITRI chairman, Tsay Ching-yen, said that China has established industrial technology research institutes in 38 provinces and cities. One by one, it has targeted and attracted talent away from Taiwan’s ITRI.

Established in Hsinchu (northern Taiwan) in 1973 as a non-profit organization under the supervision of the Ministry of Economic Affairs, the ITRI has played an instrumental role in creating Taiwan’s economic miracle and fostering the island’s information technology development.

An ITRI executive said the essence of the institute is in the personal contacts they have been established in industry over the years. The Chinese are not stingy in paying headhunters or offering a generous salary, at least four to five times higher than that in Taiwan. They also provide housing to reduce worries and ease the transition. Once the executives are lured away, the industrial professionals will inevitably follow. If the industrial talent pool leaves, where will Taiwan be?

The Central News Agency reported that Wong Chi-huey, president of Academia Sinica (Taiwan), told the Legislative Yuan that 62 people have retired and 61 have resigned from his institution in the past five years. Among these people, half of them were recruited by organizations in Hong Kong, Singapore and China. Wong expressed his worry about the “talent deficit.” With regard to himself, he said he would never accept a foreign offer after his retirement.

The Economic Daily News reported that Taiwan’s wages have been stagnant for almost a decade. The average wage grew at 0.8 percent per year from 2000 to 2010, adjusted for inflation, real wage growth is negative. Last year, Taiwan registered a 10.82 percent domestic economic growth rate, pushing up the average salary increase by 5.3 percent, but this increase only makes up for the losses brought on by the financial tsunami the previous year. The real wage level is not as high as 13 years ago.

More worrisome is that 3.6 million workers earned a monthly salary of less than NT$30,000 (US$1,000) last year. Among them, 1.04 million people earned less than NT$20,000 (US$670) per month. The wage gap between the highest-paid and the lowest is widening, with fewer higher paying jobs avaliable in Taiwan.

In China, wages have risen much faster  than in Taiwan. Except during the financial tsunami in 2009, the average annual salary of Chinese enterprises has risen by more than 10 percent in the last five years. The average wage levels in Shenzhen, Shanghai, Beijing, Guangzhou and other cities are about 35 to 45 percent of that in Taiwan. Based on the current rate, the wage level in China’s coastal provinces may catch up with that of Taiwan by 2020.

The higher pay offered in the prosperous regions of China is a strong magnet for Taiwan’s professional workforce who are the target of Chinese recruitment companies. Taiwan has a serious shortage of upper level professionals and needs to study how to neutralize China’s magnet attraction.

In order to reverse the plight of ill-managed recovery achieved through economic growth, but not wage growth, the government has initiated a 3 percent salary increase for the military, public servants and teachers starting July 1. President Ma hopes that businesses will do the same for their employees.

The Economic Daily News said in a review that it is up to market mechanisms to decide the level of a pay rise in the corporate sector. The government will have little effect in urging companies to increase their wages. If companies increase salaries, it is not because of the government’s pleas, but because they are earning a profit and have a good corporate culture embedded in their business plan that includes a pay rise. The vast majority of low-wage workers will hardly reap any benefits from these recommendations. Therefore, rather than urging  corporations to raise pay rates, the government could drive wage growth by creating new job demands. This can be done by making Taiwan a more attractive investment and operational environment, thus attracting more local and foreign capital investments.

In order to retain Taiwanese talent, the government must spare no expensive to promote industrial restructuring and upgrades, transforming businesses and enhancing their long-term competitiveness. These are the enterprises that are needed and are capable of offering better pay to retain talent, stressed the Economic Daily News.