Taiwan has a people problem: the working-age population is not growing fast enough, nor earning nearly enough.
That has turned the island from a vibrant tiger economy to aging and unsteady in just two decades.
Jason Tsai is a poster child of this worrying phenomenon.
Tsai, 25, has excellent English, but two years after graduating from university, the highly sought language skill has failed to secure him a well-paying job.
Tsai has been pulling in an average monthly pay of T$15,000 (US$455) through part-time work, below the minimum wage of T$22,000 for college graduates and one-fourth of the retirement-pension received by state employees.
“I cannot afford a place of my own with my low income… All I have been able to find were part-time jobs,” he said.
Meanwhile, a wave of barely middle-aged mostly government employees are racing to retire on generous taxpayer-funded pensions before these are watered down.
To make matters worse, a government policy designed to protect young workers during the 2008-2009 global financial crisis has created a perverse incentive for employers to lock young workers into a minimum wage.
Tsai isn’t waiting for politicians to come to the rescue. Instead, he is looking to move to Japan to secure a better job.
A flight of young people in search of greener pastures is the last thing Taiwan needs, especially as its rapidly graying population is diminishing the number of skilled workers required to propel the economy on its next growth phase.
The alarming drop in Taiwan’s fertility rate to less than 1 per woman — among the lowest in the world — from around 1.7 in 2000, has created a major demographic challenge for policymakers.
As more of today’s youth transfer the burden of caring for their parents to the state, government resources are getting stretched to breaking point amid spiraling health insurance and pension costs.
“Reforms need to be carried out soon or state employee pensions will collapse. The government cannot sustain it for long,” Wu Chung-cheng, deputy minister of the civil service ministry, told Reuters.
But fears of a political backlash have discouraged lawmakers from watering down a taxpayer-funded generous average monthly retirement pension of T$60,000, even though a flagging economy can no longer sustain these costs.
Taipei mayor Ko Wen-je has warned that 10 percent of the city’s budget will go into paying city employee pensions in 2016.
And the pressure on finances continues to grow as state employees rush to lock in the generous pension.
Between 2010 and 2013, the number of retired state employees jumped more than 50 percent to 32,000.
The lopsided pension plan is causing resentment among those like Tsai.
“What the state employees have is like a dream that would never come true for our generation,” he said.
Still, the dramatic aging of the population means the government will be forced to act sooner rather than later.
Official statistics show those 65 and older are growing faster than in most Asian countries, making up 12 percent of the total population of 23 million in 2014.
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