With no end to the recession in sight, fighting unemployment and saving the economy amount to one and the same thing, but staving off unemployment is the most nettlesome aspect in all of the economic stimulus packages that have been rolled out. The task of persuading businesses to create new job opportunities and refrain from laying off workers is the biggest challenge facing Taiwan today. In a bid for speed and results, the government has moved quickly to create large numbers of jobs. What kind of jobs are they? And how effective will the government's actions turn out to be?

A huge surge of unemployment is hitting economies worldwide, and Taiwan has not been spared from the pain. In December 2008, the domestic unemployment rate jumped to a six-year high of 5.03%, leaving 549,000 persons out of work. And if we include the estimated 200,000 who have been forced to take vacation without pay, Taiwan's implied unemployment rate approaches 7%.

To head off the possibility of still worse job losses, government agencies are racking their brains in efforts to create new job opportunities.

Fighting to create jobs

In October 2008, Taiwan's Council of Labor Affairs (CLA) launched a "Jobs Now Project," under which any private-sector firm that hires an ROC citizen who has been unemployed for over three months can receive a government subsidy of NT$10,000 per month for up to six months. The project was launched more than three months ago, and has already helped some 13,000 to find jobs (the project target is 15,000).

Cheng Shin Tire, for example, has taken advantage of the project to hire nine graduates in industrial engineering and computer science from National Cheng Kung University and National Tsing Hua University. The new hires are working as long-term training officers and earn NT$36,000 a month, of which the company itself is only paying NT$26,000.

This year's Jobs Now Project will provide another 4,000 jobs, and the fact that 87% of the planned jobs had already been created as of mid-February gives some indication of how popular the scheme has been with employers.

Another initiative, the "Public Sector Short-Term Employment Project," is being implemented on two different tracks, one at the level of county governments (and county-level cities) and one at the central government level. In all, the project has created 86,000 jobs. At the local level, an unemployed person can receive a work stipend of NT$800 per day. At 22 working days per month, that makes for NT$17,600 per month for up to six months. Jobs created under the program include such things as helping underprivileged children with their homework, delivering meals to the elderly, tracking down stolen vehicles, and shelving library books.

Jobs created by the central government are more diverse. The Council of Agriculture is recruiting people to take part in mountain patrols, conservation activities, and forest fire prevention work; jobs provided by the Environmental Protection Administration include recycling, beach cleanup, and cleaning of public toilets; and the Ministry of Economic Affairs has organized teams to protect mountain stream environments. Central government agencies plan to create 12,000 jobs this year.

Worried about a wave of layoffs that might hit following the Lunar New Year in late January, the government upped the ante on a raft of budgetary items ahead of the holidays, casting its net far and wide in an effort to see after the needs of the employed, the unemployed, the middle aged and elderly, and college students. These measures are expected to create some 330,000 new jobs.

The Council for Economic Planning and Development is administering a four-year New Economic Stimulus Plan with three main focuses: (1) expanded infrastructure investments; (2) measures to spur consumption (e.g. consumer vouchers, lower vehicle sales taxes, and reduction of inheritance and gift taxes); and (3) creation by the government of short-, medium-, and long-term job opportunities. The plan is expected to cost NT$715.1 billion over four years, with NT$330 billion earmarked for this year. The plan still has to be passed by the Legislative Yuan, and at the earliest will be implemented from April.

The plan for expanded infrastructure investments includes two sub-plans, one for the building of infrastructure, and another for promotion of employment through high-level job training. The two sub-plans are expected to create 120,000 and 69,000 jobs, respectively.

The Ministry of Transportation and Communications is planning a number of major projects this year, including work on National Freeway No. 1 from Wugu to Yangmei, widening of National Freeway No. 2, work on freeway interchanges in Yunlin County and Tainan County, and an airport rapid transit line (for which the contracts have already been awarded). These projects are expected to generate 4,000 jobs.

Keynesians to the rescue

The end of the financial tsunami is nowhere in sight, and governments worldwide are taking drastic measures to deal with the crisis. The United States and Taiwan have adopted strategies generally similar to those employed to deal with America's Great Depression of the 1930s, where the government stepped in following a market collapse to stimulate the economy by upping spending, cutting taxes, and taking on debt.

But where the government takes the lead in creating jobs and businesses are only expected to follow along, it is important that the latter do indeed follow along, or the impact of the government's actions will necessarily be limited. That is why the National Association of Small and Medium Enterprises in early February issued a "Caring Enterprise Declaration," which China Steel, CSBC, Yang Ming Marine Transport, and some 800 other companies signed on to as a pledge not to lay off workers. These companies deserve applause for the caring attitude that they have shown in determining to get through the hard times together with all their employees.

The steps described above are not without their downside. Infrastructure and public service projects have forced the government to contract debts in excess of its legally mandated debt ceiling, and the measures provide only temporary, low-skill employment; if they do not contribute to industrial restructuring, in addition to forcing heavy debts on future generations, there is also a risk that those who have found employment through these programs may return to the ranks of the unemployed once the programs come to an end.

Dr. Joseph S. Lee, vice president of National Central University and an expert in human resources management, says that the government must first tell the public what its vision for Taiwan is. People with a high level of education need the ability to find "sustained employment." Graduates with master's degrees should not have to become street sweepers just to get by.

Dr. Lee worries that people with advanced degrees and high-tech skills have never faced such a bad job market, and that the conventional method of creating jobs by expanding infrastructure spending is not necessarily going to be of any help. A small infrastructure project can only generate blue-collar jobs. To meet the needs of people with advanced degrees and high-tech skills, it will be necessary to fundamentally upgrade industries and create new demand for industrial expansion. The government could require environmentally friendly building materials, "green" concrete, and energy-efficient cooling systems when replacing old bridges and schools. This would be a shot in the arm for green industries, and would give people with advanced degrees a chance to put their expertise to work.

With a skyrocketing fiscal deficit, money must be spent wisely. While acting to ease unemployment, we must also create new industries. Tough trade-offs between long-term visions and short-term rescues are testing the mettle of the nation's leadership.