Editorial: Economic wake-up call

Living in a country that has enjoyed more than 50 years of rapid economic development, many people in Taiwan view poverty as an unfamiliar concept. However, the recent years of economic stagnation and a widening wealth gap have awakened this once- egalitarian society to the fact that it has a growing number of poor people, many of them young.

Last week, the Liberty Times (the Taipei Times’ sister paper) published a front-page story saying that the nation’s average annual income was NT$611,100 last year in nominal terms (meaning that inflation has not been factored in), lower than the NT$615,000 in 2010, while the amount has changed little from between NT$600,000 and NT$620,000 over the past decade.

The average income among young people has remained stagnant or even shrunk over the past 15 to 17 years, according to the report, citing data compiled by the Directorate-General of Budget, Accounting and Statistics (DGBAS).

The report said the average annual income for young people aged below 30 was NT$416,100 last year and NT$656,600 for those aged 35 to 39, both lower than 1997 levels.

Meanwhile, the figure for those aged 30 to 34 was NT$556,200, NT$20,600 less than the previous year’s level and the lowest in 17 years — the figure was NT$573,700 in 1995, the report said.

In other words, with low entry-level salaries and the stagnation of wage growth, there has actually been little opportunity for young people to save over the past 15 to 17 years, which has discouraged them from getting married because they cannot afford to have children or buy a home.

Apart from the youth poverty issue, the latest DGBAS statistics also showed that the nation’s poorest 20 percent of households, or 1.59 million families, were found to be living with an average of negative savings of NT$29,308 each last year, which was higher than the NT$20,525 in 2010, but came second only to the NT$30,697 seen during the 2009 global financial crisis. As people in this bracket continued to earn less than they spend, they have been living in the red for five years in a row, the DGBAS data showed.

As for the second-poorest 20 percent of the total 7.96 million households, they still had savings last year, but the amount declined to NT$24,819 on average last year, the second-lowest in the past 29 years and significantly lower than savings of NT$600,800 for the richest 20 percent and NT$207,500 for the second-richest 20 percent.

These shocking figures are proof that the government’s economic policies have long paid more attention to benefiting big companies than to small businesses, workers, young people and the economically disadvantaged.

Apart from government policy, other factors such as a stalling economic recovery — which results in the stagnant growth in wages in domestic industrial and services sectors; structural change in the labor market — which gives rise to the increase in low-wage, atypical employment, such as contract, temporary and dispatch workers; as well as the nation’s aging population and unfair wealth distribution are contributing to this emerging poverty problem.

Nonetheless, chronic poverty is associated with social problems such as a high crime rate and educational inequality and will lead to a whole generation of people with grim future prospects, which can adversely affect the nation’s social cohesion and economic development in the long run.

This is a wake-up call for us to do more to improve the situation. The government must take action to provide the youth with more social and economic opportunities. Otherwise, we will see our young people become a lost generation while the employed poor become even poorer.