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Cablegate: Taiwan Takes Steps to Boost Employment

VZCZCXRO9761
PP RUEHCN RUEHGH RUEHVC
DE RUEHIN #1612/01 3180942
ZNR UUUUU ZZH
P 130942Z NOV 08
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC PRIORITY 0378
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 TAIPEI 001612

SENSITIVE BUT UNCLASSIFIED

STATE PLEASE PASS USTR
STATE FOR EAP/RSP/TC, EAP/EP
USTR FOR WINELAND AND STRATFORD
USDOC FOR 3132/USFCS/OIO/EAP
TREASURY FOR OASIA/TTYANG, WINSHIP AND PISA

SIPDIS

E.O. 12958: N/A
TAGS: ECON ELAB TW
SUBJECT: Taiwan Takes Steps to Boost Employment

Summary
-------

1. (SBU) The Executive Yuan has approved a two-part, USD 300 million
plan to create almost 56,000 temporary jobs over the next eight
months. The program will fund 36,000 new, temporary positions
within Taiwan's official ministries, as well as contribute between
NTD 10,000 (USD 312) and NTD 17,600 (USD 550) per month to subsidize
temporary six-month jobs at local governments, non-profit
organizations (NPOs), and private-sector businesses. End summary.

Unemployment at Three-year High
-------------------------------

2. (SBU) In September, unemployment among Taiwan's 10.9-million
labor force reached a four-year high of 4.27 percent, a 0.13
percentage-point increase from August. The service sector--hit by a
bleak outlook for the financial sector and September's 5.1 percent
month-on month drop in consumer spending, a seven-year high--shed
38,000 jobs in September. The industrial sector is hurting, too,
with September's month-on-month 183-percent increase in factory
closures costing Taiwan 14,000 manufacturing jobs.

3. (SBU) On November 7, Council for Economic Planning and
Development (CEPD) Department of Manpower Planning Director Chen
Shi-Chang told econoff that Taiwan's employment situation is going
through "a year without autumn." According to Chen, Taiwan's
unemployment rate usually declines in August and September as early
summer's college and high school graduates steadily find full-time
jobs. However, Chen said the unemployment rate in 2008 worsened
over the same two months, as recent graduates failed to find
positions. According to Chen, similar rises have occurred only
twice in modern Taiwan: during 1983's oil crisis and 2001's internet
stock collapse. In addition, Chen noted that many fewer enterprises
are taking advantage of a long-term CEPD program that subsidizes
internship-to-work programs for recent college graduates, indicating
widespread reluctance in the private sector to take on new employees
this year.

Authorities Take Action
-----------------------

4. (SBU) In response to the worsening employment picture, on
October 31, Executive Yuan (EY) Premier Liu Chao-shiuan approved the
"2008 Temporary Measures to Boost Employment" submitted to the EY by
the Council for Economic Planning and Development (CEPD). On
November 6, the EY adopted an additional, larger plan covering the
first six months of 2009. On November 6, Director Chen told econoff
the combined plans will allocate USD 300 million to create 46,114
temporary jobs in 2008 and an additional 9,820 jobs in 2009.

5. (SBU) Chen said funding for the programs will come from unused
portions of the 2008 budget, part of the EY's second reserved fund,
and the Council of Labor Affairs-controlled Employment Stabilization
Fund of monthly fees collected from employers of foreign laborers.
Ministries and other agencies under the EY will use the funding to
directly create about 30,000 new, six-month positions, including
more than 5,000 jobs each under the Ministries of the Interior,
Finance, Education, and Economic Affairs. The Ministry of Defense
will also do its part by allowing up to 5,000 qualified male
applicants to report earlier than originally scheduled for their
mandatory military service.

6. (SBU) In addition, the plan calls for the Council of Labor
Affairs (CLA) to pay up to NTD 10,000 (USD 312) per month for up to
six months to help local governments, non-profit organizations, and
private-sector businesses hire workers who have registered with
local employment centers. The CLA will up this figure to about USD
550 per month for employers who hire workers from "marginal groups"
such as older workers, the handicapped, and aborigines. Under this
program, the CLA plans to create 15,000 temporary jobs in 2008, and
another 20,000 in 2009.

7. (SBU) On November 12, Chen I-Min, Director General of the CLA
Bureau of Employment and Vocational Training, told econoff the
program will benefit only those who have been unemployed for at
least three months, a status easy to confirm through Taiwan's
electronic social security system. Chen said as of November 11,
1,500 firms have applied under this program to hire over 4,000
workers, and the CLA has approved 3,000 applications.

8. (SBU) In an effort to encourage enterprises not to lay off
workers, the CLA plan also includes funding for heavily-subsidized

TAIPEI 00001612 002 OF 002


joint training programs. Under this part of the plan, the CLA hopes
employers who were planning to lay off workers will instead take
advantage of the CLA's offer to pick up 80 percent of the cost for
re-training their workers to be of more benefit to the employer.

Foreign Workers Unaffected, for Now
-----------------------------------

9. (SBU) Both CEPD's Chen and CLA's Chen told econoff the
authorities had discussed trying to increase local employment by
cutting the number of Taiwan's 373,000 foreign laborers, who are
primarily from Southeast Asia. However, they said this idea was
discarded due to opposition from enterprises, and doubts that local
workers would take the dirty, dangerous, and difficult jobs foreign
workers typically do in Taiwan. Nevertheless, CLA's Chen didn't
exclude the possibility of reducing the quota for foreign workers in
the future if Taiwan's unemployment continues to deteriorate over
2009. According to Chen, Taiwan took this step once before, when
the CLA froze new hiring for foreign workers in 2001 when the local
unemployment rate exceeded 5 percent.

Comment
-------

10. (SBU) CEPD Manpower Planning Director Chen and CLA Employment
and Vocational Training DG Chen both told us Taiwan's ministries are
under pressure from the Ma administration to boost employment.
Although both said 56,000 temporary positions will not prevent
unemployment figures from rising over the next year, they hope these
temporary measures will help make the picture a little less bleak.
End comment.

YOUNG

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