Taiwan's young people are right to be angry

Want China Times, Editorial 2014-04-28

President Ma Ying-jeou, left, and Premier Jiang Yi-huah sought to address
young people's concerns at a KMT youth forum in Taipei, April 20. (Photo/
Fang Chun-che)

Although political factors were behind the recent Sunflower Student Movement, which saw Taiwan's Legislature occupied for more than three weeks in opposition to a controversial services trade pact with China, the movement would not have found the resonance it did among the general public were it not for economic factors in the country, including stagnant salary levels, difficulty in finding jobs and surging property prices in particular.

Addressing the latter issue, how difficult is it to buy a house in Taiwan? Last week, the Ministry of the Interior announced the house price to income ratio for the fourth quarter of 2013, a key measure of housing affordability, with Taipei surging to 15.01 and New Taipei rising to 12.67, ranking first and third in the world, respectively. The average house price to income ratio was 8.37 in Taiwan overall, far ahead of the South Korean capital Seoul at 6.0, indicating that houses are expensive in Taiwan no matter what part of the country one lives.

In the ruling Kuomintang's Youth Forum held on Sunday, the problem of property prices was a major focus, with Premier Jiang Yi-huah vowing to take action to get the ratio below 10 in the capital and surrounding area.

Taiwan's property prices were not always this high. A survey in 2003 showed that Taiwan's average house price to income ratio stood at just 5.3, with Taipei at 6.1 and New Taipei (then Taipei county) at 5.1. The ratio has jumped to the highs cited above in just 10 years, indicating the government's property control policy has totally failed. How can the country's young people not be disappointed? How can they not complain?

Taiwan's property prices are not the highest in the world, but its house price to income ratio has become No. 1 in the world chiefly because salary levels have simply not gone up, especially for younger members of the workforce. According to government figures, the salary for a person's first job after entering employment has stood at the same level for more than a decade. In 1999, college graduates could expect to earn an average monthly salary of NT$28,551 (US$943 at current exchange rate), but this had actually dropped to NT$26,722 (US$882) in 2012. Is it any wonder that students are opposed to a liberalized labor market policy?

Taiwan produces more than 200,000 college graduates and over 60,000 students with master's or doctorate degrees every year. Why is it that the government's investment in higher education cannot transform this talent into a workforce with economic competitiveness? Though the problem has existed for more than 10 years, Ma Ying-jeou as Taiwan's president for six years should bear a good measure of the responsibility.

Last year, the ratio of single women of marriage age rose to a new high of 32.55%, and economic factors were cited as the second-most important reason why they had not married. This indicates many current political and social problems are caused by economic imbalance. According to a recent survey, only 6% of younger married couples under the age of 34 owned their own home. But even if they did, they would have to bear a huge pressure on mortgage repayments. On average, Taipei's homeowners have a housing cost burden ratio of 63.4% (53.5% in New Taipei), meaning these families have to pay more than 50% of their income just on their mortgages. The resulting lack of disposable income is one of the reasons Taiwan's economy has been stagnant in recent years as private consumption provides important momentum for economic growth.

We have cared about the wealth gap between the rich and the poor, but have ignored the wealth distribution between the younger and older generations. Today's young people face worse employment prospects than their parents and have to continue to rely on their financial assistance in consequence. Such a gap in wealth distribution from generation to generation will continue to expand and the government should not underestimate its future effects.

Anti-nuclear activists rally in front of the Taipei Main Station to urge the government
 to stop the construction of the fourth nuclear power plant, Apr. 27. (Photo/
Wang Chin-ho)

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