Taiwan will boost its economic stimulus programme by up to 30 percent to around T$130 billion ($3.9 billion) as it tries to bring down a jobless rate that has climbed to its highest in more than five years on the back of the economic crisis.
The government hopes to limit the jobless rate to 4.5 percent for this year, up from 4.14 percent in 2008, though some analysts said it will be tough for the tech-reliant economy to hit the 2009 target due to the world-wide wave of job cuts.
Global names such as Sony, Microsoft and Hewlett-Packard, have announced that they will be slashing their workforce, with hundreds of thousands in the non-financial industry losing their jobs this year. "In comparison, with past downcycles, the rise in the unemployment rate has been much faster than in 2001 for Taiwan especially," said Grace Ng, an economist at J.P. Morgan.
"For countries like Taiwan and Korea, we saw the most significant hit in the exports sector and the manufacturing sector and therefore, that translated quite quickly to the labour market." The government had said it planned to spend T$100 billion on infrastructure this year as part of a four-year T$500 billion stimulus plan.
But following an unscheduled meeting late on Sunday, the cabinet decided to boost the by T$20-$30 billion, or about 2.3 percent of gross domestic product, it said in a statement. The government wants to create at least 150,000 jobs through the programme this year and aims to cut the unemployment rate to 4.5 percent, the target the state planning commission set for 2009.
"If we don't do that, the jobless rate will hit 6 percent. All these jobs will help lower our jobless rate by 1.5 percentage points to 4.5 percent," Su Jun-pin, the cabinet spokesman told a news conference. Taiwan has a workforce of nearly 11 million, out of a population of 23 million.
Taiwan's jobless rate climbed to a seasonally adjusted 5.01 percent in December, a 5-1/2 year high, as the global downturn hit key export industries. Some of Taiwan's best-known tech companies, such as United Microelectronics Corp, Hon Hai and Chi Mei have announced job cuts over the past months, leading analysts to predict that the average jobless rate could be higher than the government's own target.